'The elephant in the room': Ottawa's labour review explained

The federal government’s sweeping review of the Canada Labour Code has put long‑criticized ministerial powers over disruptive strikes and lockouts squarely in the spotlight, according to one employment lawyer.

“The review of Section 107 of the Code is the elephant in the room in this whole consultation,” says Christopher Pigott, partner at Fasken in Toronto.

“[It] has been the tool that the Minister of Labour has used for the past two years to deal with very disruptive strikes and lockouts in those critical federal sector industries,” he says, adding it has faced, politically, "huge blowback from the union movement.”

Ottawa recently launched consultations on potential changes to the Code that could alter collective bargaining timelines, introduce a new “special mediator” role, strengthen protections against wage theft, and modernize occupational health and safety standards, including psychological safety and the use of AI.

Collective bargaining timelines

The consultation paper confirms that Ottawa is looking at the mechanics of collective bargaining under Part I of the Code. Currently, the legislation does not prescribe when parties must begin direct bargaining, though it allows negotiations to start as early as four months before a collective agreement expires.

The government is also reviewing the 60‑day conciliation period and 21‑day cooling‑off period, with an eye to revising them “to allow for better outcomes of good faith bargaining before a statutory strike or lockout is acquired,” along with the minimum 72‑hour notice of a strike or lockout required under section 87.2.

From an overarching perspective, the government is “trying to figure out whether it can put some more structure, some arms around collective bargaining disputes in the federal sector,” says Pigott.

“Over the course of the past two years, we've had some really disruptive transportation strikes and in other sectors. And [Ottawa is] trying to figure out if it can smooth out the process to avoid these disputes.”

Section 107 in dispute resolutions

Against that backdrop, Pigott says the central question is where Section 107 fits in if other dispute‑resolution tools are changed.

“Is it necessary in its current form if you make some other changes, such as introducing a special mediator process or changing the collective bargaining timelines and structure more generally?” he says.

“There’s a lot of litigation in the Federal Court right now that's going to consider the constitutionality of Section 107, so it may be that not a lot gets done in this consultation concerning Section 107, but it is definitely the elephant in the room here.”

‘Special mediator’ proposal 

One of the most concrete ideas in the consultation is a proposed special mediator role, which ESDC says would be added without displacing existing conciliation processes or the Minister’s authority under Section 105 to appoint mediators.

If parties cannot reach agreement, the special mediator would file a report to the Minister “with an assessment of the issues and potential next steps to conclude the collective agreement,” which could be made public “in part or in whole.”

This idea came out of the Industrial Inquiry Commission on West Coast Ports from about two years ago, where the special mediator would have more powers than the current mediator system under Part I of the Canada Labor Code, says Pigott.

Two “big features” were attached to the role in the report, he says.

“The first was the ability to make public recommendations about the issues in the dispute and the ways to resolve the dispute,” says Pigott. “The other big feature was that the right to strike and lock out would be suspended while the special mediator process was in place.”

At present, the government can appoint a mediator, but “the right to strike and lockout continues, and so the mediator is, in many ways, kind of toothless,” he says.

Replacement workers and essential services

The consultation paper also raises “essential services designations requiring minimum service levels during strikes or lockouts” as a possible model, highlighting a major shift since Parliament prohibited replacement workers in the federal sector.

“The essential services issue has become really important since replacement workers were prohibited in federal sector strikes and lockouts in June of last year,” says Pigott; previously, in an essential service, if there was a strike or lockout, the employer could bring in contractors or other employees to do the work.

As a result, employers and unions are thinking about essential services more than they previously did “because that's the main mechanism that you now have to continue services during a work stoppage,” says Pigott.

Alongside the replacement worker prohibition, the legislation required the parties to try to reach what's called a “maintenance of activities” agreement that would set out whether or not any services provided by the employer were essential, he says, “and, if so, who was going to continue working during the strike or lockout.”

However, that process has proven “very contentious” over the course of the last year or so, says Pigott, with employers and unions having difficulty agreeing on which services are essential.

For Pigott, many elements of the consultation tie back to these pressures.

“How do we deal with the most disruptive implications of strikes and lockouts in the federal sector, in particular, now that we do have a prohibition on replacement workers?

“Is it changes to collective bargaining processes? Is it the introduction of a special mediator role? Is it amping up essential services processes and designations to ensure that if there is a strike or lockout, the basic services the Canadians rely on are continued? I think that's what a lot of this review and consultation comes back to.”

Review of wage protections

The paper also highlights a review of the Wage Earner Protection Program (WEPP) “to ensure its integrity,” noting that attempts to trigger WEPP payments in certain restructuring scenarios “represent a shifting of responsibility for employee wages from employers to public funds and highlight the need to reaffirm and clarify the Program’s intent.”

The WEPP “is an important program, but it plays in practice a pretty limited role in the federal sector,” says Pigott. “It's been used to ensure that employees continue to get paid if the employer goes through a restructuring or is insolvent or, for whatever reason, isn't otherwise able to continue paying its people.”

But the core issue is probably more of a public policy one than a labour problem, he says.

“I think that the key question is ‘Should the public purse be paying employees in these sections? Should the burden of payments still be on the employer? And how do we make this work in a way that's fair for all, but ensures that the workers in an otherwise non-functioning business don't lose their livelihoods?’”

Focus on psychological safety

Under Part II of the Code, ESDC says enhancing occupational health and safety protections could include integrating psychological safety into regulations, expanding proactive inspections, using automation and artificial intelligence to deliver “faster responses and quicker resolutions for workers”, and harmonizing training frameworks with provinces and territories to support labour mobility.

Pigott notes that there has been a lot of change to the health and safety protections in Part II of the Code over the course of the last 10 years or so, citing the introduction of the workplace violence and harassment regulations and investigation and policy processes.

“I think it's good to look at it. I'm not sure that we will see major changes in this area. I think there's been a general recognition, certainly in the courts and the administrative tribunals that adjudicate the code, that psychological health and safety is important and worthy of protection,” says Pigott.

Using AI for efficiencies

On the use of AI in enforcement and complaints handling, Pigott sees both operational need and limits. He points to “a big backlog” of complaints across the board — whether it's health and safety, labour disputes or employment-related claims — that federal sector tribunals and the government need to figure out how to deal with.

“The use of AI potentially to adjudicate, resolve, review complaints that workers are making, I think is a natural path for the government to take — at least to try to determine whether there are some ways in which we can make all of these processes more efficient,” says Pigott.

At the same time, there would be serious concern about “handing over the judge's gavel to an AI to make any determinations on this front,” he says.

Political and economic backdrop

Pigott situates the current consultations within a wider moment of economic and political uncertainty. While Canada has done reviews like this in the past, it hasn't done so, in recent memory, in the midst of a global trade war, serious economic dislocation and concern about the direction in which the Canadian economy is going, says Pigott.

“We've got a Prime Minister with a new majority government now who seems to have an overriding ambition to make Canada's infrastructure function better and to build that infrastructure in a way that hasn't been done in generations. And federal sector labour and employment is really important to how that infrastructure operates,” he says.

“For me the question really becomes ‘Is the government looking to use this consultation as a vehicle to really do something to facilitate economic growth, to facilitate trade continuity and the development of new trading relationships?’ I'm not sure, but I think that's going to be a really interesting dynamic to watch.”