Construction LawJean Van der Lee
L. Frank Molnar
Construction, Labor Relations and Occupational Health & Safety in Alberta, Canada
Field Law's (Field) regional presence and full services offices in Calgary and Edmonton as well as its office in Yellowknife, Northwest Territories, provides depth of coverage and uniquely positions it to provide legal advice and assistance to all sectors of the construction industry throughout the province and for large scale energy related projects in particular. The nature and size of oil sands and other oil and gas projects in Northern Alberta of necessity involve owners, engineering firms, contractors and suppliers from outside of Alberta. It is not uncommon for contractors and major suppliers from across North America or around the world to be involved on one or more construction projects at any one time on several major extraction or processing facilities in Northern Alberta or other remote regions of Alberta and the Northwest Territories.
While construction contracts, technical expertise and manpower are becoming more sophisticated and global in nature, for example, commonly used Alternative Dispute Resolution Processes and International Arbitration Tribunals and Procedures to resolve any disputes that may arise, a number of unique requirements and statutory provisions remain in place and must be recognized at the outset and addressed by parties doing or hoping to do business within Alberta and the Northwest Territories.
One example includes the Alberta Builders' Lien Act, which differs substantially in nature and effect from lien legislation south of the border, and also differs from lien legislation in other common law provinces in Canada in terms of timing and procedures for filing liens. The Act precludes waiver of lien rights on the basis of public policy which is itself inconsistent with American lien legislation and requirements under certain standard construction contracts imported north of the border by American contractors. The Alberta Builders' Lien Act also includes special provisions dealing with work done on or in connection with recovery of mines and minerals, and oil and gas wells in particular, that extend the time period for filing liens and allow parties providing work or services or supplying materials to file a lien against all parties having any interest in the minerals involved other than the Crown, as well as in the oil and gas or other minerals involved once extracted from the land. In addition, the Act extends the unpaid vendors lien in favor of those supplying materials or equipment to any construction project in the Province to such time as the materials or equipment supplied are incorporated into the project, affording such parties additional security over what would normally be the case under sales of goods legislation and priority over other lien claimants.
Other examples include Labor Relations, Immigration and Occupational Health and Safety Rules and Regulations. Substantial manpower requirements for major projects and the seemingly ever-increasing and changing need for specific trades or technical and engineering skills and expertise bring immigration and labor and employment issues to the fore on a regular basis. Many of the projects utilize unionized labor, which gives rise to concerns about potential work stoppages. Occupational Health and Safety or “OHS” concerns are paramount given the transitory nature of the labor force and the type of construction activities and projects in question, many of which involve expansion of or work in close proximity to ongoing extraction or processing facilities, which are inherently potentially hazardous in nature.
Construction Labor Relations
The Alberta Labour Relations Code (the “Code”) governs relations between organized labor and employers in Alberta, including the process by which unions gain representation rights (through certification or voluntary recognition) or lose representation rights (decertification), collective bargaining, strikes and lockouts and unfair labor practices.
A trade union can gain the right to represent a group of employees employed with an employer (the “bargaining unit”) by applying for certification through the process set out in the Code (“certification”) or by an employer agreeing to recognize the trade union (“voluntary recognition”). While an employer can revoke a voluntary recognition, only the employees in the bargaining unit can decertify a trade union that has been certified under the Code.
Construction industry labor relations are governed by a unique part of the Code, Part 3, which contains special procedures and a unique bargaining cycle for the construction industry. Not all companies that work in construction are caught by Part 3. It only applies to employers and employees engaged in the construction industry in respect of work in that industry. Consequently, not all work performed by construction tradespersons is construction work. Section 1(g) of the Code defines “construction” as follows:
“construction” includes construction, alteration, decoration, restoration, or demolition of buildings, structures, roads, sewers, water or gas mains, pipelines, dams, tunnels, bridges, railways, canals or other works, but does not include
(i) supplying, shipping or otherwise transporting supplies and materials or other products to or delivery at a construction project, or
(ii) maintenance work.
Consequently service, maintenance, repair and delivery of goods to a construction site are excluded from the special procedures contained in Part 3. Building trades work in plants, mines, manufacturing or transportation is also non-construction work. The Board certifies construction employees in separate bargaining units from non-construction employees.
The Board certifies construction employees on a trade-by-trade basis because the majority of trade unions representing construction workers are organized on craft lines. The Board also certifies construction employees on a sector-by-sector basis. The four construction sectors are pipeline construction, road building and heavy construction, specialty construction and general construction.
The Code allows employers to form employers' organizations to bargain on their behalf. An employers' organization can apply for a registration certificate for authority to bargain collectively on behalf of affected employers for a part of the construction industry (“registered employers' organization”). The registration certificate enables the registered employers' organization to represent a province-wide group of employers in one of the four sectors and in one trade jurisdiction or construction craft. The local unions for that trade jurisdiction then bargain with the registered employers' organization representing the unionized employers that employ members in that trade jurisdiction in the sector covered by the registered employers' organization (e.g., the unionized employers employing electricians within the general construction sector). The employers' organization negotiates a province-wide collective agreement that covers all those employers and employees (“registration collective agreement”). Any new employers that become certified by the trade unions in the sector represented by the registered employers' organization are also automatically bound by the registration collective agreement.
For this reason it is important that construction employers carefully consider the implications of voluntarily recognizing a construction trade union because the employer may unintentionally find itself bound by a registration collective agreement. The registered employers' organization can assess dues against all affected employers bound by the registration collective agreement, whether or not they are members. The Code provides that unpaid dues can be collected through civil action.
An employer is only affected by registration if it has a bargaining relationship with a trade union named in the registration certificate because of certification, voluntary recognition or by having agreed to be bound by a registration collective agreement. The effect of construction registration is limited by the scope of the registration certificate. Registration only applies to the employer's operations in the sector and trade jurisdiction named on the certificate. It does not apply to the employer's other operations.
Registration bargaining takes place on a two-year cycle. Any collective agreement that falls under Part 3 must expire on April 30 every second year calculated from April 30, 1989 (that is, every odd-numbered year). As a result all collective agreements under Part 3 are negotiated at the same time. The Alberta Labour Relations Board holds a hearing prior to bargaining and issues a consolidation order, which consolidates the trade unions into union groups. While the consolidated registered trades bargain independently of each other, strike votes and strikes must occur at the same time. The purpose behind this forced consolidated action is to prevent rotating shut-downs with one trade union after another shutting down the same construction project. A Board supervised vote must be taken before a strike or lock-out can occur. A strike or lock-out cannot occur until the vote was held and it resulted in a vote for strike or lockout, as the case may be. Votes are supervised on a coordinated basis. A vote will not be held until at least 60 per cent of the groups of unions or registered employers grouped together in a consolidation order apply for a vote, excluding those groups that have already settled. Consolidation orders only apply to employers and unions affected by registration. The Board will supervise one coordinated vote after it has received a sufficient number of strike vote requests. To ensure that strike action has industry wide approval, at least 60 per cent of the employees entitled to vote and voting must vote in favor of strike action and a majority of employees in each of the 60 per cent of the trade union groups must vote in favor of strike action. The same rules and percentages apply to lockouts.
Once 75 per cent of the registered employers' organizations and the groups of trade unions in a sector have settled, binding arbitration settles the remaining disputes affected by registration in that sector. The remaining disputes are referred to the construction industry disputes resolution tribunal. The referral ends any strike or lockouts that started and the parties go back to work at the old rates until the tribunal issues its decision.
The Code creates an exception from province wide registration bargaining for certain major construction projects. Without a guarantee that the project will be free from strike or lockout, these projects may not be built. An owner or principal contractor may apply for authorization to bargain a collective agreement that applies only to the construction of that project. Approval may be granted where the project is significant to the economy of Alberta and it is in the public interest that a principal contractor negotiates a strike free agreement that falls outside the regular registration collective agreements. These agreements are referred to as “project” or “carve-out” agreements. They are an exception to registration and any registration collective agreements, registration bargaining, strike, lockout or construction dispute resolution tribunal has no application to the project while the project agreement is in effect.
The project must be for the construction of a plant or other works or undertakings for the production or manufacturing of petroleum products, natural gas products, pulp and paper products or any other products specified in the Regulations to the Code. Construction can include an alteration of or addition to an existing plant and can include providing camp or catering facilities for such a project. Bargaining for a project agreement is voluntary. Where the principal contractor and the unions cannot voluntarily agree on the terms of a collective agreement, then the registration collective agreements will likely apply. Strikes and lockouts are prohibited over the negotiation of a project agreement.
If a construction employer has a bargaining relationship with a union and it is operating in a part of the construction industry that is not covered by a registration certificate, that employer is free to bargain directly and engage in individual bargaining. If it cannot agree upon a collective agreement any strike or lockout action involves only the employees of the individual employer.
Many construction employers chose to operate non-union. Some construction employers operate both union and non-union companies, also known as “double-breasting”, to have the flexibility to bid on work that must be unionized and to also bid on non-union work without the burden of a collective agreement. A “double breasting” arrangement must be carefully structured. It is essential that the union and non-union companies are separately operated and their operations are not intermingled. If the two companies are not properly structured and operated, the Board may declare them to be a “common employer” in which case the collective agreement binding the unionized company may be held to also bind the non-union company.
Some companies have their labor provided through a labor broker. Those arrangements need to be carefully structured. An application by a union for certification may allege that the contracting company is the true employer of the employees provided by the labor broker. If the union's certification application is successful, the bargaining certificate may end up being issued against the contracting company rather than the labor broker.
A construction company entering the Alberta marketplace needs to ensure that it engages in proper labor planning before commencing operations. That planning should include the following considerations: whether a separate company should be incorporated to carry out the project, whether the project would be completed by union or non-union labor, who will provide the labor, whether the project can be undertaken outside the registration system, and whether the project is suitable for a project agreement.
Occupational Health and Safety
While increasing OHS rules and regulations are the norm in most jurisdictions, there are certain unique requirements under the Alberta legislation that must be addressed, as briefly summarized below.
The last decade has seen dramatic changes in the Alberta government's approach to workplace health and safety. Born of the notion that employers are best placed to look after the health and safety of workers, the Province of Alberta has determined that employers must do all that is reasonably practicable to ensure the health and safety of workers. Importantly this requirement is not limited to one's own employees; rather, it is “workers” engaged in the work of that employer, and workers not engaged in the work of that employer but present at the work site at which that work is being carried out. Sound broad enough? It's intended to.
Without a doubt, the recent changes to Alberta's Occupational Health and Safety (OHS) regime should cause anyone intending to work in Alberta – particularly in an industry that has the potential for more accidents – to take note. These changes are both quantitative and qualitative. First, amendments to the OHS Act have provided for an increase in maximum fines from C$150,000 for a first offense to a new maximum fine of C$500,000 for a first offense and C$1,000,000 for a subsequent offense. Importantly, the maximum was handed down by sentencing courts almost immediately after coming into effect. Today, a decade later, it is not unusual for fines in fatality cases to reach C$350,000 to C$400,000. In cases of serious injury, fines of C$200,000 are not at all unusual.
Unique to Alberta legislation, the changes to Alberta's OHS regime introduced an OHS Code having wide ramifications for anyone doing business in Alberta. With 39 parts, 800 sections and 500 pages, the new Code is the most far-reaching OHS step taken by the Province. The Code clearly sets out a duty for businesses to be proactive when it comes to safety. Indeed, given the numerous, specific and technical directives of the Code, and given that OHS legislation is strict liability, the only defense available to breaches of OHS obligations is to demonstrate the employer was duly diligent in taking all reasonable steps to avoid it.
Accordingly, the owner, prime contractor or employer must be able to demonstrate through documentation the following:
- workers have a working knowledge of the OHS Act, Regulations and OHS Code, both in a general sense and also for those provisions specifically related to the work site in question;
- workers have a working knowledge of any hazards associated with the work site in question, including known hazards and potential hazards. Those hazards should be documented as well as the procedures or methods used to eliminate or control those hazards;
- there is a formalized system or process designed to ensure all parties at the work site are complying with the Act, Regulations and OHS Code. A practical example of this would be a written safety procedure that all workers at the work site have been provided with, and confirmation that they have read and understood the contents of the procedure;
- all workers at the work site have been trained to perform the work safely; that their performance has been monitored for compliance with the written safety procedures for the work site; that the safety procedures were enforced at the work site and where appropriate workers were disciplined for non-compliance; that ongoing communication of the importance of safety and the safety procedures to be used and followed were emphasized at the work site.
Thus it should be clear to anyone coming to work in Alberta, Canada: OHS legislation demands a considerable amount of investment of time and education in safety.
Another obligation that would have particular meaning for the construction industry, particularly given that construction sites tend to have multiple companies working at the same time is found in s. 3 of the OHS Act. “Every work site must have a prime contractor if there are two or more employers involved in work at the work site at the same time.” The role of the prime contractor is to ensure that employers, workers, contractors, and suppliers are all complying, as far as it is reasonably practicable to do so, with the Act, Regulations, and the Code. Thus the prime contractor – despite other obligation it may have by virtue of it also being an employer – must establish and monitor an overall system of safety.
In addition to the foregoing obligations, there are OHS obligations that would have particular relevance to those in the construction industry. This is the case not only because of the Alberta OHS inspectors' penchant for focusing on construction sites – justly or not, notorious for workplace accidents – but also because of the vast powers they enjoy. Alberta OHS officers have the power to stop work when they are of the opinion that work is being carried out in a manner that is unhealthy or unsafe to the workers. The consequences of a stop work order may be severe, since work may be halted until the concern is potentially creating considerable downtime.
As can be seen, the construction industry in Alberta Canada has undergone some drastic legislative changes. The effects of an OHS charge being laid against a construction company – the damage to reputation, to marketability, to the bottom line, to say nothing of the human cost – all point to the need to know the legal landscape even before a shovel hits the physical landscape.