After extensive consultations with stakeholders, the Federal Government has introduced legislation in Parliament proposing a number of significant reforms to the Canada Labour Code, RSC, 1985, c. L-2 (the “Code”). These reforms include expanding the legislative tools available to encourage the settlement of collective agreements and prevent work stoppages that could harm the national interest.

Background

On September 21, 2026, the Federal Government tabled Bill C-39, the Building Canada Strong Act (the “Bill’), which sets out broad reforms in different policy areas.  The Bill includes a number of proposed changes to the Code. These changes largely reflect the unique nature of the federal sector, which includes companies that provide the national infrastructure in industries such as transportation, telecommunications, postal and courier services, etc.  Work stoppages in these industries can have devastating consequences for the national economy, thereby warranting additional state support and intervention.

The last wave of Code reforms from the Federal Government included the controversial ban on replacement workers, which many federal employers viewed as improperly tipping the collective bargaining scales in favour of unions. The reforms proposed in the new Bill were informed by consultations with employers, unions, and other stakeholders.   Although the replacement worker ban remains in place over the strong objections of employers, many of the proposed changes appear to be directed at seeking a better balance between employers and unions.

Summary of Proposed Reforms

The following is a brief summary of the key reforms proposed in the Bill.

1. The broad powers of the Minister of Labour to intervene in work stoppages adversely impacting the national interest under section 107 of the Code would be clarified;
2. The Minister would be entitled to appoint a Special Mediator to assist Parties in resolving a collective bargaining impasse and avoiding a strike or lockout;
3. First contract arbitration would become a right, rather than a discretionary remedy, when Parties are unable to reach a first collective agreement after 9 months of bargaining;
4. Collective bargaining for a renewal collective agreement would have to begin earlier in circumstances where it is anticipated that the Parties will face challenges reaching an agreement without a work stoppage;
5. The requirement for paid medical leave under the Code would be satisfied by a collective agreement regime that offers employees a benefit at least as favourable as the Code;
6. The Canada Industrial Relations Board (“CIRB”) would be able to establish regional, multi-employer bargaining units in industries beyond longshoring; and
7. The Governor in Council would be allowed to make regulations establishing expedited arbitration for certain disputes arising from collective agreements.

Further Details of the Proposed Reforms

1. Clarification of the Broad Powers of the Minister Under Section 107

Proposed changes to section 107 of the Code would give the Minister of Labour express authority to promote industrial peace and settle industrial disputes. If the Minister believes that a strike or lockout would adversely affect the national interest, then they will have the discretion to direct the CIRB to order the resumption of work or continuation of operations, extend a collective agreement term, or impose a binding dispute-resolution process. In determining whether a strike or lockout would adversely affect the national interest, the Minister would have to consider factors such as the potential impact on the Canadian economy and potential social disruption.

The current version of section 107 has been used numerous times by the Federal Government to bring an end to work stoppages in the federal sector.  The constitutionality of such use has been challenged in several cases.   The proposed reforms essentially clarify when and how section 107 can be used, thereby ensuring that the Minister will only intervene to bring an end to a strike or lockout where a serious public interest is at stake.   This should strengthen the Government’s position that its use of section 107 is constitutional.

2. Special Mediation before Strike or Lockout

The Bill proposes to introduce a special mediation process that can occur before a strike or lockout can proceed. The Minister would have the discretion to appoint a Special Mediator for up to 21 days to assist the Parties to resolve outstanding issues through facilitated discussions. If no agreement is reached, then the Special Mediator would be required to report on the issues in dispute, the Parties’ positions and participation, and the likelihood of reaching an agreement. The report would be provided to the Parties and would be made public.  There would then be a minimum 10-day period between the public release of the Special Mediator’s report and the commencement of any strike or lockout.

This proposed reform is consistent with a longstanding feature of the Canadian labour law system, which is to publicize collective bargaining disputes so that pressure is brought to bear on the Parties to reach an agreement without a work stoppage.

3. First Contract Arbitration as of Right

Proposed amendments would make first contract arbitration a right rather than a discretionary remedy the Minister may invoke. The Bill’s proposed changes to section 80 of the Code would allow either a union or an employer to require binding first contract arbitration if no collective agreement has been reached after 9 months of bargaining.

While this proposed reform could expedite the settlement of first collective agreements, it also could have the effect of undercutting the collective bargaining process.  In other Canadian jurisdictions, such as Ontario, first contract arbitration is not a right.  Rather, it is only available if Parties have made reasonable efforts to reach agreement in collective bargaining but have failed.   The proposed reform to the Code would reward a Party with first contract arbitration even absent reasonable efforts in the collective bargaining process.

4. Earlier Commencement of Collective Bargaining

The Bill proposes an expansion of the timing for commencing collective bargaining. Specifically, the proposed reform would require Parties to meet and commence bargaining between 200 and 180 days before their collective agreement expires if:  (a) they had a strike or lockout during the prior round of collective bargaining, (b) the collective agreement at issue resulted from imposed binding arbitration; or (c) the collective agreement at issue has a term of five years or more.

While the earlier commencement of collective bargaining may be reasonable where there was a prior work stoppage or imposed binding arbitration, there is concern that extending the new requirement to collective agreements lasting five years or more could discourage parties from entering into longer-term collective agreements.

5. Paid Medical Leave

The proposed change to the paid medical leave provisions of the Code would allow collective agreement regimes on paid medical leave to apply so long as they are at least as favourable as the Code.    This would permit bargaining parties to tailor paid medical leave for their particular workplaces, and would undercut any claim that the Code entitlements are “stacked” on top of applicable collective agreement benefits.

This is a welcome clarification that federal employers have been demanding.

6. Expanding Regional Bargaining Units

The Bill would allow the CIRB, either on application by two or more employers, referral by the Minister, or on the CIRB’s own initiative, to create regional, multi-employer bargaining units in industries beyond longshoring. These industries are currently unknown, but will be designated by regulations made by the Governor in Council on the recommendation of the CIRB. The CIRB could then certify a union as the bargaining agent for those employees, even if the union did not apply for certification.

Multi-employer bargaining units are relatively rare in Canada.    The proposed reform would likely be applied on an exceptional basis, with traditional single employer bargaining units remaining the norm in the federal sector.

7. Expedited Arbitration

According to the proposed amendments, the Governor in Council would be allowed to make regulations to establish an expedited arbitration process for resolving disputes involving the content and interpretation of collective agreements.

While expedited arbitration would be desirable in much of the federal sector, the practical impact of this proposed change is difficult to assess until the relevant regulations have been made.

We will continue to provide updates on Bill C-39 as it progresses through Parliament.

If you have any questions about this topic or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer.