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Canadian Legislation

In this section we keep decisions and legislation by Canadian Courts that, in our view, represent examples of LabourWatch's Guiding Principles.

The "Rand Formula"
Ford Motor Company of Canada Limited and The International Union United Automobile, Aircraft and Agricultural Implement Workers of America (U.A.W.C.I.O.).
Union Dues
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Arbitration-Award on issue of union security.

Summary

The architect of compulsory union dues in Canada was then Supreme Court Mr. Justice Ivan C. Rand who was an Appointed as arbitrator to settle a strike. The dispute was between the Ford Motor Co. in Windsor, Ontario and the United Auto Workers Union. He handed down an Arbitration Award on January 29, 1946, that made union dues compulsory for both Members and non-Members of the union at this Ford location.

Canadian Decisions
Armstrong
Alberta Court of Queens Bench of Alberta
Fines
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Queen's Bench of Alberta overturns ALRB decision that fined a union Member who worked non-Union job
Style
Armstrong v. International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers and Helpers, Local Lodge No. 146, 2009 ABQB 477
Case
Court of Queen's Bench of Alberta
Docket
0801 03140

Summary

On August 6, 2009 the Alberta Court of Queen’s Bench dealt an important blow to the all too common practice of unions imposing significant fines upon members who work for employers not having a relationship with the union.

This case involved an experienced welder who was a member of the Boilermakers Union. He had been working in a managerial position for a building trades contractor and then had an opportunity to work for a non-union construction management company, also in a managerial position. When the Union learned of this employment, it implemented its disciplinary procedures and fined the member $5,000. This is common in the construction industry. The Labour Relations Board upheld this Union discipline.

The Court overturned the Labour Board’s decisions and thus the Union’s discipline. Two of the Court’s important findings were as follows:

1. The Union violated its member’s “right to counsel” that exists under the Labour Relations Code for union discipline proceedings. Both the Union Constitution and its communications with the member indicated that he could only be represented by a fellow union member, not a lawyer of his choosing. The member did not participate in the discipline proceedings because he viewed it as being a “kangaroo court”. Although the Union subsequently gave evidence that it would have allowed legal representation in its hearings, the Court found this did not satisfy the member’s right to counsel because the member did not know of this fact.

2. Although the Labour Relations Code allows unions to punish members in certain circumstances, they are not entitled to do so when a member is working for a non-union company in a managerial position. A union may only punish members in such circumstances where it can provide “reasonable alternate employment.” A position under a collective agreement is not reasonable alternate employment to a managerial position. Further, the Court found that the purpose of this provision is to allow limited union discipline only for employees working under a collective agreement, not managerial employees.

Although this decision is consistent with similar decisions made in other provinces, it is an important precedent in Alberta in limiting the harsh practices of some unions. It is unknown whether the Union will appeal this decision.

Birch & Luberti
Ontario Court of Appeal
Fines
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Unions cannot use courts to collect fines
Style
Jeffery Birch and April Luberti and Union of Taxation Employees Local 70030
Case
Court of Appeal for Ontario
Docket
C48007

Summary

In a significant decision limiting the rights of trade unions, the Ontario Superior Court of Justice has ruled that the courts will not enforce financial penalties levied by trade unions against members who choose to cross a picket line during a legal work stoppage. The ruling in Birch and Luberti v. Union of Taxation Employees Local 70030 will make it more difficult for trade unions to use the threat of fines and other penalties to enforce picket line solidarity. It will also enhance the right of employees to decide for themselves whether they wish to participate in a work stoppage.

The decision was immediately appealed by the union in the Ontario Court of Appeal.

The union lost in a 2 to 1 decision on December 3, 2008.

Background

During a seven day PSAC strike in 2004, numerous members of the Union of Taxation Employees Local 70030 (Union), a division of PSAC, decided to cross the picket line and report for work. The Union responded by imposing a fine on each member equivalent to the employee's gross salary for each day worked during the strike. Many members refused to pay the fines, so the Union resorted to Ontario's Small Claims Court to recover the fines. The Union relied on a provision of its Constitution that purported to authorize the imposition and collection of fines.

Jeffrey Birch and April Luberti were two Union members who crossed the picket line, were fined by the Union, and were subsequently sued by the Union in Small Claims Court. Instead of defending in Small Claims Court, Birch and Luberti jointly brought an application in the Superior Court of Justice seeking two orders: (1) a declaration that the Ontario courts will not enforce the Union's financial penalties, and (2) an order dismissing the Union's lawsuits in Small Claims Court. Birch and Luberti were represented in the Superior Court of Justice by John Craig and Richard Sinclair of Heenan Blaikie LLP.

The October 2007 Decision

Justice Smith ruled in favour of Birch and Luberti on all the issues and granted the orders they were seeking. Justice Smith based his decision on the following considerations.

First, neither Birch nor Luberti had availed themselves of an internal appeal that was permitted under the Union's Constitution. The Union argued that failure to take advantage of an internal Union appeal meant that Birch and Luberti could not seek the assistance of the courts. Justice Smith disagreed, pointing out that the Union had resorted to the courts by suing Birch and Luberti. Birch and Luberti were entitled to defend themselves regardless of the existence of an internal Union appeal mechanism.

Second, Justice Smith confirmed the common law position that Ontario's courts will not enforce penalty clauses in contracts. The Union's Constitution was effectively a contract between the Union and its individual members. Therefore, if it contained a penalty clause, then that clause would not be enforceable in the courts. Justice Smith considered the specific provision of the Union Constitution at issue. He concluded that the provision permitted a financial penalty to be imposed that was excessive since the penalty (i.e. gross salary for the time worked) bore no relation whatsoever to actual losses suffered by the Union as a result of members crossing the picket line. The financial penalty therefore fell into the category of penalties that will not be enforced by the courts.

Third, the Union argued that the financial penalties were not unconscionable in the labour relations circumstances and therefore should be enforced in the courts. Justice Smith disagreed, finding that the financial penalties were "extremely onerous" and based on speculative assumptions. Significantly, he rejected the idea that a financial penalty for picket line crossing could be based on the supposed financial benefit of such crossing to the employer. The Union also asserted that the financial penalties were justifiable to deter "free riders" who would benefit from strike activity while continuing to report to work. In response, Justice Smith observed that trade unions should use strategies other than onerous financial penalties to encourage respect for picket lines (e.g. persuasive information campaigns and better strike pay).

Fourth, Justice Smith rejected the submission that the Public Service Labour Relations Act (PSLRA) authorized the imposition of financial penalties for crossing a picket line. The relevant provisions of the PSLRA are very similar to provisions of the Canada Labour Code. At best, these PSLRA provisions refrain from making it an unfair labour practice for unions to levy financial penalties against their members. However, there would have to be a clear statutory provision authorizing such penalties before the courts would enforce them.

The December 2008 Appeal Decision

In a 2 to 1 decision, the majority of the Court of Appeal agreed with the application judge and held that the provision in UTE's constitution authorizing the imposition of fines is unconscionable and therefore unenforceable. In applying the unconscionability test, the majority found that there was an inequality in bargaining power between the parties and that, you as the respondents did not have much choice in agreeing to the inclusion of such penalty provisions in their collective bargaining agreement. Moreover, the majority found that the penalties imposed were excessive. While the court recognized that union solidarity is a fundamental principle of the union movement and the collective bargaining process, the court found that the means adopted to achieve such solidarity were "very unfair". As such, the majority of the court found no basis to interfere with the decision of the application judge. As agreed by the parties at the conclusion of the oral arguments, the court awarded costs in the amount of $3,000 in our favour.

In a dissenting decision, Juriansz J.A. found that the fine was not unconscionable and that the common law rules that penalties are per se unenforceable does not apply to the disciplinary provisions of a union constitution. Justice Juriansz found that (i) there was no inequality of bargaining power; (ii) the amount of the fine was not unfair when considered in light of the actual damage suffered by the union; and (iii) the disciplinary provision is not inherently unenforceable as a penalty. As such, Justice Juriansz would allow the appeal.

Macmillan, Pinchak and Gejdos
Court of Queen's Bench of Alberta
Fines
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Unions cannot use courts to collect fines

Summary

In response to an appeal to the Alberta Provincial Court decision of February 2008 the Telecommunication Workers Union (TWU) appealed to the Court of Queen's Bench of Alberta.

The Queen's Bench again ruled in agreement with other Canadian jurisdictions that Unions cannot enforce disciplinary penalties in a court of law.

Armstrong
Alberta Labour Relations Board
Fines
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Labour Board upholds fine and Membership suspension of union Member who worked non-Union job

Summary

The Alberta Labour Relations Board rules against union Member Warren Armstrong, upholding his suspension from the union for failure to pay a fine levied by the Boilermakers union for working non-union.

Armstrong's position was that the union's imposition of a fine was coercive and improper. The Alberta Labour Board did not agree - "With respect to the improper motive for the imposition of discipline we find none. While banning work for non-union contractors at initial blush appears to be a restraint of trade, the fact is that is precisely what a Union is supposed to do."

Macmillan, Pinchak and Gejdos
Provincial Court of Alberta
Fines
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Unions cannot use courts to collect fines

Summary

The Alberta Provincial Court rules in agreement with other Canadian jursidictions that Unions cannot enforce disciplinary penalties in a court of law.

Birch & Luberti - 2007 Decision
Ontario Superior Court of Justice
Fines
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Unions cannot use courts to collect fines
Style
Jeffery Birch and April Luberti and Union of Taxation Employees Local 70030
Case
Ontario Superior Court of Justice
Docket
06-CV-35925
Berry v. Pulley
Supreme Court of Canada - [2002] 2 S.C.R. 493, 2002 SCC 40
Fines
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Union members have no "bargaining power" with a union

Summary

This decision addresses the basic question of whether a union member may be personally liable to other members in a breach of contract action based on the terms of the union constitution. This requires an analysis of the nature of the obligations that exist between members of a trade union.

Drake
Newfoundland and Labrador Supreme Court - [2002] N.J. No. 25 Docket: 1996 G.B. No. 91
Fines
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Union's cannot use courts to collect fines

Summary

Under the Labour Relations Act, a trade union had an unfettered and unqualified status as a legal entity for the purposes of suing and being sued. However, the judge correctly concluded that the fines were not debts. Although the Association's constitution considered the fines to be debts, there was no fixed amount or any agreed method of quantification. The fines were financial penalties, and were not intended to compensate the Association for loss. Therefore, there was no jurisdiction under the Small Claims Act. There was no determination of the public policy issue.

Litke
Brotherhood of Maintenance of Way Employees v. Litke - [1998] M.J. No. 569 Docket: CI 98-01-08761
Fines
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Union's cannot use courts to collect fines

Summary

The Court ruled that the Union did not have the power to enforce its rules in a court of law as an unregistered Union at common law. Further, while the Small Claims Act did not specifically proscribe a claim to collect a penalty, penalties which were purely punitive rather than compensatory, such as the penalty in this matter, were unenforceable by the courts at common law.

I.A.M. v. Hearn
Supreme Court of Newfoundland - [1986] N.J. No. 261 Action 1984 Nos. 1351, 1352 and 1353 (D.C.)
Fines
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Union's cannot use courts to collect fines

Summary

The appellant is a trade union, whose membership includes persons employed by Eastern Provincial Airways (herein referred to as the employer) an air carrier with business premises, amongst other places, at Gander, Newfoundland. The appellants are residents of Gander, and at all times material to this action were employees of the employer and members of the appellant union. The employer operates in a field of federal jurisdiction and its labour relations with the appellant are governed by the Canadian Labour Code, Revised Statutes of Canada, 1970, Chapter L-1, under which the appellant was certified as a bargaining agent for a unit of its employees including the respondents. The appellant had had in effect a collective agreement between itself and the employer, but had been unsuccessful in negotiating a new agreement upon its expiry. In consequence, the appellant had declared a strike against the employer. In the course of the strike, which endured from January 7, l983 to March 16, 1983, certain of its employees in its bargaining unit, including the respondents, failed to comply with a request made to them by the appellant to desist from work at the employer's premises during the strike period, but continued their employment duties. In so doing, the respondents crossed the picket lines established by the appellant at the employer s premises. The respondents were duly charged by the appellant with commission of acts of misconduct contrary to the rules of its constitution, and upon following procedures outlined therein the respondents were found guilty of the offences charged and it imposed upon each of them a fine of $1,000.00. Although there was provision in the constitution allowing the respondents to appeal the decision of the appellant, they did not avail of it and the time limit provided for such appeal has now passed. The respondents have not paid the fines imposed upon them. By originating summons with statements of claim attached, issued out of the Provincial Court of Newfoundland on December 31st, 1983 the appellant sought to recover from the respondents the amount of the respective fines levied on them as debts. When the action came on for hearing in the Provincial Court of Newfoundland on the 25th day of May, A.D., 1984 His Honour Judge M.R. Reid, upon the application of the respondents struck out the claim of the appellant upon the ground that he lacked the jurisdiction to try the case.

Advancing Employee Rights
Federal or Province
Caution

In most cases you will select the province where you work.

However, select "Federal and Territories", if any of the following apply:

  • You live in Northwest Territories, Nunavut or Yukon.
  • You work as a federal civil servant anywhere in Canada.
  • You work in one of the following industries:
    • airports or air transportation
    • broadcasting - radio, television or cable television
    • telecommunications
    • banking
    • fisheries (but only if your business relates to the protection and preservation of fisheries as a natural resource)
    • shipping and navigation (including loading and unloading vessels)
    • grain handling
    • uranium mining and processing
    • certain federal crown agencies
  • You work in one of the following industries AND (a) your activities connect one province to another OR (b) extend beyond the limit of one province:
    • air transport
    • canals
    • ferries, tunnels and bridges
    • highway transport of good or passengers
    • railway transport of goods or passengers