Interest Arbitration and the Canadian Construction Industry

By Rose, Joseph P. | Labor Law Journal, Winter 2011 | Go to article overview

Interest Arbitration and the Canadian Construction Industry


Rose, Joseph P., Labor Law Journal


I. Introduction

The construction industry has long been recognized as one of Canada's most strike-prone industries.1 During the 1960s, economic expansion and fragmented bargaining structures contributed to the deterioration of labor-management relations in the construction industry in both Canada and the United States.2 This was reflected in a significant rise in strike activity and negotiated wage settlements. In Canada, policymakers responded by adopting numerous labor law reforms to promote construction labor relations stability. An outgrowth of these efforts has been the emergence of interest arbitration to resolve bargaining disputes.

This development is somewhat surprising considering interest arbitration is a rare occurrence in the private sector. Most often interest arbitration has been adopted as substitute for the right to strike for public employees such as police, firefighters and hospital workers.3 To a lesser extent, arbitration is available to resolve first contract bargaining disputes. Whereas most jurisdictions in Canada have statutory provisions for first contract arbitration in the private sector, it is used infrequently.4 While referrals to binding interest arbitration occasionally result from voluntary agreements between parties and back-to-work legislation, this is also more prevalent in the public sector.5

The purpose of this paper is to examine the factors that have given rise to the use of interest arbitration in the construction industry. The paper begins by highlighting the sources of construction instability and the legal reforms aimed at improving labor-management relations in major building construction, i.e., the industrial, commercial and institutional sector. This is followed by an examination of the different approaches to interest arbitration. Three arbitration models are identified: (1) statutory arbitration, (2) labor relations board assisted arbitration and (3) consensual arbitration. The paper explores the purpose and characteristics of the three approaches and analyzes the jurisprudence with respect of each. The final section of the paper assesses the overall impact of interest arbitration and its future role as a dispute resolution procedure in the industry.

II. The Distinctive Nature of the Construction Industry

With the possible exception of the public sector, labor relations in the construction industry has been subjected to more scrutiny and legislative intervention than any other sector of the Canadian economy. There are three reasons for this. First, the construction industry is of strategic importance to the overall performance of the economy. The industry is one of the nation's largest employers, a major consumer of raw materials and assumes a large role in economic growth and development. A second and interrelated factor is that labor relations can have a disruptive effect on the economy, as evidenced by a history of protracted labor disputes over wages. The often chaotic nature of labor relations is a byproduct of external and internal sources of instability. The industry is vulnerable to market forces, e.g., cyclical and seasonal fluctuations in demand, as well as the decentralized nature of collective bargaining which produced an imbalance of bargaining power in favor of unions. Third, the persistence of unstable labor relations led to the recognition that the existing legal framework was ill-suited to the unique characteristics and needs of the construction industry.6

In response to these concerns, policymakers initiated numerous legal reforms in the 1960's and 1970's. To begin with, it was recognized a special legislative framework was needed to accommodate the unique features of the construction industry and its industrial relations system. Accordingly, general labor relations statutes were amended to include a section tailored to the construction industry. This included such issues as trade union certification and jurisdictional disputes. …

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