Canada’s proposed labour reforms could shift power away from workers in major disputes

The federal government’s newly tabled Bill C-39 would give Ottawa a more direct and explicit role in labour disputes in federally regulated sectors, changing how the government may respond to strikes and lockouts.

The labour provisions are part of a larger piece of legislation aimed at strengthening Canada’s economic resilience, protecting supply chains and supporting national projects.

The changes would apply to workplaces governed by the Canada Labour Code, which covers sectors that include railways, airlines, ports, telecommunications, postal services and banks, as well as other industries under federal jurisdiction.

The government has presented the changes as a way to reduce unnecessary intervention, but the legislation could instead make it easier for Ottawa to normalize and justify intervention in disputes collective bargaining is designed to manage.

The bill would codify and structure the federal labour minister’s authority under Section 107 of the Canada Labour Code to direct the Canada Industrial Relations Board to take action to prevent strikes and lockouts, including referring a dispute to binding arbitration.

That could alter the balance of bargaining power between unions and employers in federally regulated industries, particularly where workers’ ability to withhold their labour is their principal source of leverage.

A new intervention process

The government has described the changes as “a guardrail” around the code’s controversial Section 107.

Under the proposed framework, the labour minister could appoint a special mediator to assist parties that remain unable to reach a collective agreement. The mediator would have 21 days to work with the union and employer before preparing a report outlining the issues in dispute and the likelihood of settlement. The report would become public five days after being issued unless the parties reached an agreement in the meantime.

Before directing the Canada Industrial Relations Board to act under Section 107, the minister would have to consider the mediator’s report and determine whether intervention was in the “national interest.” The bill identifies factors that may be considered, including whether a strike or lockout would significantly affect the Canadian economy.

Mediation can play a valuable role in labour relations. A skilled mediator can help parties identify areas of agreement and resolve disputes before they escalate. But when mediation fails, the board could be directed to order workers back on the job, extend the terms of an expired collective agreement or refer unresolved issues to binding arbitration.

The significance of Bill C-39 is that it essentially codifies a contested ministerial power that unions had been urging Ottawa to repeal. In fact, the Teamsters launched a legal challenge to the federal government’s use of Section 107 after Ottawa forced an end to the August 2024 national rail shutdown. The change should therefore be understood as a policy choice, not a technical clarification.

For unions, the concern is that the changes could normalize the idea that an effective strike is, by definition, a threat to the “national interest.”

Strikes are meant to apply pressure

The purpose of collective bargaining is to give workers a democratic counterweight to employer power. The ability to withhold labour is one of the primary tools workers have when negotiations reach an impasse. Making it easier for government to suspend the right to strike undermines that goal.

Workers do not strike lightly. The costs are considerable: lost income, uncertainty, public scrutiny and the possibility of a long and bitter dispute. However, strikes can become necessary in the face of employer intransigence, unacceptable working conditions or the erosion of wages.

Nearly every effective strike imposes economic costs. That disruption is how workers who lack control over capital, investment and production can exert pressure on employers.

If a significant economic impact is sufficient to justify ending a strike under the government’s new framework, then Bill C-39 could limit the ability of workers in strategically important sectors to use one of their primary bargaining tools.

Canada needs reliable transportation networks, resilient supply chains and a strong economy. But those goals should not become a catch-all rationale for overriding workers’ bargaining power whenever a lawful strike creates economic consequences. That pressure is precisely what strikes are designed to create.

The limits of arbitration

For workers in genuinely essential roles who cannot strike because of immediate public safety concerns — such as police or firefighters — carefully designed arbitration processes may be necessary as an alternative.

But that does not mean binding arbitration should become the routine response to a strike that causes economic or political inconvenience.

Arbitration transfers unresolved issues to a third party, who determines the terms of a collective agreement. As a result, workers lose their ability to withhold labour and both sides lose some control over the final settlement.

The prospect of ministerial intervention can also affect bargaining before a strike begins. Some unions have warned that employers may have less incentive to bargain seriously if they believe government intervention is available whenever a dispute becomes politically difficult.

Balancing economic and labour rights

There are potentially constructive reforms in Bill C-39 that deserve consideration. Earlier bargaining in high-conflict relationships, expanded access to mediation and longer conciliation periods may all help parties settle difficult negotiations before strikes or lockouts occur.

But those measures should support collective bargaining, not become a pathway to removing workers’ final source of leverage.

A durable national economic strategy should recognize that resilient supply chains and robust labour rights are compatible goals. Canada does not become stronger by telling workers in ports, railways and airlines that their rights must yield whenever employers invoke competitiveness or the national interest.

The government’s “Canada Strong” agenda emphasized economic resilience, domestic capacity and the ability to withstand disruptions. That vision should also mean workers have a meaningful voice at work and the ability to strike when employers and unions cannot reach an agreement.

If Ottawa expands its authority to end lawful strikes whenever they significantly affect the economy, it will not “modernize” labour relations as the government has suggested; it will tilt the system further in favour of corporations at the expense of workers.

Larry Savage does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.