Politicians contemplating how to prevent interest arbitrators from granting raises to essential public sector workers will be interested in a decision issued this week involving Toronto’s firefighters by one of Canada’s leading interest arbitrator, Kevin Burkett. Â Tim Hudak in Ontario and the Harper government have talked about reforming the interest arbitration process to restrict the discretion of arbitrators to award raises when the government wants a wage freeze.
Could a government do that?
I’ve noted before how respected arbitrators are suspicious of public sector employers who argue that they have an inability to pay the raises sought by their employees, provided those raise levels are similar to other recent bargaining settlements in comparable jobs.
Here is the Toronto Firefighter’s Award issued this week.
Firefighters are not permitted to strike in Ontario, so any bargaining disputes are referred to
arbitration to decide.  In this case, an important outstanding issue in bargaining was wage increases.  Historically, arbitrators have used police as a comparator for firefighters, so that wage increases bargained by one group would most often be matched for the other group.  The police has bargained  a collective agreement that would run from 2010-2014, that included a series of wage increases.  The firefighters’ union asked the arbitration board to order the same amounts for their members.
The City of Toronto (Employer) argued that it had an ‘inability to pay’ the firefighters the raises it had agreed to pay the police.  The interesting law question is what to make of this argument.  The arbitrator is guided in his decision by a series of factors set out in Section 50.5(2) of the Fire Protection and Prevention Act, 1997:
In making a decision the board shall take into consideration all factors the board considers relevant, including the following criteria:
1.The employer’s ability to pay in light of its fiscal situation;
2.The extent to which services may have to be reduced, in light of the decision, if current funding and taxation levels are not increased;
3.The economic situation in Ontario and in the municipality;
4.A comparison, as between the firefighters and other comparable employees in the public and private sectors, of the terms and conditions of employment and the nature of the work performed;
5.The employer’s ability to attract and then retain qualified firefighters.
The employer argued that it had an inability to pay owing to present budget constraints at the City of  Toronto, that it has no problem attracting new firefighters at existing rates, and that the comparator should not just be police, but also other municipal City of Toronto employees, who had received a smaller wage increase than the police.  The union argued that the ‘inability to pay’ argument is political and not economic, and whatever financial limitations the City faces are a result of voluntary, political decisions, such as the decision to freeze taxes and eliminate the personal vehicle tax, et cetera.  In other words, the argument is that the City has the ability to pay, it just lacks the willingness to pay.
The Decision
Kevin Burkett accepts the Union’s argument on wages, finding no reason to depart from the long-standing practice of linking police and firefighter wage increases.  Most interesting is his discussion of the relevance of the ‘ability to pay’ provision in the Act.  Burkett explains that  ability to pay is just one factor, and that arbitrators can not have their discretion tied by statutory criteria.  Burkett suggests that a statutory tight jacket on arbitral discretion would violate the Charter:
Kevin Burkett: Don’t Mess With Arbitrator’s Discretion
While requiring a board to put its mind to various factors that might be relevant to its ultimate determination, [the statutory criteria] do not abridge the broad discretion of an interest board of arbitration to consider and weigh all the relevant factors in any given case in coming to a freely determined result that is fair and reasonable in all the circumstances. The discretion given to an interest board of arbitration in this regard is fundamental to the functioning of an interest arbitration process that serves as an alternative to free collective bargaining under which the parties are able to resort to economic sanctions in the form of strike or lockout in support of their respective positions. Where the legislature, in its wisdom, decides that in the interest of the greater public good the right to free collective bargaining must be restricted to the extent that economic sanctions are not permitted, i.e. police, fire and health services, the alternative must be fair, impartial and transparent. This is why statutory criteria, as found in the various interest arbitration statutes, including the Fire Protection and Prevention Act, do not remove the ultimate discretion of a board of interest arbitration to make a fair and impartial award that takes into account all relevant considerations.
If there is any doubt in this regard, reference need only be had to the judgements of the Supreme Court of Canada in re: B.C. Health Services, [2007] SCR 391, SCC 27 and CUPE v. Ontario (Minister of Labour), [2003] 1 SCR 539, 203 SCR 25. In the former, the British Columbia government passed legislation overriding certain collective agreement provisions applicable to employees in the health care sector. In reversing a number of its prior decisions, the Supreme Court found that Section 2(d) of the Charter guarantees a right to collective bargaining as part of freedom of association. Although the Court emphasized that the right is to a process and does not guarantee access to a particular statutory framework or to a particular result, the Court did find that “substantial interference” with collective bargaining will violate the Charter. It would be difficult to conclude that statutory interest arbitration parameters that robbed an impartial interest arbitrator of his/her essential discretion by, in effect, prescribing a particular result or even by narrowing the range within which a fair and reasonable result might otherwise fall would not run afoul of B.C. Health. After all, just as there can be no “substantial interference” with the right to free collective bargaining, there can be no “substantial interference” with free, fair and impartial interest arbitration where it is legislatively substituted for free collective bargaining.
Consistent with the foregoing, the Supreme Court had already found in 2003 in CUPE v. Ontario (Minister of Labour), supra that the Ontario Minister of Labour could not ignore the established list of mutually acceptable interest arbitrators and appoint retired judges to interest arbitration cases. The government of the day was unhappy with the results of interest arbitration in the health care sector. While acknowledging that retired judges would not necessarily lack impartiality, the Court concluded that interest arbitrators must also be independent and that independence in the interest arbitration sphere is guaranteed by training, expertise, and mutual acceptability. The Court went on to find that “the appointment of an inexpert and inexperienced chairperson to an interest arbitration board who is not seen as generally acceptable in the labour relations community is a deficit in approach that is both immediate and obvious.” It is difficult to see how restricting the discretion of an expert, experienced and mutually acceptable interest arbitrator by means of formulaic criteria or other such limitations that affect the outcome would be any less a deficit in approach that is both immediate and obvious.
Given the foregoing, it is not surprising that the statutory criteria that govern interest arbitration generally, and this case in particular, are neither exhaustive nor formulaic. Under the law, for reasons related to fundamental fairness, interest arbitrators are provided with a broad discretion to consider not only the statutory criteria but all other factors that are relevant and to provide an appropriate weighting. Such discretion is the necessary underpinning to an interest arbitration process that, as the substitute for free collective bargaining, is fair, impartial and transparent.
Issues for Discussion
Do you agree with Burkett’s suggestion that a law that in effect binds an arbitrator’s discretion would violate Section 2(d) of the Charter? If so, do you think this spells trouble for politicians like Hudak who want to do just that?
Do you think that a government should be able to legislatively impose wage freezes or set raise amounts for its employees by statute, rather than through negotiation or neutral, free interest arbitration?