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"Anti-scab' bills restrict employer options.

EMPLOYERS IN ONTARIO and British Columbia are facing uncertain times ahead in light of two bills enacted this past January that restrict an employer's response options I to a labor dispute, possibly necessitating changes in contingency planning. In particular, during a lockout or strike, an employer is prohibited from hiring replacements or using employees from other plants to perform the work of an employee in the bargaining unit that is on strike or locked out. Quebec, which enacted similar legislation 15 years ago, is the only other province to ban the hiring of striker replacements. The full breadth and impact of the new bills Bill 40 in Ontario and Bill 84 in British Columbia -- however, is yet unclear, only time and each province's labor relations board can clarify that.

"By prohibiting the use of replacement workers in disputes, the potential for violence and bitterness is reduced, and both sides are encouraged to reach a reasonable settlement," according to British Columbia Labor Minister Moe Sihota. But this argument is not valid according to Tom Roper, a law partner with Alexander, Holburn, Beaudin & Lang in Vancouver, and one of three special advisors submitting draft provisions for Bill 84, because in British Columbia, "the sanctity of the picket line" has dissuaded those who would cross it or cause violence, which is more akin to Quebec's and Ontario's histories. Thus, the ban on hiring striker replacements is unnecessary, unduly changes the balance of power from the employer to labor, and makes business and investors more insecure, asserts Jim Matkin, president of the Business Council of British Columbia in Vancouver.

One consequence of the new legislation is that "small bargaining units may gain bargaining clout in situations where a strike by the small unit will shut down the employer's operations affecting other larger bargaining units, because of the limit on who can perform struck work," reports the labor and employment law department of Osier, Hoskin & Harcourt in Toronto. Furthermore, employers must continue employee benefit coverage, except for pensions, during a strike, provided that the union continues to make the necessary contributions.

The hiring of replacement workers to protect against property theft or to prevent damage to property other than premises, equipment or machinery is no longer permissible. "For example, potential damage to inventory and finished product would not justify the use of replacement workers. Employers with perishable products cannot hire replacements to prevent spoilage of meat and produce and may have to take extraordinary steps on the eve of a strike," Osier, Hoskin & Harcourt reports.

Who Will Be Affected?

The ban on striker replacements could have a significant impact on manufacturers practicing total quality management who either are, or rely on, "sole source" suppliers or who have instituted "just-in-time" inventory systems. For the auto industry, which significantly relies on just-in-time production, these bills could throw a monkey wrench into the works should a feeder plant be shut down or a supplier's operations disrupted.

The new exclusions of using managers from other plants to do the work of striking employees could affect the gas distribution, telephone and electric companies that have traditionally utilized management during strikes to keep operations running, Mr. Matkin finds. The management exclusions will make these operations more vulnerable to a strike and perhaps more damaging to the public consumer.

The measures could also have a major impact on smaller, unionized manufacturers. Before these bills were passed, those companies with simple assembly line operations, for example, could have hired unskilled labor as replacement workers with relative ease and minor disruption to the plant. The ban on hiring striker replacements also hits smaller businesses particularly hard "because it prohibits the use of spouses or family members to do the work being struck," while at the same time necessitates getting management% consent to do that work, notes Kathy Sanderson, chairperson of the Vancouver-based Coalition of B.C. Businesses.

"Because of the ban on striker replacements, a property owner may not be able to replace a contractor whose employees are legally on strike," states Ted McDermott, a partner in the labor and employment law department of Osier, Hoskin & Harcourt in Toronto. He notes, "it is very possible that an employer could be stuck with a collective agreement forever." Furthermore, reasonable offers of employment to the predecessor's employees must also be made; "otherwise the company can be exposed to inordinate damages," he adds.

What can an employer do? Many simply choose to ride a strike out. Sandra Stewart, director of corporate affairs for Stelco Inc., a large, predominantly unionized steel manufacturer in Hamilton, Ontario, notes that the company has never hired striker replacements, so the effects of Bill 40 in this regard may have only an indirect impact via Stelco's suppliers. In the event of a strike, most of Stelco's operations will be shut down, except for those whose machinery need maintenance to ensure its integrity and ability to be on line when the strike ends.

Thus, Stelco uses its plant supervisors to handle this chore during a strike, a practice still permitted under the new legislation. B.C. Rail in Vancouver will act similarly during a strike, notes its manager of risk and litigation, Robert Wheeler. But in past strikes, B.C. Rail often kept its "school bus" train operating, albeit with the concurrence of the striking unions. Bear in mind that both bills allow any employee to refuse to perform the work of a striker.

To help persuade unions to agree to terms of a collective agreement and avert a strike, employers can make it clear that contingency plans have been made and that any strike would pose a less-than-hoped-for economic hardship upon the company. Conversely, an employer, if applicable, can make it clear to the union the likelihood of the plant never reopening in the event of a prolonged strike. Because employees generally will not cross a picket line, employers, if appropriate, should make certain that managers and supervisors are thoroughly cross-trained.

Circumventing the Intent

"Bill 84 could backfire because its measures are so draconian that they give employers incentives to engage in measures to defeat the intention of the legislation's drafters," Mr. Matkin believes. In the past, some employers have deliberately set up operations at different locations with different expiry dates in each collective agreement to ensure uninterrupted production if one of the locations is hit with a strike, Mr. McDermott reports.

But under Bill 40, an employer attempting to shift work in the event of a strike to another plant in the same province may find the same trade union there being consolidated into the striking bargaining unit by the Ontario Labor Relations Board.

One corporate planning alternative is to have similar operations set up in another province altogether. But even work shifting within the same province, which could appear to an arbitrator as an unfair labor practice, would be difficult to prove if the employer's operations had been established prior to the strike and if the employer can show a history of occasional shifting of work from plant to plant, says Heather MacNaughton, a partner in the employment labor law area of Lang Michener in Toronto. But maybe the easiest way to get around this measure is to have buyers shift their purchase orders to a non-struck plant.

It would be unwise for an employer to count on being eligible for the "essential services" exclusions in order to prevent a strike or be permitted to hire replacement workers. Bill 40's "exclusion" of essential human services (e.g., detention centers, residential care for vulnerable persons, emergency shelters, ambulatory and emergency communications services) from the amendment provisions already appears ambiguous in practice.

Apparently, if these services can be purchased elsewhere, then the contracting company may lose its "essential service" exclusionary status. In Ms. MacNaughton's experience with a "non-qualifying" residential care contractor, "it appears a harder hurdle to overcome outside the hospital environment" in order to fall under the essential human services exclusion, she adds. A municipality, on the other hand, would probably find it easier to be conferred this status based upon the need, for example, to maintain a water treatment facility, Mr. McDermott points out. In British Columbia, it would be the labor board's judgment call as to whether or not a strike by security workers should be prevented if this could be seen as a threat to the health, safety or welfare of the province's residents.
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Title Annotation:Ontario, British Columbia
Author:Kurland, Orin M.
Publication:Risk Management
Date:Apr 1, 1993
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