Canada has one of the most restrictive rights to strike in the advanced economic world. One example of the very restrictive nature of the right to strike here is the prohibition on “midterm” strikes or lockouts, which goes back to the early days of modern labour legislation and Prime Minister MacKenzie King in the 1940s. This prohibition says that there can be no strike or lockout during the period in which a collective agreement is in force. All disputes must be sent to a labour arbitrator instead. That was a distinctly Canadian addition.
The result of this is that it is a violation of labour relations legislation for a union to strike during a collective agreement. And since Canadian legislation also reads into every collective agreement a term prohibiting strikes and lockouts, such a strike is also a breach of the collective agreement.
Therefore, if workers engage in an illegal strike during a collective agreement, they are in breach of the collective agreement. The employer can file a grievance as a result. What remedy do you think the employer would be asking for?
Money. If the employees shut down production, then an employer may suffer financial loss. I say “may”, because sometimes a short work stoppage will not cause the employer any financial harm. For example, the employees may be able to make up any lost production when they return to work. However, as a recent arbitration decision reminds us, unions mights be ordered to pay damages even if there is no direct lost production caused by an illegal strike.
The Canada Post Arbitration Award Ordering Union to Pay $35,000 Punitive Damages
The case involved illegal “midterm” strikes at 3 Canada Post facilities out west in 2008. The decision is here, and it was written by a leading arbitrator named Michel Picher.
The strikes lasted between one hour and two days. The union argued that in the end there was no harm done to the employer’s production at all, and therefore that it was not a strike at all. Picher rejected that argument, noting that during the period of the strike, no work was done. That was a strike. Moreover, since union stewards were involved in encouraging and participating in the strike, the Union itself could be held liable for the strike.
The most interesting part of the Award relates to the damages.
At one facility, the strike caused no financial or production harm, since all the mail was eventually delivered and no additional costs were incurred. However, at the other two facilities the employer incurred additional costs caused by the illegal strike in terms of additional overtime to deal with the backlog and travel costs to transport an employer rep to the strike site.
Amount ordered for production and travel costs incurred by employer: $2652.
Does the employer actually have to suffer a net loss from the strike? The Union argued that the employer was not out of pocket at all, since it saved more than these costs by not having to pay the workers for the time there were on strike. Picher rejected that argument, noting that the fact that employees “chose to forgo their wages by engaging in an unlawful strike” does not change the fact that the employer absorbed exceptional costs as a result of the strike. Picher wrote that “there was no principled basis upon which the unlawful conduct of the employees and the union can be viewed as mitigating the employer’s damages”.
Does the Union have to pay the employer’s legal costs in the arbitration? Yes. Legal Costs: $12, 882.
Can the Arbitrator Order Punitive Costs Against the Union? Yes.
The Employer asked for over $200,000 in additional “punitive damages”. Punitive damages are damages not related to actual financial loss, but that are intended to punish the wrongdoer and to act as a deterrent for future breaches. Picher rules that it is well-settled that arbitrators have the authority to order punitive damages for breach of a collective agreement, although that power should be used sparingly. Here, the lockout received substantial media attention, that can be assumed to have created a negative business image of Canada Post, something intended by the strikers. In the end, Picher orders $35,000 in punitive damages against the union, an amount he believed sent a clear message to the Union and would act as a sufficient deterrent against future illegal strikes.
Total Damages Union Must pay Canada Post: $50, 535.
Is that a fair outcome?
Here, the union officials were directly involved in organizing the strike. Do you think the outcome would/should be different if union members engage in an unlawful strike without any direct involvement of Union officials?