On May 27, 2024, the House of Commons unanimously passed Bill C-58 (the “Bill”), which seeks to restrict federally-regulated employers from hiring replacement workers during lockouts or strikes.

If the Bill is passed by the Senate and receives Royal Assent, as is anticipated, it will make several consequential amendments to the Canada Labour Code, 1985 (the “Code”), including the following:

1. Prohibiting employers or persons acting on their behalf from using the services of certain categories of persons to perform all or part of the duties of an employee in the bargaining unit on strike or lockout;
2. Removing the requirement of demonstrating a purpose of undermining a trade union’s representational capacity;
3. Requiring employers and trade unions to agree upon activities that need to be maintained in the event of a legal strike or lockout; and
4. Imposing penalties and authorizing regulations to promote compliance.

Prohibited Replacement Workers

The Bill removes any requirement for a trade union to demonstrate that an employer’s intention in hiring replacement workers was to undermine a trade union’s representational capacity, in order to allege an unfair practice under section 94(2.1) of the Code.

Instead, the Bill specifies categories of persons who are prohibited from being used as replacement workers, which are:

1. Any employee or person who performs management functions or who is employed in a confidential capacity, if that employee or person is hired after the day on which notice to bargain collectively is given;
2. Any contractor, other than a dependent contractor, or employee of another employer;
3. Any employee normally working at a different workplace than that at which the strike or lockout is taking place, or who was transferred after the day on which notice to bargain collectively is given; and
4. Any volunteer, student or member of the public.

Any persons not listed above may be used as replacement workers. Specifically, the prohibition does not apply to employees or persons performing management functions or employed in a confidential capacity, if such employees or persons are hired before or on the day on which notice to bargain collectively is given. Similarly, it does not apply to workers from other workplaces who were transferred before or on the day on which notice to bargain collectively is given. Under the Code, either party (or both parties) may give a notice to bargain collectively.  

Employers should note that the Bill does not prevent employees from other bargaining units not affected by the strike or lockout from being used as replacement workers, nor does it prevent family members, or other categories of persons not listed above, from being used as replacement workers.

The Bill allows the use of contractors or employees of another employer as replacement workers, if such contractors or employees were being used before the day on which notice to bargain collectively was given, and so long as they are used in the same manner, to the same extent and in the same circumstances as they did before the notice was given.

The Bill prohibits employers from using the services of bargaining unit members in the event of a strike or lockout that is intended to involve the cessation of work by all employees in the bargaining unit, but this prohibition does not apply to partial or rotating strikes, which involve the cessation of work by some employees in the bargaining unit.

The Bill, as drafted, creates some ambiguity in relation to the use of dependent contractors as replacement workers, by excluding them from the list of prohibited replacement workers, even though dependent contractors are included in the definition of “employee” under Part I of the Code.  

Maintenance of activities

The Bill repeals subsections 87.4(2) to (5) of the Code, and replaces them with provisions requiring an employer and a trade union, no later than 15 days after the day on which notice to bargain collectively has been given, to enter into an agreement with respect to the supply of services, operation of facilities or production of goods to the extent necessary to prevent an immediate and serious danger to the safety or health of the public.

Such an agreement must be filed with the Minister of Labour and the Canada Industrial Relations Board as a condition precedent to giving a notice of strike or lockout. If the employer and the trade union do not enter into such an agreement, the Board must determine this issue on application or referral by the Minister, and must make an order within 82 days of receiving an application or a referral. The Bill does not impose any time limits for applications for reconsideration, judicial reviews or appeals, nor does it specify any consequence to the failure of the Board to make an order within this time-limit.

Exceptions

The Bill allows for replacement workers to be used in certain cases where the services are used solely in order to deal with a situation that presents or could reasonably be expected to present an imminent or serious:

• threat to the life, health or safety of any person,
• threat of destruction of, or serious damage to, the employer’s property or premises, or
• threat of serious environmental damage affecting the employer’s property or premises.

The employer retains the discretion to determine whether such a situation has arisen.

If work is necessary under such exceptional situations, an employer must first give employees in the bargaining unit on strike or lockout the opportunity to perform the necessary work, failing which, the employer may use replacement workers to perform work in these situations. Where the employer uses bargaining unit members to perform work under these exceptional situations, such members cannot be used for any purpose beyond what is required to deal with the exceptional situations. 

Where an employer uses replacement workers under these exceptional situations, the employer may not use them for the purpose of continuing the supply of services, operation of facilities or production of goods.

Where employees affected by a strike or lockout do not have access to the employer’s premises, the Bill does not go as far as to provide the Minister with any new investigative powers to independently determine compliance with these provisions, as exists under the law in Quebec.

Penalties and Compliance

The Bill makes a violation of the prohibition on replacement workers an offence and liable on summary conviction to a fine not exceeding $100,000 for each day during which the offence is committed or continued. The Bill also authorizes the issuance of regulations establishing an administrative monetary penalties scheme for the purpose of promoting compliance.

The Bill will come into effect 12 months after the month on which it receives Royal Assent. Certain provisions, including the prohibition on using replacement workers, will apply in respect of any strike or lockout that is ongoing on the day on which the relevant sections come into force.

We will continue to monitor the legislative developments, and provide further information as the proposed amendments to the Code come into effect, and what they mean for employers. 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.

The authors gratefully acknowledge the assistance of Rand Al-Rawi, a Summer Student in the firm’s Toronto office.

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