Thursday, January 6, 2011

AEG: Evading Contractual Obligations

The Alberta Enterprise Group’s report making recommendations about reforms in Alberta’s laws proposes eliminating successor rights provisions because they are, allegedly, economically damaging.

What are successor right provisions?
Section 46 of the Labour Relations Code ensures that union certifications and the resulting collective agreements survive changes in company ownership. Basically, employers cannot sell, lease, transfer, double-breast, or merge their way out of a collective bargaining relationship or contract they have signed with a union.

These provisions exist because employers have (and do) try to evade their legal obligations to workers in order to reduce their labour costs. AEG tries to frame the issue as one of ensuring labour market flexibility. But the actual issue is that AEG wants to give employers a way to nullify workers’ rights to join a union and evade the binding contracts employers have signed with those unions. The evidence provided by AEG that successor right provisions (or unionization more generally) is economically damaging is unconvincing.

Analysis or Ideology?
AEG’s “study” is simply another lobbying document that dresses up employer self-interest as analysis. This can be difficult to see because of AEG’s careful framing of the issues and the charged nature of labour relations in Alberta. But consider this statement from the report:

“Employment standards legislation governs such things as hours of work, the minimum wage, over time pay, and termination of employment. These standards reduce flexibility when they are overly prescriptive. For example, employment security provisions can make termination of employment prohibitively expensive for businesses and in that way can limit the ability of the labour market to adjust to economic changes.” (p.8)

In effect, what AEG suggests is that requiring a period of notice to workers that they will be sacked (or providing pay in lieu of notice) is too expensive for businesses. The maximum notice Alberta’s Employment Standards Code provides is eight weeks (if you have been employed for 10 or more years). While this does impose some costs on employers, it does so to provide workers with some buffer against termination on employer whim. And Employment Standards requirements cost employers nothing if they choose to plan their workforce reductions and give notice, rather than pay in lieu of notice.

Interestingly, AEG’s assertion re: the burdensome nature of employment standards ignores that minimum notice period required under Employment Standards is less than the “reasonable notice” requirements by the common law. That is to say, even if Employment Standards was eliminated, it would not reduce the employer’s obligation to provide reasonable notice under the common law. It would just make it harder for workers to collect what is owed to them because they would have to sue.

What this means is it is not nasty government regulation that makes it expensive to terminate workers, but rather judicial precedent. The underlying purpose of the doctrine of reasonable notice is that, when an employer repudiates a contract, the workers (who depend on the job to feed their kids), ought not be kicked to the curb to starve. Rather, they ought to get some compensation for the employer breaching their contract. But (apparently) AEG disagrees with holding employers accountable for their actions and to their contracts.

Overall, the analysis in AEG's report is poor quality. It is also self-serving. My assumption is that this report is intended to pressure the Conservative government (which is getting outflanked on the right by the Wild Rose) to further contract the statutory protections available to workers.

Yet is screwing workers really in the public interest? Or is it just in the craven political interest of AEG and its members? Thoughtful practitioners and policy makers are already dismissing AEG’s paper as meaningless. You should too.

-- Bob Barnetson

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