Written by David Doorey, York University
CUPW is in a legal position to strike, again. You might recall that the postal workers struck in November 2024 and stayed out until mid-December, when the federal Liberal government intervened by taking two steps, which I explained at the time in this post.
To recap, the Liberals dusted off their favourite new labour law tool, the “Section 107 directive” to send the matter to the CIRB. The directive ordered the CIRB to determine if there was an impasse in bargaining (it found there was) and, if so, to order the parties to resume operations under the terms of the expired collective agreements until May 22. This morning, CUPW began an overtime ban, which is a limited form of strike.
As the same time, the Liberals appointed an Industrial Inquiry Commissioner, noted arbitrator and mediator William Kaplan, to investigate structural issues and the underlying causes of the labour dispute. Kaplan met with the parties and held public hearings over a tight time frame and issued his final report last week. Here is the full Kaplan Report. I finally had a chance to read it over. There is much more nuance in the Report than media and talking head commentaries have described. I recommend you read it if you are interested in complex labour relations.
As expected, Kaplan is direct and cuts to the heart of the matter quickly. He finds that Canada Post is facing an existential financial crisis that cannot be resolved by tinkering around the edges of the existing collective agreements. Significant structural changes are required to Canada Post’s model of mail and parcel delivery, some of which will require amendments to collective agreement restrictions on management rights and others that would require government intervention, such as changes to the Postal Charter and removal of moratoriums on closures of rural post offices.
I’m not going to comb through the details of the recommendations or the parties’ proposals in any detail in this post. My interest here is on Kaplan’s observations about what happens next in terms of the bargaining dispute and his observations about interest arbitration and the right to strike. First though, let’s quickly look at the options available for ending the Canada Post labour dispute.
A Quick Review of the Options to Resolve the Canada Post Labour Dispute
It’s always possible a deal will be reached without an escalation of the work stoppage. The parties can meet and work out a deal. But what if no deal is reached? The options are clear:
Final Offer Vote
First, the government could direct a “final offer vote” of CUPW members on Canada Post’s last offer. Unlike in some provinces, the Canada Labour Code does not grant the employer a direct right to insist on a vote. But Canada Post could nudge the government to order one and the government might do so. As always, the downside of this tactic is that it can galvanize the workers to resist the employer’s offer and dig in their heals in anticipation of the employer improving its proposals. But if the government believes a majority of workers are prepared to vote in favour of the deal, it might try this option as a first step.
Interest Arbitration
Second, the dispute could end up in interest arbitration. This could happen in several ways. The parties can agree to refer remaining issues to binding arbitration. Seems unlikely, but it’s possible. Failing agreement of the parties to refer the matter to arbitration, the government could gather enough support for back-to-work legislation that substitutes binding arbitration for the right to strike. Certainly, the federal government has a long history of ending work strikes in this manner.
Or the government could again dust off Section 107 power and essentially direct the CIRB to do its bidding and order the parties to arbitration. It’s already pulled this stunt on several occasions in the last 18 months, so why not just do it again here? As Sandrine Haentjens and I explained in a post called “The All-Powerful Section 107 of the Canada Labour Code: A Liberal Love Story“, the use of Section 107 to direct the CIRB to end strikes is unprecedented (before the Trudeau Liberals) and is already the subject of a Charter challenge. If the feds use Section 107 again, presumably CUPW will just join the Charter challenge, which ultimately is likely to end up before the Supreme Court years from now.
The Strike/Lockout/Imposition of Terms by the Employer (Industrial Warfare) Route
The third option is that the government permits the parties to duke it out. CUPW will be permitted to strike and Canada Post to lockout or (more likely) to impose contract terms on CUPW workers who continue to work, including implementing its final offer or taking other adverse steps, such as cutting off health benefits (which Canada Post has already indicated it intends to do). The employer’s final offer included a bump in salary that it no doubts hopes enough (50% plus 1) CUPW members will find sufficient to accept. This strategy–of sweetening the offer and then requesting a final offer vote–has worked before.
Kaplan’s Observations on the Way Forward
What strikes me most, from a labour law and collective bargaining perspective, are Kaplan’s comments on interest arbitration and the right to strike, buried deep in the report (mostly at pages 82-85). Keep in mind that Kaplan is Canada’s top interest arbitrator (or one of them, it’s not a contest). Therefore, these observations carry significant weight and are worthy of study.
First, Kaplan notes that his view, which is “universally shared among labour relations practitioners” is that a deal that is collectively bargained by the parties is superior to one imposed by a third-party arbitration (p. 25). That is a starting point. Therefore, the role of government in collective bargaining should first and foremost be to promote freely negotiated settlements crafted by the parties themselves. More on this point in a moment.
Second, Kaplan notes that interest arbitration is by its very nature a “conservative process, one that generally shies away from imposing structural change.” (p. 83). This is a point I have emphasized in the past when explaining why we sometimes see a party propose arbitration in one round of bargaining and then staunchly resist it in another: whether arbitration is a good solution for a party depends on what they are trying to achieve in the negotiations and whether they believe arbitration will get them there.
Neither of these first two points provide novel insight. They are well known observations about collective bargaining. However, now things get interesting.
In the case of Canada Post, Kaplan expresses significant doubt that arbitration is a viable option, noting that “it is not apparent to me that interest arbitration will, or can, successfully address the issues in this Report.” The reason is that the changes Kaplan believes are required are not conservative or minor. They are substantial.
[Theoretically, this could lead CUPW to eventually accept arbitration as a way out, believing that an arbitrator would be unlikely to award the sorts of fundamental changes Canada Post is pushing for. But CUPW has always been very vocal about the sanctity of the right to strike, so it seems unlikely that it will suddenly push for arbitration].
Kaplan is saying that while forced arbitration might buy some labour peace for a period, it is unlikely to solve the underlying problems. The economic tsunami will still be coming. Kaplan’s concern that typical interest arbitration is unlikely to solve the problems facing Canada Post leaves him to make the following observation:
it may well be that strike/lockout is the only way in which the structural changes and trade-offs necessary for the survival of Canada Post can be reached. There is no doubt that if a strike/lockout were allowed to run its course, it could very well lead to the permanent desertion of many more letter mail and parcel customers, making it impossible – absent continuing and increasing government support – for Canada Post to continue operations (without incurring massive and growing deficits). It could very well mean the end of Canada Post – there is a tipping point – even if collective agreements are eventually reached.
So, allowing a strike at Canada Post to run its course may be the best way forward, but that route could also be devastating for the future of Canada Post. This creates a conundrum for the government. Then Kaplan sends the government a crucial warning that I want to emphasize:
At present, the parties are unable to agree on what must obviously be
done. However, it is the nature of collective bargaining that this dynamic can change (and may indeed do so between date of submission and release of this Report). For this reason, if strike/lockout is to be the route going forward, in my view government should make clear at the outset that it will not be interfering and that it is the responsibility of Canada Post and CUPW to mutually agree on the changes that must be made for Canada Post to keep operating (knowing what hangs in the balance if they fail to do so). One final point: Government intervention – by outright engagement, or by the behind-the-scenes direction from the shareholder, to prevent or preclude labour disputes – has, to some degree, contributed to the current situation.
For me, this passage is the single most important observation in the Report in terms of ongoing importance to Canadian labour relations beyond the Canada Post dispute.
Kaplan is sending a shot across the bow here, warning government that it needs to resist the temptation to continue intervening in labour disputes. The message is clear: the government’s constant intervention through back-to-work legislation and the recent use of Section 107 directives to the CIRB is poisoning the bargaining environment. If the parties anticipate that ultimately the government will step in, one side (usually the employer) or the other will not bargain seriously. They will hold back and wait for the government to step in. Only if the parties know from the outset that this won’t happen will they get to work in finding a solution.
This also is not a new observation, but Canadian governments have in recent years seemed to have forgotten the lesson. Therefore, Kaplan is warning the government that it needs to make a choice, but if the choice is to permit the parties to duke it out, then it needs to stay out of it and announce its intention to not intervene in clear terms from the outset.
So, What Now?
Where are we then in terms of what might happen next in the Canada Post affair? What lesson for the government to take from the Kaplan Report?
Perhaps the government will try a final offer vote if it (and Canada Post) believes a majority of workers will accept the employer’s last offer. At the same time, the Liberals could say something like “we are also studying Kaplan’s broader recommendations and will take action on them”. For example, the government could revisit the Postal Charter and alter or remove the embargo on closing “rural” post offices. This approach would piss off some CUPW members, but all Canada Post needs is a majority of them to vote for its final offer.
Alternatively, or if a final offer vote results in the workers voting against the offer, the government could move forward with interest arbitration (either via back-to-work legislation or Section 107 again). However, it would need to walk a fine line. Given Kaplan’s observations that standard arbitration is unlikely to work here, the government may be tempted to impose novel mandatory directions on the arbitrator that address Kaplan’s concerns. For example, maybe the referral to arbitration requires the arbitrator to impose all previously agreed to items and mandates that the new collective agreement must permit part-time workers to be used for weekend parcel delivery paid the same rates as full-time workers and covered by all the same benefits, as Kaplan recommended.
This approach would permit the government to claim that it is “implementing” the Kaplan recommendations while avoiding a prolonged and potentially devastating work stoppage. A danger in this approach is that the more a referral to arbitration restricts the discretion of the arbitrator, the greater the chance a court will rule that the referral violates freedom of association guaranteed by the Charter. For example, back to work legislation introduced in 2011 to end a Canada Post work stoppage was ruled unconstitutional because it hamstrung the arbitrator’s discretion too much.
Maybe a referral to arbitration tweaks the standard approach in more straightforward ways. For example, the government might provide the arbitrator with broad discretion, but direct the arbitrator to “consider the recommendations in the Kaplan Report” in rendering their decision. In legislation ordering arbitration at Canada Post in 2018, the government included the following direction to the arbitrator:
In rendering a decision or selecting a final offer under paragraph (1)(b), the mediator-arbitrator is to be guided by the need
(a) to ensure that the health and safety of the employees is protected;
(b) to ensure that the employees receive equal pay for work of equal value;
(c) to ensure the fair treatment of temporary or part-time employees, and other employees in non-standard employment, as compared to full-time, permanent employees;
(d) to ensure the financial sustainability of the employer;
(e) to create a culture of collaborative labour-management relations; and
(f) to have the employer provide high-quality service at a reasonable price to Canadians.
An Ontario court recently ruled that legislation to be constitutional, since it left the arbitrator with significant discretion to craft an award. Similar language could be deployed but with an additional parameter that the arbitrator be guided by concerns raised and solutions recommended in the Kaplan Report.
Any of these recourses to interest arbitration could end up being subject to another Charter challenge. That is the risk any government takes these days in imposing legislative restrictions on collective bargaining and the right to strike. The current government is no doubt at this moment weighing its options and considering the right balance between preserving a right to strike (and lockout) against the threat to Canada Post if structural changes are not made in line with Kaplan’s recommendations. We will keep a close eye on developments.
/DD