Principle of replication, choice of comparators resulting in awards critics claim are too large
There’s a battle building over the issue of interest arbitration in Canada, with some saying it’s time for change and others worrying any change may bring about its demise.
The Nova Scotia government announced in January 2011 it will cover the extra $5.5 million in wages awarded to nurses who work for the Capital District Health Authority (CDHA).
Although the CDHA said it could afford only a one per cent per year increase over a two-year agreement, the arbitrator awarded a wage increase of 7.1 per cent over three years.
In Ontario, Windsor Regional Hospital is looking at cutting jobs or patient services following an arbitrator’s ruling last year that adds $1 million annually to the hospital’s payroll. Owen Sound has seen its fire service cost jump to $4.2 million from $3.7 million as a result of an arbitration ruling that increased wage and benefit costs.
Last year, the province’s 12 largest police services boards also called for amendments to the interest arbitration system that would demand arbitrators consider the ability of municipalities and taxpayers to pay.
Interest arbitration has become too expensive for employers and, as a result, “it’s failing us,” according to Howard Levitt, a prominent employment lawyer with Levitt LLP in Toronto.
“[Arbitrators] are looking at other public sector examples, not the ability of taxpayers to pay, and they’re creating tax burdens,” he says.
It’s “easy politically” for politicians to send labour disputes to interest arbitration but, in his experience, those decisions actually end up costing more, Levitt says.
He would like to see legislation requiring arbitrators to look at private sector comparators, not other public sectors, as part of the criteria when determining awards.
For example, rather than considering what a janitor in one hospital makes versus another, Levitt says arbitrators should be required to look at what a janitor — with the same skills in a similar job — makes working in a downtown office building.
It’s important the criteria be legislated because too often arbitrators ignore economic realities, as happened when the Ontario government ordered a two-year wage freeze in 2010 but arbitrators ordered a wage increase for Crown attorneys and provincial police anyway, Levitt says.
Levitt is not alone in his thinking. The Canadian Federation of Independent Business and Ontario Progressive Conservative leader, Tim Hudak, are also calling for amendments to interest arbitration in the public sector.
There’s a bigger picture issue that this debate ignores, says Bill Cole, an employment lawyer with Nelligan O’Brien Payne in Ottawa. Cole negotiates on behalf of workers.
“We lack a broader understanding of the value of public services,” he says. “We’ve lost this notion of should we have someone check our water, think Walkerton? Or should we have public sector meat inspectors, think Maple Leaf?”
Interest arbitration is threatened whenever there’s a larger than usual economic downturn, Cole says.
But the recent level of involvement by politicians has shifted the issue and created a much more precarious future for this method of arbitration, according to Cole.
“When Hudak makes comments around interest arbitration, he’s essentially misusing his political hat to curry favour with one side,” he says. “Does the environment in which collective bargaining is unfolding today warrant that mass infusion?”
Denis Lemelin says no. The president of the Canadian Union of Postal Workers is fearful that as political parties insert themselves into labour disputes as both government and employer, they’ll get the outcomes they want by either changing the criteria arbitrators must consider — as some would like — or by appointing arbitrators who will set their own criteria.
At the end of January 2012, a federal court overturned federal Minister of Labour Lisa Raitt’s appointment of a retired judge to arbitrate the government’s dispute with postal workers. Judge Coulter Osbourne was unilingual with little labour relations experience.
That dispute was sent to final offer selection, not interest arbitration — a vehicle Lemelin suggests will be increasingly used in future.
It’s regrettable because interest arbitration seeks a compromise, not just a winner and a loser, he says.
The interest arbitration issue is clouded more by “political unwillingness” than an inability for municipalities and governments to pay, Cole adds.
He would like to see them have to prove that threshold in arbitration.
“Contrary to the script employers are given,” he says, “interest arbitration is still a very conservative approach.”
