Quebec employers angry over labour code

Government keeps strict limits on outsourcing.

The growth of the Quebec economy is being slowed by stringent rules around the subcontracting of labour, according to the Canadian Federation of Independent Business (CFIB).

The CFIB is angry about changes to the province’s labour code, rushed through the legislative assembly in late June, because they do not ease the restrictions around the subcontracting of work.

Instead, Quebec will continue to have the toughest rules regulating the subcontracting of labour in the country, said Richard Fahey, vice-president, Quebec for CFIB.

“If you subcontract part of your company you have to transfer the union and in some cases the union agreement,” he said. “That is the main economic impediment for the economy of Quebec.”

There are some new regulations about notification periods, but they will do nothing to improve the situation, he added.
The anger of the CFIB is directed specifically toward article 45 of the Quebec labour code.

When the restrictions on subcontracting provisions were first created in 1961, they were intended to make it more difficult for employers to get rid of a union through simple steps like a company name change, explained Michel Grant, professor of HR at the University of Quebec at Montreal. But consistent liberal interpretations of that article since then have favoured the unions and made it increasingly difficult for companies to subcontract.

In the latest labour code changes, there were a few minor changes to article 45 but they deal mostly with notification periods surrounding subcontracting and are not significant as far as employers are concerned. On the contrary the changes create even more favourable conditions for the unions, said Fahey.

From the point of view of management, the changes are disappointing, agreed Grant.

Genevieve Fortier, president of Quebec’s HR association, Ordre des conseillers en ressources humaines et en relations industrielles agréés du Québec, said the association did not have an official position on changes to the labour code, choosing instead to act as an objective balance to union and employer positions.

Changes to article 45 were hotly debated from the very beginning, she said. “We were saying nobody is talking about the consequence.” The Ordre conducted a study and found that of all the collective agreements in Quebec slightly more than half (57 per cent) had clauses limiting subcontracting anyway. The other 43 per cent said they don’t need to limit subcontracting.

However, the study also found that if the number of collective agreements limiting subcontracting was reduced to 52 per cent, 11,000 jobs would be lost, but another 24,000 jobs would be created with subcontractors.

Unions contend that jobs with subcontractors generally pay less, said Fortier. “The other conclusion (of the study) is that it is not obvious at all that the pay would be less.”

Companies in the modern economy want to focus on core competencies and be able to outsource non-core functions to subcontractors, said Fahey. The inability to do so hurts large companies that want to outsource and also the smaller companies that lose out on potential business.

A July Supreme Court decision illustrates the problem, Fahey said. The town of Sept Iles announced plans in the early ’90s to outsource its refuse collection. City employees would be put in new positions but not lose their jobs.

However after the business was transferred to the subcontractor, the Canadian Union of Public Employees filed a motion seeking to have the collective agreement that covered garbage collectors with the city transferred to the new employer. The city argued this was unreasonable.

After 10 years of fighting the case, the Supreme Court found in favour of the union, and that under article 45 the collective agreement should have been transferred to the subcontractor. As a result the subcontractor who was paying his employees about $12 per hour may now have to pay back pay at the rate of about $19 per hour, said Fahey.

The CFIB also cites research on the effect of subcontracting on the Quebec economy. The study showed a loosening of the rules would create new jobs and increase profitability for companies in the province, he said.
The study showed that only 4.2 per cent of companies that wanted to outsource were doing so to cut jobs. Most were doing it to focus more closely on their core competencies, said Fahey.

Grant also said that the government’s decision not to make more employer-friendly changes may stem from the unco-ordinated lobbying efforts of business groups. Rather than pushing for sweeping changes to the labour code, they should have focused on getting more favourable changes to article 45.

The CFIB was also calling for a secret ballot during union certification rather than the current process in Quebec where the signing of cards by 50 per cent plus one is typically enough for certification.

“In some cases we have seen pressures put on employees to sign cards,” said Fahey.

“We should organize secret ballots. Being secret is a given fact in any democracy.”

They were also asking for the government to introduce policy that would allow employers during strike or lockout negotiations to take what it considers its best offer directly to the members for a vote.

It could only happen once but when an employer thinks it has put its best offer on the table, it should be able to convene a meeting of all members to vote on the offer.

Fahey said he will continue to fight for better changes to the labour code. “It isn’t too late,” he said. “The day there is no room for changes in the labour code in Quebec, I will resign. I think it is a major problem in Quebec I will keep hammering the issue.”

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