E. Collective Agreements

Author:Roderick J. Wood
Profession:Faculty of Law. University of Alberta

Page 374

If the debtor’s workforce is unionized, the relations between the debtor and the employees will be governed by a collective agreement negotiated between the debtor and the employee’s bargaining agent. In the absence of any other statutory provision, this agreement would potentially be subject to the ordinary principles that govern executory contracts in insolvency proceedings, and the debtor would have the power to disclaim the agreement. The 2005/2007 amendments to the CCAA and the BIA introduced new provisions that govern collective agreements. The executory contract provisions of the CCAA and BIA do not apply to collective agreements.104A collective agreement remains in force and cannot be altered except as specifically provided in the agreement or in accordance with the laws of the jurisdiction governing collective bargaining.105This wording prevents a court from using the concept of inherent jurisdiction or some other source of power to make an order that permits the debtor to disclaim a collective agreement or that alters its terms. Although the collective agreement cannot be unilaterally disclaimed, the terms can be amended by the agreement of the debtor and the bargaining agent. In many restructurings, the employer seeks concessions from the employees’ union. The new statutory provisions attempt to facilitate a process for the renegotiation of the terms of the collective agreement when other attempts at renegotiation have ended in failure.

If attempts to renegotiate the terms of a collective agreement have been unsuccessful, the debtor can apply to court for an order authorizing service of a notice to bargain pursuant to the laws of a jurisdic-

Page 375

tion governing collective bargaining. The order can be issued only if the court is satisfied that a viable plan or proposal could not otherwise be made, that the debtor has made good faith efforts to renegotiate the terms of the collective agreement, and a failure to issue the order is likely to result in irreparable damage to the debtor.106This mechanism can be used to force the employee’s union to meet and bargain with the employer even though the collective agreement has not come to an end. The applicable collective-bargaining legislation defines the rules and processes that govern these negotiations. If an order is issued, the bargaining agent has the right to apply to court to request an order requiring the disclosure of information relating to the debtor’s business...

To continue reading