Thursday, March 5, 2015

Spring Edition

Welcome to the Spring edition of our committee newsletter. This edition we have articles from the US, Canada, France, and Mexico. Many thanks as always to our contributors. Please let me know if you would like to contribute an article to a future edition.

Helen Colquhoun
Withers LLP
Registered Foreign Lawyer (Hong Kong), Dual qualified in New York and England & Wales

Canada - The Right to Strike Recognized as a Fundamental Freedom

By Patrick Goudreau and Gabrielle Dumas-Aubin,
DS Welch Bussières LLP, Montréal, Canada

1. Introduction

Section 2 d) of the Canadian Charter of Rights and Freedoms (hereinafter the “Charter”) provides that “[e]veryone has the (…) freedom of association.” Tribunals have interpreted this provision since the incorporation of the Charter in the Constitution in 1982. Recently, its scope has reached a turning point with the decision Saskatchewan Federation of Labour v Saskatchewan (hereinafter “Saskatchewan Federation of Labour”). On the 29th of January 2015, the Supreme Court of Canada ruled (5 judges against 2) that the prohibition against strikes in The Public Service Essential Services Act (hereinafter “PSESA”) violates s. 2 d) of the Charter by interfering in the meaningful process of collective bargaining. In other words, the right to strike currently benefits from a constitutional protection. As concluded by the majority, recognizing the right to strike as being an indispensable component of the collective bargaining would rebalance powers between the employers and employees and overcome the workers’ vulnerability. This essay summarizes the main arguments of the majority and the historic jurisprudential background leading to this decision. It also presents the principal oppositions of the two dissenting judges. In conclusion, it provides an overview of the impacts that Saskatchewan Federation of Labour might have in the future on current labour law legislations.

2. Background

a. The PSESA

At the outset, PSESA has been enacted by the provincial government of Saskatchewan in 2008. It aimed at “limit[ing] the ability of public sector employees who perform ‘essential services’ to strike” by prohibiting them from “participating in any work stoppage against their public employer” and requiring them “to continue the duties of their employment in accordance with the terms and conditions of the last collective bargaining agreement.” Following its enactment, Saskatchewan Federation of Labour and other unions reacted immediately by filing a motion against the PSESA to challenge its constitutionality. The trial judge concluded that the prohibition on the right to strike as included and formulated in the PSESA violated s. 2 d) of the Charter. Additionally, he held that the right to strike should be recognized as a fundamental freedom and should benefit from constitutional protection. However, the Saskatchewan Court of Appeal unanimously overruled the trial judge decision and relied on the last decades of Supreme Court decisions which have refrained from granting a constitutional status to the right to strike.

b. Jurisprudential Developments

In the late eighties, three Supreme Court decisions referred as “the Labour Trilogy” firmly rejected granting a constitutional status to the right to strike and concluded that the freedom of association did not protect the right to strike nor the right to collective bargaining. In the more recent decision Health Services and Support – Facilities Subsector Bargaining Assn v British Columbia, the Supreme Court underlines the importance of “the right to employees to engage in a meaningful process of collective bargaining” by granting such right a constitutional protection under s. 2 d) of the Charter. In Ontario (Attorney General) v Fraser, the Supreme Court decided again to enlarge the scope of the freedom of association by accepting that “a meaningful process includes employees’ rights to join together to pursue workplace goals, to make collective representations to the employer, and to have those representations considered in good faith, including having a means of recourse should employer not bargain in good faith”. In the beginning of 2015, the same court held that “a process of collective bargaining could not be meaningful if employees lacked the independence and choice to determine and pursue their collective interests”.

In Saskatchewan Federation of Labour, the majority interprets these jurisprudential developments as moving toward workplace justice, the next logical step being recognizing the constitutional status of the right to strike. On the other hand, the dissenting judges stress that “there is nothing in the concept of collective bargaining as it was defined by this Court [Supreme Court] (…) that would imply that employees have a constitutional right to strike”. In other words, they support the opinion that the majority position is contradicting the recent jurisprudence, which has never included the right to strike as being an indispensable component of collective bargaining.

3. The Majority’s Arguments

The majority recognizes the significance of striking as a tool used by unions to put economic pressure on the employer and tipping the scale on their side in the collective bargaining process. By analysing the historic and international significance of the right to strike, the Court came to the conclusion that the right to strike is protected by s. 2 d) of the Charter “by virtue of its unique role in the collective bargaining process.”

Consequently, they conclude that the prohibition of employees performing essential services to strike as formulated in PSESA violates the freedom of association. Following such an assertion, the Supreme Court addresses the determinative issue as to whether the means chosen by the Saskatchewan government are justifiable in a free and democratic society. To answer this question, the majority analysed that if the said means are “carefully tailored so that rights are impaired no more than necessary”.

In addressing this question, the Court discussed the distinctiveness of the public sector’s collective bargaining process as the PSESA applies restrictions specifically to public sector employees who provide essential services: “When ‘public’ employees strike, the pressure exerted on the employer is not largely financial, as in the private sector, but rather arises from the disruption of services upon which society depends for the daily activities of its members.” Such distinction between the private and public sector is essential. In the public sector, the interests of a third actor, the public, are to be taken into consideration in the collective bargaining process and can complicate or burden the dynamic between the employers and employees.

The majority also examines the broad concept of “essential services” which is a crucial one in the implementation of the PSESA. At the outset, “essential services” should be defined as “one the interruption of which would threaten serious harm to the general public or to a part of the population.” In other words, there is an important distinction to be made between essential services and services provided by the public sector.

The majority concludes that the means chosen by the Saskatchewan government are not minimally impairing the freedom of association because of the unilateral discretion of the employer to decide which workers will have their right to strike revoked: “ (…) s. 9 (2) [of the PSESA] gives a public employer the unilateral authority to dictate whether and how essential services will be maintained, including the authority to determine the classifications of employees who must continue to work during the work stoppage, the number and names of employees within each classification, and, for public employers other than the Government of Saskatchewan, the essential services that are to be maintained.” Such discretion is interpreted by the Court as creating a wider gap in the balance of powers between employees and employers.

Moreover, as stressed by the majority, another crucial element lacking in the PSESA is a meaningful alternative mechanism for resolving bargaining impasses. Indeed, a “no strike legislation” should provide “a safety valve against an explosion buildup of unresolved labour relations tension.” As mentioned by the trial judge, the prohibition to the right to strike as formulated in the PSESA is particularly broad in comparison with other essential services legislations in Canada aiming at the same objective i.e. limiting the rights to strike of essential services employees. Indeed, many essential services legislations include an alternative mechanism for resolving collective bargaining disputes. The lack of alternative mechanism is mainly what led the Court to conclude that not only the PSESA was violating s. 2 d) of the Charter but also that it was impairing with the “rights of designated employees much more widely and deeply than is necessary to achieve its objective of ensuring the continued delivery of essential services.”

4. The Dissidence

As mentioned above, the dissenting judges maintain that the right to strike as an indispensable element of the collective bargaining contradicts the recent decisions of the Supreme Court. They add that the right to strike has been qualified as an essential part to the right to collective bargaining, which is in itself is a derivate from the protection of freedom of association, “inflate[s] the right to freedom of association to such an extent that its scope is now completely divorced from the words of s. 2(d) of the Charter themselves.”

As to the specificity of the workplace justice in the public sector, the dissenting judges stress that “[p]ublic sector labour disputes are unique in that any additional expenditures incurred to meet employee demands will come from public funds.” Moreover, they underline that the governments need to have the necessary flexibility and freedom to enact legislations able to take into consideration the interests of the employers, the employees and the public without upsetting the delicate balance between those actors. Also, the dissenting judges state that the threat of work stoppage is most likely not a motivating argument for employers to bargain in good faith.

Finally, the dissenting judges claim that the majority has surpassed the judicial scrutiny role of the Supreme Court: “The exercise of judicial restraint is essential in ensuring that courts do not upset the balance by usurping the responsibilities of the legislative and executive branches.” They reiterate, “that it is the role of legislators and not judges to balance competing tensions in making policy decisions.”

5. Conclusion

This decision brings back into the spotlight the constant debate regarding the limits and the role of judicial scrutiny. The dissidence restates that the role of the court of interpreting the rights and freedoms of the Charter has to be considered in perspective relative to the importance of maintaining a balance between the legislative and the judicial branches. On the other hand, as stated in a recent article, what has been called “government by the judges” is essential in ensuring that governments do not take disproportionate actions against minorities.

Finally, it is early to be able to assess the real consequences of Saskatchewan Federation of Labour on the collective bargaining process in public sector. Changes in Canadian legislation restricting to the right to strike for the public sectors employees should be expected. However, not all legislation restricting the right to strike might be affected in the same way by the decision. Considering the uniqueness of the restriction in PSESA, one could argue that other prohibitions against strikes in federal or provincial legislation, although in violation of s. 2 d) of the Charter, are still justifiable in a democratic society as they are choosing the appropriate means for not impairing more than is necessary.

Nevertheless, it is undeniable that this decision will have a considerable impact on tipping the scale on the employees’ side in the collective bargaining process in the public sector at a municipal, provincial and federal level. By having the right to strike being recognized a constitutional status and being granted the protection of the Charter, Canada has definitely reached a milestone.

France - The French proposed "Macron law" for economic growth: a summary of key changes affecting employment

Roselyn S. Sands
EY Société d’Avocats
Paris, France

The bill for economic growth (the “Macron” law) was submitted by the French government to the Parliament on January 22, 2014. The plethora of subjects covered by the bill, as well as the controversy throughout over 200 hours of debate, makes the passage of this bill difficult. Indeed, to try to save the threatened bill the Prime Minister Valls made use of article 49-3 of the French Constitution to bypass the Assemblée Nationale and submit the vote directly to the Senate for the first reading; the no-confidence motion failed on February 19, 2015.

The bill treats a multitude of subjects which aim to strengthen the French economy and increase its competitiveness. Specifically, in the area of human resources, the bill contains a series of measures which would have an impact on companies established in France.

The Macron law is about re-boosting France’s economy: increasing consumption and decreasing unemployment.

Measures aimed to increase flexibility

There are two key areas in which the Macron law seeks to increase flexibility: 1) working time matters; 2) downsizing matters.

• Certain businesses would open 7/7 and stay open later
To encourage increased consumption and employment, the new bill will allow certain businesses to open 12 Sundays per year (7 more than the current 5). Employees will be protected as Sunday work will be voluntary and a collective agreement must set increased remuneration for Sunday work.

The bill also relaxes the definition of night work in certain areas, and thus facilitates the ability of employers to open businesses from 7 a.m. to midnight. This expanded work day should encourage employers to hire new employees instead of simply resorting to the use of overtime work by existing employees, thus reducing unemployment. Employees will be protected in that night work will be voluntary and paid double.

• Simplification of certain downsizing rules
The LSE law voted in June of 2013 has already created greater control over the downsizing process and timeline, adding certainty which had been greatly lacking in the process.

The bill corrects one of the remaining difficulties of the redundancy rules in France, i.e. the extra-territorial “reclassement” obligation, requiring employers to find jobs for redundant employees even outside of France. The proposed bill would strongly limit the extra-territorial scope of this obligation.

Moreover, the employee selection criteria used to determine impacted employees would be easier to manage in that instead of a country-wide analysis, a site by site analysis would be possible.

Measures related to tax optimized compensation

The bill also provides a series of measures which would encourage the delivery of compensation through tax efficient pension and profit-sharing schemes, by offering more optimized tax and social security treatment.

In addition, the bill intends to modify the tax rules governing certain employee equity grants which could lead to more favorable tax treatments.

Measures to accelerate employment dispute resolution

The bill seeks to correct existing deficiencies with respect to employment litigation: the process is too slow and damage awards are unpredictable. Three specific proposed changes can be highlighted.

First, the bill provides for enhanced opportunities for parties in a dispute to resolve their differences through alternative dispute resolution proceedings, such as mediation, in lieu of the labor courts.

Second, French labor judges will now be encouraged to use a defined scale with respect to the range of damages to be awarded to employees in wrongful dismissal litigation (“licenciement sans cause réelle et sérieuse”).

Third, under the new bill, either party may request that the litigation follow two alternative and potentially accelerated routes.

Measures related to employee representation

The Macron law includes several measures which would impact the relationship between employers and employee representatives in France. The new measures seek to render sanctions for non-compliance more efficient by increasing the amounts of the fines, yet removing prison sentences.

In addition, the original bill aimed to render compliance with employee representation regulation easier and more efficient by creating a unique body (“Conseil d’entreprise”) which would replace the existing Works Council and the Health and Safety Committee. The government has decided to tackle this subject in a separate bill later this year.


In conclusion, the bill touches a wide gamut of issues beyond the employment related matters highlighted in this update. If the bill passes, it could result in an improved competitive position for France, and thus attract greater foreign investment.

Mexico - New Regulations for Occupational Safety & Health ("OSH") Entered into Force in Mexico

By Juan Nájera

In line with the International Labour Organization’s (“ILO”) Conventions, the federal government of Mexico enacted new OSH Regulations that came into force as of February 13, 2015.

These regulations are mandatory for all employers, regardless of the type of work being performed at their facilities, although supplementary regulations may apply for dangerous industries or activities.

The following are among the most important obligations for employers under these new regulations:

• Conduct a diagnostic assessment of OSH conditions at every place of work, including an assessment of related risks and implement OSH Programs based on these;
• Obtain and maintain all required diagnostics, reports and certificates of compliance with OSH regulations;
• Place warning signs at every place of work;
• Identify and control environmental polutants at every place of work;
• Order any and all medical test for all employees having an occupational exposure to risk factors;
• Provide all necessary protective gear for employees;
• Maintain records and report any incidents, accidents, injuries or deaths which occur in the place of work;
• Report and properly maintain any pressurized or criogenic vessels, boilers, steam or other generators;
• Ensure oversight of compliance by any contractors, subcontractors or suppliers working within the main employer’s facilities;
• Establish procedures for authorizing the performance of any risky or dangerous activities at the place of work;
• Organize and record OSH Joint Commissions at every place of work;
• Establish OSH Preventive Services systems at every place of work;
• Establish Medical Preventive Services systems at every place of work;

The following subjects or activities are now regulated:

• Buildings, sites, facilities or places of work;
• Fire prevention and protection;
• Use of machinery, equipment and tools;
• Handling, transportation and storage of materials and dangerous chemicals;
• Driving motor vehicles;
• Working above or under ground or water or in confined spaces;
• Pressurized or criogenic vessels, boilers, steam or other generators;
• Static electricity and electrical installations maintenance; and
• Cutting and soldering activities.

In general, all programs must cover the following factors:

• Noise;
• Vibration;
• Lighting conditions;
• Ionizing or non ionizing electromagnetic radiation;
• Abnormal thermal conditions or air /water pressure above or below range;
• Chemical or biological agents; and
• Ergonomic risk factors.

Also, prevention programs for health risks and addictions must be implemented and maintained by all employers on a confidential and non discriminatory basis.

These regulations are being actively enforced by the federal Ministry of Work (Secretaría del Trabajo y Previsión Social -STPS-) through its local delegate offices in every state and major city.

The sanction for non compliance will be fines of between USD$250 and USD$25,000 per occurrence, which might be duplicated in case of reincidence (without prejudice to any related civil or criminal liability).

Also, the competent authorities may order mandatory modifications or alterations to the places of work, machinery, equipment, tools, installations, etc., required to meet applicable regulations.

USA - A Quick Guide to Employee Representatives Outside the US - Or, Why the US Wagner Act Union Regime Stands Alone

By Donald C. Dowling, Jr
Partner, K&L Gates, New York City

One main reason American organized labor differs from collective representation elsewhere is the binary, “either/or” nature of U.S. labor relationships―the so-called “single channel” model of U.S. labor representation. Unionization in the United States is binary or all-or-nothing in that only one “channel” of labor representatives exists: unions. American employers get unionized only after a formal government-supervised certification process that features a representation petition, union recognition proceedings, a government-supervised union election, union certification and then, maybe later, a decertification. (Wagner Act § 9) Where a U.S. employer is unionized, each of its employees either falls within a workplace “bargaining unit”—or else is non-union staff. Every American employer is either a party to a formal, federal-government-enforced bargaining relationship with a recognized labor union in its workforce—or else it is not. Every employer is either “unionized”—or else is a “non-union shop” with no collective bargaining obligations.

The United States is not unique in having a binary or “single channel” organized labor system; binary labor regimes are also said to exist in a number of countries outside the United States, from Canada to Malaysia to Latin America to Scandinavia and beyond. But many jurisdictions around the world, including much of Europe, take a layered approach to labor representation. Indeed, even Canada, Malaysia, Latin America, Scandinavia and other purportedly-single-channel jurisdictions actually recognize at least one layer of labor representatives in addition to unions.

In many layered worker representation regimes, American-style binary union elections are not an issue because national unions act as worker representatives at the industry level with little formal “shop level” presence in most local workplaces, except that at a big employer a union might have an internal “committee” or “cell.” (See Verna Glassner, “Transnational Collective Bargaining in National Systems of Industrial Relations,” chap. 2 in I.Schomann et al., Transnational Collective Bargaining at Company Level (2012)) In some layered collective labor regimes, union elections are not an issue because trade unions represent only their members within a given workplace―employees are free to join a union or not, and bosses deal with unions almost as employees’ personal agents. In Japan, for example, dues-paying union members might use their union to confront their employer with grievances, while non-union-member colleagues may be on their own. In Germany, a collective bargaining agreement might cover a dues-paying union member employee but not a non-member co-worker.

In other layered collective labor regimes, American-style binary union elections are not an issue because the law empowers so-called “minority unions” that may represent just one or a handful of workers within a workplace bargaining unit. In Poland, for example, a union with just one member in a workforce can enjoy recognition status. In Russia “it only takes three employees to form a union, demand formal recognition and obtain the protections against dismissal and detriment which the law offers to union members.” (D. Whincup, “Boss-napping, Wheelbarrows and Trumpets: Trade Union Power in Europe,” WestLaw Int’l HR Journal, Spring 2014 at p. 29, 30) In Colombia a minority union enjoys full collective bargaining and grievance-processing rights even in a workplace where a majority union represents most of the rest of the staff. (Colombia Decree-Law 89/2014 of 20 Jan. 2014)

And this just speaks to layered relationships with actual trade unions. In addition, many countries have layers of non-union labor representatives. Law in many countries forces employers to set up―and then to bargain or consult with, and often to fund―so-called “statutory consultative bodies” that exist separate and apart from trade unions.

Collective bargaining, consultation and negotiation. As a point of semantics, in some legal systems only trade unions are said to engage in “collective bargaining.” But actually these non-union statutory consultative bodies consult and negotiate with bosses over terms and conditions of employment and grievances in a way that, in the United States, would qualify them as regulated “labor organizations.”

Examples. The lead example of a non-union statutory consultative body is the “works council,” which in some jurisdictions can exist at various levels within an organization, from company-wide works councils down to local site-level works councils. Separately, Europe requires large pan-European employers to set up multinational works councils called “European Works Councils” or EWCs. (EU Works Council Directive, 94/45/EC) Some European-based multinationals have even voluntarily launched so-called “global works councils”—in-house bodies of worker representatives from company workforces worldwide.

Other statutory consultative bodies include: labor/management councils, worker committees, staff consultation committees, employee delegations, working-environment committees, employee ombudsmen, workplace forums (as in South Africa), stand-alone worker representatives (as in Denmark) and “enterprise employees as one party” (as in China). (China Labor Contract Law of 2007 at arts. 51-52)

In addition, some jurisdictions force employers to set up temporary, ad hoc or one-off worker representative groups elected to consult or negotiate with management over a specific workplace issue. These “pop up” staff representatives pop up, for example, when a European Union employer without a standing works council or union group tentatively decides to do a reduction-in-force/“collective redundancy” or asset sale/spin-off/divestiture. As another example, Japanese employers regularly enter overtime pay agreements with one-off ad hoc employee representative bodies which can get elected by a mere show of hands. (Japan Labor Ministry Tsuutatsu of Mar. 31, 1999) As another example, Chinese workers form a temporary “assembly of laborers’ representatives” to negotiate whenever management proposes changing “material matters that have a direct bearing on the immediate interests of its laborers concerning labor remuneration, working hours, rest and vacations, occupational safety and health, insurance and welfare, employee training, working discipline or work quota management, etc.” (China Labor Contract Law of 2007 at art. 4 ¶ 2)
Further, many countries around the world require that employers set up labor/management “health and safety committees.” In France and elsewhere these committees wield authority to consult with management over topics well beyond what Americans (at least) would consider workplace health and safety―overtime and vacation, for example. In fact, some jurisdictions including Canada, Malaysia, Latin America and Scandinavia that are called single-channel labor representation systems actually mandate health and safety committees, in addition to unions, in some contexts. (E.g. Malaysia Act 514, Occupational Safety and Health Act 1994 § 30)

What is the effect of layered employee representation? That is, does having layers of staff representatives raise or lower the voice of workers in labor/management dialogue? American labor policy would say non-union groups beholden to management hurt workers because they keep independent unions away, which is why U.S. labor law defines a “labor organization” essentially to mean an independent labor union, with virtually no room for other types of worker representative bodies. (Wagner Act § 2(5)) Federal law forbids non-union consultative bodies beholden to management as presumably weak and impotent shams. Volkswagen learned this the hard way when, in 2014, it found itself unable to host a German-style works council at its Chattanooga plant.

But overseas, statutory consultative bodies often prove to be tough, rich and influential—sometimes fierce negotiators that wield real clout and impede management-sponsored changes in the workplace. Many American-based multinationals grumble about militant works councils at their French and German branches pushing back every time the organization seeks to do a reduction-in-force, restructuring, or merger, or just roll out a new work rule, code of conduct or whistleblower hotline.

Further, non-union worker groups can get expensive because employers generally have to fund them―often (as in France) with a flat percentage of total payroll. Employers find themselves paying for high-rate independent experts for worker groups, underwriting expensive business trips for staff representatives and funding other costly extras. A big labor representatives group like an EWC can cost hundreds of thousands of dollars every year.