Bill C-377 (Historical)

An Act to amend the Income Tax Act (requirements for labour organizations)

This enactment amends the Income Tax Act to require that labour organizations provide financial information to the Minister for public disclosure.

Taxation

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

Mr. Speaker, that is not what the parliamentary budget officer is saying .

At the time, we introduced Bill C-377 on union transparency. We believe that Canadians who pay union dues have the right to know how their mandatory dues are spent by union bosses. For us, it is about transparency and accountability.

Why does the Prime Minister want to prevent union members from knowing how their hard-earned money is spent?

[Mark Rowlinson, Executive Assistant to the National Director, United Steelworkers]

Thank you very much, Mr. Chair.

My name is Mark Rowlinson. I'm the assistant to the Canadian national director of the United Steelworkers. I've also been a practising labour lawyer for the union for about 20 years.

The United Steelworkers is one of the largest industrial unions in Canada, with about 225,000 members from coast to coast to coast. We're part of an international union that has about 800,000 members across North America. We represent a diverse membership in almost every part of the private sector, along with thousands of public sector workers in hospitals, nursing homes, universities, and among security guards. We also advocate on behalf of roughly 100,000 retirees and their families across Canada.

While many of our members work under provincial law regimes, we also represent about 25,000 members in the federal jurisdictions, including workers employed in airport security, transportation, energy, and telecommunications.

Labour legislation in all jurisdictions in Canada is important to our union, as it is to all labour organizations across the country. We are concerned about any legislation that may interfere with either the spirit or the substance of fundamental labour rights, like the right to join unions and the right to bargain collectively.

We're very grateful for the opportunity to appear before you today, as we're concerned about how the Government of Canada responds to and complies with the important Supreme Court of Canada decision in the MPAO case, which the Supreme Court issued a little over a year ago.

The MPAO decision was one of a series of decisions by our country's highest court that clarifies the scope of freedom of association and collective bargaining rights under the charter. We were a plaintiff in the SFL case that was issued a week after the MPAO decision, and we've long taken a great interest in how the charter and labour law regimes in Canada interact.

In MPAO, as the committee will be aware, the Supreme Court affirmed that freedom of association protects the right to join and form associations, to do so in pursuit of constitutional rights, and the right to join others to meet on more equal terms the power and strength of employers.

If I might pause for a minute, I want to read you an excerpt from the decision, where the Supreme Court noted, and I'll return to this:

Individual employees typically lack the power to bargain and pursue workplace goals with their more powerful employers. Only by banding together in collective bargaining associations, thus strengthening their bargaining power with their employer, can they meaningfully pursue their workplace goals.

It is precisely that set of rights that is protected under section 2(d) of the charter.

The Supreme Court continued, “The right to a meaningful process of collective bargaining is therefore a necessary element of the right to collectively pursue workplace goals in a meaningful way”, and “A process” or legislation, I would submit, “that substantially interferes with a meaningful process of collective bargaining by reducing employees’ negotiating power is therefore inconsistent with the guarantee of freedom of association enshrined in [section] 2(d)” of the charter.

We are here today to provide a few comments on Bill C-7, and to express our concern that in some areas Bill C-7 grants the right to join a union and collectively bargain to RCMP employees and officers on the one hand, but on the other hand it also erodes that right through limits on association and the scope of bargaining.

I want to review a number of points where we have concerns, given that background about Bill C-7.

First, is the configuration of the bargaining unit. In the bill under its present form, as the committee will be aware, civilian RCMP members are excluded from the bargaining unit. There is no justification, in our view, for excluding employees of the same employer from the bargaining unit, other than to erode the collective bargaining position of the union. In both federal and provincial jurisdictions across Canada, labour relations boards have for decades preferred broad-based, all-employee units.

While we agree with the bill's exclusion of officers in their capacity of management, the list of ranks that are considered officers is set by Governor in Council. The number of officers in each rank who are excluded, as prescribed by the Treasury Board, means the employer has essentially the exclusive power to decide who is included and excluded from the bargaining unit as an officer. This is an exception to the normal rule in Canadian labour relation regimes, which provides that managerial exclusions and other exclusions from the bargaining unit are determined by independent labour relations boards.

Second, and this is perhaps the one point I want to emphasize the most this morning, are the very vague and general limits on affiliation that are contained in Bill C-7.

Under Bill C-7, to be certified, an employee organization must be, among other things, “not affiliated with a bargaining agent or other association that does not have as its primary mandate the representation of police officers”.

We fully respect and understand the limit that the bargaining agent itself must be an organization that is primarily devoted to the representation of police officers; however, we are at a loss to understand this very general and vague point that the bargaining agent must not have any affiliation with other organizations. We submit that this is a serious infringement on freedom of association, and there are clearly less restrictive ways to deal with issues of the independence of the bargaining agent than this one.

We would refer the committee to the Ontario Police Services Act, which deals with this issue in a different way in that, for police unions in Ontario, the only limit to their ability to affiliate applies to individual members and prevents them from actually joining another union without approval. However, the Ontario Police Services Act appears to rightly allow collaboration and affiliation with members of other unions and other labour organizations.

This would seem, for example, to allow members of the RCMP union—should there be one—who are affiliated with other organizations to provide that union with advice, support, and so on and so forth, and would actually allow the police union to become a part of a broader movement and to seek the assistance of other organizations. We don't think that at all threatens the independence of the RCMP potential union and we think it is an important right for them. This could take the support in terms of one-off support for a particular campaign or initiative. For example, police unions across the country were very important in the campaign around Bill C-377, which was introduced by the former government, and worked within the broader movement on those sorts of issues.

We are suggesting that this restriction on affiliation, again, is extremely general and will be very hard to understand by someone from outside the organization and from the broader labour movement.

Our union, for example, has a wide range of different relationships with different unions. We have strategic alliances with some unions, we collaborate with other unions, and we provide resources, whether that's use of our buildings or collaboration or training with other organizations. Again, it's not clear to us that such a broad restriction is necessary.

The third point I want to comment on, and only very briefly, is limits on the scope of collective bargaining in Bill C-7. I know the committee has already heard a great deal about the limits on the scope of collective bargaining that are contained in the legislation, and I won't belabour the point other than to say that limiting the scope of collective bargaining, as the legislation does, in such a broad and pervasive manner, constitutes a significant infringement, in our view, on the rights of RCMP officers as enshrined in section 2(d) of the charter. We submit that the legislation is over-broad in precluding negotiation over transfers, promotions, discharges, and demotions; conduct, including harassment; the basic rights for carrying out the duties of an officer; as well as equipment matters.

Further, of course, Bill C-7 limits the outcome of binding arbitration. We understand and support the idea that collective agreements should be resolved by binding arbitration, but again, the fact that the arbitrator will be precluded from dealing with that wide range of issues in our view further reinforces the restriction and the possible infringement on section 2(d) of the charter. We would submit to you that it substantially interferes in their collective bargaining rights.

The fourth issue that I want to mention is the factors in the binding interest arbitration regime that is set forth for RCMP officers. Here Bill C-7 essentially provides that the factors that are already set out in the PSLRA to guide an arbitration board in imposing a collective agreement will also apply to the RCMP union, should there be one.

In particular, section 148 of the PSLRA, which was amended and implemented by the previous federal government, requires that the arbitration board consider:

(a) the necessity of attracting competent persons to, and retaining them in, the public service in order to meet the needs of Canadians; and (b) Canada’s fiscal circumstances relative to its stated budgetary policies.

These provisions of the PSLRA were introduced, as I mentioned, by the previous Conservative government, and the fact that they've been maintained in Bill C-7 we think is problematic. The fact that the legislation requires an arbitrator to give preponderant weight to these two factors compromises the independence of an arbitrator and creates a built-in bias in the interests of the arbitration process by essentially requiring an arbitrator, rather than to act independently, to implement what amounts to government policy.

Bill C-7 imposes an additional constraint on the arbitration process in that it provides that the board must consider “the impact of the determination on the operational effectiveness of the Royal Canadian Mounted Police” in imposing collective agreement terms.

This requirement is unique to Bill C-7 and is not required for any other federal public sector employees. Given that RCMP members do not have the right to strike and the fact that bargaining impasses must be resolved by way of interest arbitration, this is a new factor, which unnecessarily and in our view inappropriately biases the interest arbitration process in favour of the employer.

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

I want to thank Mr. Sims and Ms. Slinn for their comments. I very much appreciated the comments on the differences between Canada and other countries. They really are comparing apples to oranges, and if that were the case, then I guess this would be called Europe here or they would be called Canada.

Earlier it was suggested that by taking away Bill C-377, there would be zero accountability, absolutely zero. It was suggested by my colleague on the other side. Is that true, Mr. Sims?

[Wayne Long, Liberal, Saint John—Rothesay, NB]

Okay.

There's another thing just for the record. I know that Mr. Barlow was talking about how every union member he talks to is pro Bills C-377 and C-525. You know, the Saint John firefighters, IBEW, the pipefitters, operating engineers across the country—I haven't found anybody who does support it.

I have another question for you, Professor Slinn. Many opponents of the mandatory vote argue that if a secret ballot is good enough to elect our provincial representatives, it should be good enough for workers in deciding whether to unionize or not. Can you comment on that?

[John Barlow, Conservative, Foothills, AB]

Thank you very much. It's good to be here, Chair, and good to meet all of you as well. I haven't had a chance to say hi to everyone, but thanks for having me today.

Thank you very much to our witnesses for spending some time with us today.

Andrew, I want to ask you some questions first. I kind of want the Canadian input.

We've talked a lot today about employers and unions, but we haven't talked a lot about union or potential union members. I think what this really should be about is what is best for union members.

From what I've heard from residents of my constituency, whether they're in carpentry or mining, or pipefitters in the oil and gas sector, they liked what was in Bill C-525 and Bill C-377. It could certainly be different in other communities. We did some pretty substantial polling, and we saw that well over 80% of union members supported the changes that were in these two bills.

I'm wondering if anything has been done more recently. I think our poll was 2014. How do we come up with saying we don't want these things, when the word we're getting from union members is that this is something they do want?

[Dr. Sara Slinn]

Thanks very much.

I'll focus my comments on the representation procedures, reflecting my research experience in this area, and will address two aspects of these procedures: the nature of votes, and the academic research on the effect of choice of procedure on certifications.

In terms of the nature of representation votes, first of all, the confidential nature of votes shouldn't be overstated when assessing the reliability of mandatory vote representation procedures. Both employers and the union know which employees voted and which did not, in every vote, and know how many ballots were cast for and against unionization. This encourages employers and unions to draw conclusions about individual employee's choices and likely discourages some employees from voting, particularly in smaller units or where fewer ballots are cast.

Secondly, there is a faulty political election analogy at work here. Mandatory vote supporters commonly rely on a political election analogy founded on the view that certification votes are analogous to political campaigns and elections. The attraction of this argument is understandable, appealing as it does to ideas of free speech and informed choice and workplace democracy, but it's a false analogy.

The nature of union representation is not analogous to government power or political representation, and as a result, the nature of decision-making in a union vote is not analogous to that in a political election. First, the nature of the decision is different. Certification doesn't transform the employment relationship. It simply introduces the union as the employee's agent for the limited purpose of bargaining and administering any collective agreement that the union may be able to negotiate. The employer's overriding economic authority over employees continues in any event.

Secondly, there is no non-representation outcome possible in the political context. In political elections citizens vote between two or more possible representatives. There is no option to be unrepresented, so as Becker, for example, has pointed out, if union representation elections were to be analogous to political elections, then it would be a vote among different collective employer representatives with no option for non-representation. That's simply not the system that we have anywhere in Canada.

Finally, in terms of cards being a reliable measure of employee support, it's often contended that votes more accurately indicate employees' desire for union representation than cards, suggesting that card-based certification fosters union misconduct to compel employees to sign cards. Although this is possible, there is no evidence, either in academic studies or in the case law from jurisdictions that use this procedure, that it is a significant or a widespread problem. Anecdote isn't evidence, and certainly it shouldn't be a compelling basis for legislative change in the face of a lot of academic research finding that mandatory vote systems have negative effects on labour relations and that employer interference in certification is indeed a significant and widespread problem.

In terms of the academic research on the effect of the choice of procedure—vote versus card-based certification—you're likely already familiar with a lot of this so I'll be relatively brief and leave it largely to your questions if you want to go into more detail on these particular topics.

First of all, studies have consistently concluded that mandatory vote procedures in Canadian jurisdictions are associated with statistically significant reductions in certification application activity, including certification success rates. This is in the order of about 20 percentage points. Reduced organizing activity—that's applications as well as certifications—are found to be concentrated in typically more difficult to organize units where we're talking about weaker and more vulnerable groups of employees. The increased opportunity for delay and for greater opportunity for employer unfair labour practices are identified in the research as contributing to these effects.

Just on some earlier comments querying how it could be that employers could engage in unfair labour practices or anti-union activity in the vote procedure, it's clear how this can happen.

In every case, in a vote-based procedure, the employer is notified by the labour board that a certification application has been made. It then has the period between that notification and the date of the vote. In most jurisdictions in Canada, in all but two, there is a deadline for that vote. It's between five and 10 working days. Under the Canada Labour Code, there is no deadline for that vote.

This provides ample time for employers to engage in anti-union campaigns. Anecdotally I've heard of five-day plans where it's advertised what the employer must do on each of the days, for example in the five-day period in Ontario between the application and the vote, to defeat the certification. There's no evidence there isn't sufficient time for employers to respond between the application, the notification, and the vote.

Secondly, there's quite a bit of research on delay in the vote process. Representation votes, by requiring a vote in addition to submitting evidence, necessarily result in a longer certification procedure. It has been found that it significantly reduces the likelihood of certification where there's either no time limit—as is currently the case under the Canada Labour Code and other federal legislation—or the time limit's not well enforced. This is in the order of 10% to 32%.

These studies concluded that a combination of enforced statutory time limits and expedited hearings for unfair labour practices was necessary to satisfactorily offset these negative effects. Neither of these are currently available.

Delay should be a real concern under the current provisions, and it is something that Bill C-4 would in part address.

In terms of employer interference, the vote-based procedure gives employers a substantial opportunity to seek to defeat the organizing attempt. There are numerous studies showing this is not only widespread, but effective. A large percentage of managers surveyed in some of these studies admits to engaging in what they believe to be illegal unfair labour practices to avoid union representation.

Survey evidence by Lipset and Meltz has also found in Canada that non-union employees expect employer retaliation and expect anti-union conduct by employers. Research by Mark Thompson at UBC has found that Canadian employers are no less anti-union in their attitudes toward unions than U.S. managers. That is something also to keep in mind.

In terms of remedying employer interference, the dilemma with the mandatory vote procedure is that, on the one hand, quick votes are seen as necessary to protect employees from inappropriate employer interference, and on the other hand, holding a vote quickly might not allow labour boards an opportunity to effectively remedy employer unfair labour practices. The vote can be held before the unfair labour practice can be heard and a remedy awarded.

Employees require greater protection from employer interference under a vote system. These include access to expedited unfair labour practice procedures and more substantial interim remedies, but such necessary protections were not provided by Bill C-525.

I'll make a comment regarding the Bill C-377 changes. Disclosure is already required for unions for all bargaining unit employees. I'd also like to echo Mr. Sims' comments that in Europe there is a very different approach to labour relations. The difference in the approach to disclosure and to union finances is embedded in a very different labour relations system. The Canadian and U.S. system is, in the broader international perspective, an extremely unique labour relations system, and it's inappropriate to consider transplanting one specific element of an interwoven very different system.

In closing, the Bill C-4 proposed amendments reversing the Bill C-525 and Bill C-377 changes, particularly to representation procedures, are a change that better protects employees' decision-making about collective representation.

Thank you.

[Dr. John Logan]

Thank you.

I'll also keep my remarks brief and obviously my remarks are aimed at the U.S. experience with union financial reporting and with mandatory elections.

To a large extent, the Canadian bills we're discussing were based on the U.S. experience. It's certainly my experience that both the union financial reporting that was introduced during the Bush II administration, which Bill C-377 was based upon, and the experience of mandatory elections in the United States have really been a failure and researchers have demonstrated repeatedly that this has not been good public policy in the United States.

I published a number of articles on union financial reporting in the United States, most recently an article last year comparing the approaches of the Obama and Bush II administrations.

As I've said, the law governing union financial reporting in the United States was past in the late 1950s, but what we got in the early 2000s under the Bush administration was a significant departure from past practice, whereby they imposed far more detailed, far more complex, far more onerous reporting burdens on unions in the name of promoting greater accountability and transparency. They clearly have failed to achieve this.

As I've said before, it was those rules that Bill C-377 was largely based upon.

The Obama administration has reversed the majority of those rules and has adopted voluntary compliance programs with unions whereby it works co-operatively with unions at the national level to uncover cases of fraud and embezzlement. In fact, it has a much better record than the previous Bush administration in this regard. However, if the goal of the Bush financial reporting role was to impose a much more onerous administrative burden on unions, they certainly achieved that much.

Research done by two senior scholars at Cornell University and Penn State University in the United States—and I can talk in more detail about that research—demonstrated that unions were having to divert a great deal of personnel and of financial resources, and adopting new accounting methods, in order to comply with these new rules. It was, in fact, a very onerous burden that was placed upon unions, and in fact, a very costly burden that was placed upon the federal government, but one that had no apparent benefit for ordinary union members. In fact, I would say it was quite the opposite. I would say that ordinary union members were hurt significantly, because, ultimately, they were the ones who had to pay the cost of complying with these new complex reporting regulations. Union officials, whose time would previously have been taken up negotiating contracts, providing services, and doing other things that union members want them to do, were no longer able to do that. They were instead having to make sure that the unions were in compliance with the new reporting rules.

I think it was clear that the only people who really benefited from these new rules were certain organizations who were hostile to unionization and to collective bargaining. In fact, in the article I mentioned, the comparison of financial reporting under the Obama and Bush administrations, I cite several examples of organizations that are hostile to unions that make clear that they benefited tremendously from these new complex regulations, but ordinary union members did not benefit.

As I said, overall I think it is very clear that the reporting regulations that Bill C-377 was based upon were a failure in the United States. They did not bring about greater transparency or accountability. They did not uncover more cases of corruption or embezzlement. However, they did impose a significant administrative burden on unions, and they did prevent unions from providing better services to ordinary union members.

Second, and just briefly, on the mandatory elections.... The United States, of course, has several decades' experience with mandatory certification elections, and it has not been a positive experience. The United States is widely recognized among advanced anglophone countries to have the largest representation gap, i.e., the gap between the percentage of employees who say they would like to have union representation and the percentage of employees who actually have it and who are able to get union representation under the system of mandatory elections.

The person who perhaps has studied this the most is Harvard economist Richard Freeman. I will quote briefly from a study that Freeman did a few years ago. He says, “The gap between what workers want and obtain in representation is greater in the United States than in any other advanced English-speaking country.”

According to Freeman, about one half of non-union workers in the United States desire union representation but don't have it, a figure that is significantly larger than the 25% to 35% gap we see in Canada and in other advanced anglophone countries. Mandatory elections in the United States have not delivered union representation to those workers who want it. In fact, the record in the United States is far worse than it is in Canada or in other advanced anglophone countries.

The other consequence of mandatory elections is that the United States has an appalling record when it comes to unfair management practices during certification campaigns. The organization that has studied this most thoroughly is the Center for Economic and Policy Research, based in Washington, D.C. One of their recent studies estimates that workers were illegally fired in approximately 30% of union certification elections in 2007, and that 96% of U.S. employers engaged in anti-union campaigns of varying levels of aggressiveness and illegality.

Again, these are significantly higher levels than we find in Canada. Anti-union campaigns are not unusual in Canada, but more American employers engage in anti-union campaigns. More American employers engage in illegal actions during anti-union campaigns. In part, this may simply reflect the fact that Canada is a more civilized country, and I am perfectly willing to concede that this is in fact part of the explanation. However, there is also the issue that Canadian employers, because of the mixed system of card-check certification and elections, have far fewer opportunities to engage in illegal practices than do their American counterparts.

I'll finish by quoting from the Centre for Economic and Policy Research study from 2012 I cited earlier, which concludes, “Compared to Canada, many workers in the United States are not able to exercise their right to freely join and form unions and participate in collective bargaining, in large part due to employer opposition, which current labor policy fails to adequately address.”

In conclusion I would say that far from Canada learning from the U.S. experience when it comes to the issues of union financial reporting and union certification, perhaps it's the United States that has much to learn from Canada when it comes to these two critically important public policy issues.

Thank you.

[Tony Fanelli]

My position, on behalf of the employers I represent, is that we are opposed to Bill C-377. We were opposed from the time it was first brought forward. Our position has not changed.

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Good.

What is your opinion about Bill C-377, as the representative of an employers' group and as the vice-president of one of the largest engineering and construction companies in Canada?

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

I'll just translate for Mr. Robillard.

Coming back to Bill C-377, in your opinion, how invasive do you find the reporting that we're talking about?

[Yves Robillard, Liberal, Marc-Aurèle-Fortin, QC]

Good afternoon to all of you. Thank you for joining us today.

My special thanks go to our interpretation service; we never thank them enough.

My question goes to you, Mr. Fanelli. Can you tell us whether your organization supports the invasive declarations that Bill C-377 gives rise to?

[Daniel Kelly]

Sure. There's absolutely no.... Let me say this very clearly. I did say this in my presentation too. There's no question that this bill creates red tape. It creates costs. It requires a giant leap forward in accountability measures, in detailed reporting requirements for unions.

Let me quickly clarify our views on regulation and red tape. We have never come to government to suggest that there should be no red tape and no regulation. We are opposed to red tape, I suppose, but regulation is an appropriate measure for governments to take. Our only request is that the balance of the regulation be fair, that it be in keeping with the need for the regulatory intervention in the first place.

As I said earlier, our first choice with respect to this legislation would be the opportunity for workers in a unionized environment to choose whether to pay dues or not, as exists in every other country in the world save a couple, and only a few states now in the U.S. That would eliminate the need for any measure like the measure that was taken in Bill C-377, so our hope was that these additional measures would be balancing the unprecedented powers that unions have to force the unwilling to pay dues. That is the reason we were in support of this.

I recognize and fully believe that a large number of unionized employees are happy to pay union dues, but for those who aren't, we believe that either they should have the ability to opt out or at the very least additional disclosure should be given to them to allow that to happen. I don't deny any of those things you said. We continue to be huge champions for red tape and regulatory reduction, balanced of course with government's need to regulate in important areas of public policy, but I can square that circle pretty easily.

[Dan Ruimy, Liberal, Pitt Meadows—Maple Ridge, BC]

What if, by the government's official estimates, that report would create a burden of about 536 hours a year at a cost of about $17,000? I guess that would still qualify. Would it qualify for tax fairness? Because when it comes down to it, as small businesses, we all want to make a profit. I can't imagine my paying $17,000 to fill out documentation.

This, by the way, is coming from the U.S. government, when they calculated the impact their reporting regulations would have on unions.

I see you're nodding your head so I'm glad we agree. Given that Bill C-377 is based on these regulations, I have no reason to believe the estimate would be any different for Canadian organizations under Bill C-377.

Again, would this fit your definition of red tape?

[Sheri Benson, NDP, Saskatoon West, SK]

Thank you very much.

Mr. Fanelli, I'd like to spend a bit of time with you with some questions. Obviously, we've heard you're not supportive of Bill C-377. It was too broad. It included employers and trusts, and many things where privacy would be an issue, but not only privacy.

You talked about the fact that it would actually give your competitors an advantage in the business world. Could you expand a bit on that? In what way?

[Wayne Long, Liberal, Saint John—Rothesay, NB]

It's no secret, obviously, you supported Bill C-377. The Barreau du Québec, Canadian Bar Association, constitutional experts like Bruce Ryder, Robin Elliott, Alain Barré, and Henri Brun, all view the reporting requirements in Bill C-377 as violating the Canadian Charter of Rights and Freedoms. All of these groups believe that the reporting requirements force unions to disclose information that could disadvantage them in joint collective bargaining.

How do you rationalize your support for the bill, the small business owners you represent, in light of the criticisms?