Arbitration and the employer’s “ability to pay”.

Bargaining Wire: OCUFA Report October 12, 2010

Since mid-summer, four experienced Ontario arbitrators have awarded compensation increases in excess of the government’s “policy statement” of no-net compensation increases.

All four gave detailed reasons for their decisions, which were all based on the specifics of the bargaining situation before them. Each carefully considered the economic environment and noted the existence of the Ontario government’s intervention in the collective bargaining process. But each based his award on such criteria as inflation and the wage patterns in each sector (hospitals, nursing homes, and universities), and all concluded that wage increases were warranted.

Why didn’t these arbitrators feel bound by the government’s compensation restraint demand?

As arbitrator Martin Teplitsky noted in his award at the University of Toronto, arbitrators have for the last four decades rejected the concept that they should consider the ability of the employer to pay. Arbitrator Owen Shime summarized this principle in an arbitration decision at McMaster: “.…[P]ublic sector employees should not be required to subsidize the community by accepting substandard wages and working conditions….”

Arbitrators must reject the government’s policy statement and wage restraint demands in order to remain independent. To do otherwise, in Teplitsky’s words, an arbitrator would “appear a minion of government”.

This Ontario Liberal government is neither the first nor last to try to bind the hands of arbitrators. The Conservative government of Mike Harris passed into law a provision requiring arbitrators to consider the ability of the employer to pay, to no avail. For, in spite of these attempts, arbitrators continue to see their role as trying to ascertain what the parties would have agreed to in “free” collective bargaining. As long as faculty associations continue to demand and secure contract improvements at the bargaining table, we can expect arbitrators to award the same.

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