Originally Published in BeneFacts Bulletin | January 28, 2019
The following analysis and potential impact of Bill 66 is provided by High Secord, Chief Strategist, Oakbridges Industrial Relations Strategists.
Bill 66, the proposed Restoring Ontario’s Competitiveness Act, 2018 is the second in a series of bills that form part of Ontario’s Open for Business Action Plan. Its intent is to stimulate business investment, create good jobs, and make Ontario more competitive by cutting unnecessary regulations that are inefficient, inflexible or out of date. It is an omnibus bill that amends nine other acts and several additional regulations.
An omnibus bill is a single document containing several measures, usually unrelated, and accepted in a single vote by legislature. Members of the legislature are required to agree to the entire package of changes, including provisions they may oppose in order to get ones they favour. In this particular Bill, there are provisions that could impact the protection of the Greenbelt around the GTA, while including amendments to the Employment Standards Act and the Labour Relations Act (LRA). We believe the latter amendments are needed. With this caveat, endorsement of the changes to the LRA should not be construed as an agreement with the entirety of Bill 66.
Within the current LRA, there are a unique set of rules governing the construction industry resulting in province-wide, multi-employer collective agreements. These provisions are necessary given the unique nature of construction employment. These particular provisions of the LRA have established an efficient means for collective bargaining and reducing the incidences of labour disputes. These exceptions to the “normal” rules of labour relations generally have produced outcomes favourable for both the industry itself and participants in the construction industry.
However, provisions within the LRA relating to “construction” can result in non-competitive situations or inordinately complex relationships. For example, certain municipalities may have (at one time in their history) engaged in self-performed construction work, and as a result became signatory to a Building Trade Union(s). The net impact has been these municipalities can now only tender work out to contractors which are unionized with the Building Trade Unions. This can occur even in circumstances where the municipality no longer self-performs any construction work. This situation unduly constrains competition since non-union contractors and contractors, signatory to “alternative” construction unions, cannot bid for work.
A study by Cardus reviewed five Ontario municipalities which are restricted in their bidding processes, and estimated $2 billion worth of work was available only to a smaller set of Building Trade Construction companies. A bid premium results in reduced competition, and was estimated to cost Ontario taxpayers an additional $370 million. This result, from a sample size of five municipalities, indicates this money could have been made available for other public policy initiatives. It is likely other public organizations face the same restrictions.
Bill 66 seeks to relieve municipalities and certain other local boards, school boards, hospitals, colleges, universities and public bodies of obligations to the Building Trade Unions and contractors by deeming them to be non-construction employers. Thus, these organizations will be able to “open up” bidding to all contractors regardless of union affiliation or non-affiliation. Increased competition can only result in more competitive bidding and the elimination of the bid premium currently in place.
It is anticipated the Building Trade Unions will challenge the passing of this Act under the freedom of association guarantees of the Canadian Charter of Rights and Freedoms. However, the basic concept has already been tested in IESO v CUSW 2012 ONCA 293. This decision found an organization can be deemed a non-construction employer, and be relieved of any obligations it may have had to the Building Trade Unions, if it can demonstrate the essential nature of the organization’s work it performs is not in the construction industry, any construction activities it engages in are incidental, and are solely for its own benefit and are not undertaken for a third party for profit.
The changes to the LRA will deem the affected organizations to be non-construction employers but will allow Building Trade Unions to organize municipal ‘’inside’’ construction workers under another provision within the Act.
On balance, the proposed changes to the LRA should result in lower costs for municipalities to the benefit of the general public.
