Labour and Employment Law Blog

Employers of unionized workforces often face different challenges and legal issues than employers of non-union workforces. The biggest difference is that in a unionized workforce the terms and conditions of employment are governed by a collective agreement negotiated by the union, as opposed to individual employment agreements negotiated between the employer and individual employee.

Collective agreements have a commencement and expiry date; however, after the expiry date, the employer is not free to impose on employees whatever terms of employment it desires. Where a collective agreement comes to an end, the British Columbia Labour Relations Code requires that the terms and conditions of the collective agreement that was previously in force continue to govern until either a new collective agreement is concluded or there is a strike or lockout. Many collective agreements also contain a ‘continuation clause’ which says that, despite the expiry of the agreement, the agreement will continue in force and effect until replaced by a new collective agreement, or until there is a strike or lockout. This means that employees would continue to be entitled to any health and welfare benefits provided by the employer; and the employer would continue to be liable for its share of applicable premiums.

Although collective bargaining can be intense, employers and unions are often able to resolve their differences and agree on the terms of a new collective agreement without resorting to strikes or lockouts. Occasionally, however, good faith negotiations break down, and the only way to break the stalemate is economic action. When a strike or lockout takes effect, the expired collective agreement no longer governs the relationship among the employer, the union, and the employees. Effectively, a strike or lockout terminates the collective agreement.

Interestingly, the termination of a collective agreement during a strike or lockout does not terminate the employment relationship between the employer and employees. The Supreme Court of Canada has held that collective agreements are not merely a collection of individual employment agreements, and, as labour relations are generally governed by statute, common law does not apply. Labour boards throughout Canada recognize that employees who are on strike, or who are locked out, continue to be employees of the employer.

This raises the question of whether a striking or locked out employee is entitled to benefits while on strike or locked out. In some cases (but not all), an employees’ right to participate in health and welfare plans is set out in the collective agreement as a negotiated benefit. Often, the provision by employers of employee health and welfare benefits under the benefits plan are tied to an employee’s active employment, and some arbitral authorities have observed that provision of benefits is in the nature of remuneration for work provided. On its face, it would seem to follow that striking or locked out employees would not be entitled to health or welfare benefits.

In British Columbia, however, section 62 of the Labour Relations Code requires that employers continue the health and welfare benefits, other than pension benefits or contributions, for employees who are on strike or locked out, if the trade union tenders payment to the employer (or benefits provider as applicable) in an amount sufficient to continue the employees’ entitlement to the benefits on or before the regular due date of that payment.

Accordingly, depending on the language of the benefits plan, an employer is generally not liable for its share of benefits premiums for striking or locked out employees. However, if the trade union tenders sufficient payment for the premiums, the employer must ensure benefits are continued for struck or locked out employees.