On September 21, 2026, the Federal Government tabled Bill C-39, the Building Canada Strong Act (the “Bill”) which proposes significant reforms to the Canada Labour Code, RSC, 1985, c. L-2 (the “Code”).
Bill C-39 recently passed second reading in the House of Commons. It has now been referred to a Special Committee.
Federal employers should be aware of the proposed changes and consider whether, if enacted, they may affect their collective bargaining timelines and strategy.
The practical implications of these amendments will depend, in part, on where a federal employer is in the collective bargaining process. The following provides an overview of the proposed changes and what federal employers may expect at various stages of collective bargaining if the amendments come into force.
First Contract Arbitration
Bill C-39 proposes to significantly change the process to settle the terms of a first collective agreement. Currently, section 80 of the Code grants the Minister the discretion to require parties in their first round of collective bargaining to submit to binding interest arbitration.
The proposed changes to section 80 of the Code would establish a prescriptive, rather than discretionary, process for parties in their first round of collective bargaining. If, within 9 months after notice to bargain was given, the parties have not entered into a first collective agreement then either party will be entitled to apply to the CIRB for an order directing a binding mechanism to resolve the remaining issues in dispute. Upon receiving such an application, the CIRB “must, by order, direct a binding method of resolving the issues that remain in dispute between the parties.”
The provisions in Bill C-39 concerning first contract arbitration do not require a party to show that the other side has acted unreasonably or in bad faith. Binding interest arbitration will effectively be ‘as of right’ after the completion of 9 months of bargaining. The likely result is that fewer first collective agreements will be settled in collective bargaining since parties will position themselves for binding arbitration rather than compromise to reach agreement.
Commencement of Renewal Collective Bargaining
For federal employers with a collective agreement that (a) resulted from a binding method of dispute resolution imposed on the parties, (b) followed a round of bargaining in which a strike or lockout occurred, or (c) has a term of 5 years or more, the proposed amendments would require the Parties to meet and commence bargaining during the period beginning 200 days and ending 180 days before the expiry of the collective agreement. Currently, section 49(1) of the Code permits, but does not require, parties to commence bargaining during the final four months of their collective agreement. Consequently, the enactment of Bill C-39 will mean an earlier commencement of renewal collective bargaining for some employers.
Moreover, prior to the commencement of collective bargaining in the above-described circumstances, the parties would also be required to provide written notice to the Minister of Labour and the Canada Industrial Relations Board (“CIRB”) setting out the date and location of the first collective bargaining meeting and the contact information for each party. They will then be required to engage the Federal Mediation and Conciliation Service (“FMCS”), meaning that the parties will effectively be in conciliation from the outset of bargaining.
Parties covered by the new requirement for an earlier commencement of bargaining will also be required to reach a maintenance of activities agreement “no later than the 185th day before the day on which the term of the collective agreement expires”. Maintenance of activities discussions will therefore have to take place much earlier in the collective bargaining process.
If these provisions of Bill C-39 come into effect, we can anticipate parties agreeing to collective agreement terms of less than 5 years to avoid the early commencement of their next round of bargaining (including maintenance of activities discussions) and the unnecessary early intervention of FMCS in the process.
Third Party Assistance – Conciliation and the Special Mediator
Bill C-39 will extend the statutory conciliation period under section 73(2) of the Code from 60 days to 90 days, providing the parties with additional time to reach a negotiated collective agreement with the assistance of a conciliation officer.
At any time, but no later than 75 days after the appointment of the conciliation officer, commissioner, or board, the Minister of Labour will also be permitted to appoint a Special Mediator for a 21-day period to assist the parties in settling their dispute. If no collective or tentative agreement is reached, the Special Mediator will be required to report on the issues in dispute, the parties’ positions, their participation in the process, and the likelihood of reaching an agreement within a reasonable time. The Minister will be required to provide the Special Mediator’s report to both parties immediately and make it publicly available following a five-day period after the Special Mediator’s period of appointment ends.
If a tentative agreement is rejected, the Minister must also immediately provide the parties with the report, unless they have already received it, and release the report publicly within the prescribed timelines. The process is intended to provide at least 10 days between the public release of the report and a strike or lockout.
Intervention to Halt a Work Stoppage
The proposed amendments to section 107 of the Code would clarify the Minister of Labour’s authority to intervene in work stoppages while introducing safeguards to ensure that such powers are exercised in a balanced manner and only where necessary to protect the national interest. If the Minister determines that a strike or lockout would adversely affect the national interest, they will have discretion to direct the CIRB to order the resumption of work or continuation of operations, extend the term of a collective agreement, and/or impose binding interest arbitration. In making this determination, the Minister would be required to consider the potential impact on the Canadian economy, any serious social disruption, and freedom of association.
Concluding a Round of Collective Bargaining
Finally, federal employers should be aware of proposed obligations that could arise after a collective agreement has been reached. In circumstances where the collective agreement resulted from an imposed method of binding arbitration or was reached following a strike or lockout, the Minister of Labour will be required to appoint a mediator to assist the parties in improving their relationship. This relationship building exercise will have to occur within the first 6 months of the term of the new collective agreement.
We will continue to provide updates regarding 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.
Prepared with the assistance of Mathews Dinsdale Articling Student, Abigail Liznick.
