Railways prepare to restart after federal government forces binding arbitration in labour dispute

Editor’s note: Developing coverage from Friday, Aug. 23, here.

Canada’s Labour Minister Steven MacKinnon is intervening to end a work stoppage that saw this country’s two largest railways grind to a standstill Thursday, by forcing the parties into binding arbitration.

Announcing the major move from Parliament Hill, MacKinnon said he is invoking powers under Section 107 of the Canada Labour Code to direct the Canada Industrial Relations Board (CIRB) to “assist the parties in settling the outstanding terms of their collective agreements by imposing final binding arbitration.”

MacKinnon has also ordered the board to extend the term on the parties’ current collective agreements until new deals are signed, and is calling for operations on both railways to resume “forthwith.” 

The move has been met with relief from some and sparked condemnation from others.

“Canadians must be assured that their government will not allow them to suffer when parties do not fill their responsibility to them at the bargaining table, especially where worker and community safety is at stake,” he said, following a day of key meetings with stakeholders.

In a first-ever simultaneous work stoppage, Canadian National Railway (CN) and Canadian Pacific Kansas City (CPKC) locked out Teamsters Canada rail workers early Thursday morning after months of failed negotiations, where safety issues, wages and what the union called a “forced relocation scheme” for workers were top issues in the talks.

The unprecedented labour dispute snarled supply chains and complicated commutes for thousands across Canada.

Contract talks continued as picket lines went up, demonstrators marched in front of the rail companies’ headquarters in Montreal and Calgary, and thousands of railcars carrying a range of goods sat parked.

At the same time, business groups, impacted industry leaders, as well as some premiers pressed the federal government to act given the critical transport lines – when running – carry more than $1 billion worth of goods each day, according to the Railway Association of Canada.

As of 4:40 p.m. ET, when MacKinnon announced he’d be stepping in, an agreement between the parties remained “elusive,” the minister – just over a month into the job – told reporters.

“Collective bargaining negotiations belong to these parties, but their effects and the impacts of the current impasse are being borne by all Canadians,” MacKinnon said. “As minister of labour, I’m using my authorities … to secure industrial peace and deliver the short- and long-term solutions that are in the national interest.”

It remains unclear when exactly rail operations will resume, though the minister expressed hope it will be within a few days, as the impacts both on the daily lives of millions of Canadians and the economy “cannot be understated.”

MacKinnon said the lack of clarity is because as an arms-length body, the CIRB now has to consult with the parties involved before rendering a decision on next steps.

“Obviously, I’m acting at a very early stage here and hoping they will act with similar dispatch … but again, I want to be deferential to the process that will unfold here,” he said.

In response to the federal government forcing arbitration, CN ended its lockout and said in a statement that it is now working on a “recovery plan,” as the company is “satisfied that this labour conflict has ended.”

CPKC is “preparing to restart railway operations,” but won’t reveal further details on timing, until it receives the CIRB order. 

“We regret that the government had to intervene because we fundamentally believe in and respect collective bargaining; however, given the stakes for all involved, this situation required action,” CPKC president and CEO Keith Creel said in a statement.

Both railways had called for binding arbitration, a move the union rebuffed. 

Teamsters Canada said it will also be reviewing the minister’s referral and the CIRB response, but that “picket lines remain in place.”

The union said it is “deeply disappointed by this shameful decision,” and accused the Liberals of resorting to binding arbitration because they couldn’t garner enough support for a legislated resolution.

“The government has allowed CN and CPKC to sidestep a union determined to protect rail safety. Despite claiming to value and honour the collective bargaining process, the federal government quickly used its authority to suspend it, mere hours after an employer-imposed work stoppage,” a statement from Teamsters Canada said.

Prime Minister Justin Trudeau had hinted earlier that the federal government would come forward with actions before the end of the day “to make sure that the right solution is found quickly for the economy.”

“We’re taking it so seriously. The minister is engaged directly. We are not taking this lightly, obviously, because Canadians across the country are worried about it,” Trudeau said Thursday in Sherbrooke, Que., in front of a manufacturer that would have been impacted if the shutdown continued much longer.

“Collective bargaining is always the best way forward. When that is no longer a foreseeable option – when we are facing serious consequences to our supply chains and the workers who depend on it – governments must act,” Trudeau posted online after his minister took action.

Heading into crunch time, even with “significant” issues outstanding, MacKinnon said the federal government’s position remained that the best outcome would be a negotiated agreement reached at the bargaining table.

Asked why the government took the arbitration route now, rather than last week to avoid any economic harm, the minister said he wanted to give all parties the chance to come to a deal on their own.

Avoiding back-to-work legislation for now means the federal government won’t have to recall Parliament and can pause on considering where it would secure political support to pass such a bill.

NDP Leader Jagmeet Singh reiterated Thursday his party’s long-standing opposition to back-to-work legislation.

Appearing alongside some of the 9,300 engineers, conductors and yard workers who were locked out, Singh said he didn’t want to see any federal interference.

It didn’t take long for Singh – whose party continues to help prop up Trudeau’s minority – to slam the Liberals’ decision.

“Justin Trudeau has just sent a message to CN, CPKC and all big corporations—being a bad boss pays off. The Liberals’ actions are cowardly, anti-worker and proof that they will always cave to corporate greed, and Canadians will always pay for it,” he said in a statement.

While the Bloc Quebecois was noncommittal on what the federal government should do, Conservative Leader Pierre Poilievre, who is trying to court working-class voters – and backed the Liberals’ recent anti-scab law – has avoided commenting on the situation.

Ahead of MacKinnon’s announcement, former Conservative labour minister Lisa Raitt said the federal Conservatives didn’t need to weigh in until the federal government announced its next steps.

Saskatchewan Premier Scott Moe applauded the federal government for acting, saying that the move will “ensure our Canadian products are moving to market again.”

Echoing this, Alberta Premier Danielle Smith called for operations to resume “immediately,” as “each day this disruption continues will have costly impacts on our economy, workers, businesses, families and farmers.”

The federal government also announced Thursday plans to dig into the root causes behind the work stoppage.

“It is the government’s responsibility to ensure industrial peace in this critically vital sector,” MacKinnon said. “Thus, we will be examining why we experience repeated conflicts in the railway sector and the conditions that led to the parallel work stoppages we are seeing.”

U.S. lawmakers were closely watching the work stoppage on this side of the border, given the impacts to routes linking their goods across the continent.

Downplaying the pressure he faced from his American counterparts and business leaders, MacKinnon said the conversations he had in the lead-up to forcing the parties to iron out a deal were “very helpful.”

“I would categorize it, or characterize it, as helpful advice, understanding, and those relationships are extremely strong and I know the government is very grateful for them,” he said.

Speaking to CTV News Chief Political Correspondent Vassy Kapelos at the Democratic National Convention in Chigaco ahead of the Canadian government’s announcement, U.S. Rep. Haley Stevens from the key border state of Michigan said the rail stoppage was “significant” every minute it went on.

Later, her colleague Congressman Dan Kildee expressed relief that the rail stoppage was on its way to being resolved.

“It’s a huge relief. I mean, our supply chain relies on the rail sector, and in Michigan in particular… We’ve been through this ourselves,” Kildee said. “We’re glad that at least for the time being, things have settled. We hope there’s a permanent solution.”