When Unions Aren’t Necessarily the Best Support for Employees
Original article written by Howard Levitt in the Financial Post on November 28, 2018
The question of whether unions can flourish in infertile soil is now salient in a labour dispute involving one of my clients, Flair Airlines.
Flair was a charter carrier heading for extinction when purchased by investors wishing to develop a national carrier flying across Canada and to popular U.S. destinations at ultra discount rates. A service that Canada needs.
Often when new ownership steps in, employees bring in unions for perceived protection against the unknown. It is a popular misapprehension that employees unionize for increased wages and benefits. Far more often, it is because of apprehended threats to job security or in response to abusive management. Flair’s flight attendants turned to CUPE, better known for representing white-collar public-sector employees than new private-sector entrepreneurial enterprises. But you take the union you get and, increasingly, unions, in decline in Canada and accordingly desperate for new membership i.e. dues, organize well beyond their historic craft/industrial boundaries.
Negotiations quickly foundered on what ostensibly was an intractable problem. The flight attendants’ starting wages, which the new owners inherited at this heavily discounted fare airline, was 30 per cent higher than those at Air Canada Rouge (also represented by CUPE) or at WestJet’s Swoop. The flight attendants’ wages were even higher than those at Flair’s full-fare competitors, Air Canada and WestJet. This had not been a problem when Flair was a charter airline, since it simply passed those costs on to its clients, largely oil companies ferrying workers to Fort McMurray.
When we pointed out in bargaining that these wages were unsustainable for a low-fare carrier and asked CUPE to brainstorm a solution with us, CUPE replied that it was there to obtain increases not negotiate rollbacks.
The irony is that, if these employees had never unionized, Flair could not have reduced wages because that would have been a constructive dismissal. Once unionized though, constructive dismissal law no longer applies and there Is nothing illegal in negotiating, or even imposing, even massive wage reductions. CUPE quickly ended the meeting.
I had our client advertise, everywhere it flew, for flight attendants at 30 per cent lower wages than it had been paying. CUPE was apoplectic. One can imagine the phone calls it was receiving from its members.
We assured it that, as long as wages were frozen (a temporary legal requirement as a result of the certification application), we could and would not hire at this lower wage. I informed the union that we were advertising to “better establish market wages” to assist in bargaining and to have lower-cost employees available if CUPE decided to strike.
At the next bargaining session, we shared that this young airline had received 2,100 job applications in just five weeks, all at the advertised lower wage. The meeting again ended quickly.
At the next negotiating session, the company announced it would not reduce the wages or benefits of its current employees. On the contrary, it offered certain improvements. Reciprocally though, the wages and benefits of newly hired employees would be consistent with these advertisements and there would now be a two-tier wage system.
Existing employees were relieved. Not only would their wages not be reduced as feared but they would actually obtain improvements. But CUPE has taken the position that it will not, as a matter of national policy, negotiate a two-tier wage grid.
Usually, unions ask for conciliation and run out the strike deadline to pressure the employer. But in this case, planning our strategy well in advance, we had months earlier asked for conciliation and run out the legal time frames, putting the union in a position to strike, Flair in a position to impose a lockout and, to the point, ending the legal freeze on terms of employment. When CUPE rejected our offer, we were then free to unilaterally introduce our new employment terms so that existing employees had the advantage of the improvements without having to pay union dues and all new employees were hired at the lower, advertised rates.
There is nothing illegal in negotiating, or even imposing, even massive wage reductions
CUPE is now attempting to convince existing employees to strike against employees who have largely not yet even been hired. Although both sides have a legal duty to bargain in good faith, there is no point in going back to the table. CUPE has made clear that it will not negotiate a two-tier wage grid and, from Flair’s perspective, its members are now working under the unilaterally imposed, new and better terms. If CUPE suddenly accepts the company’s terms, which I am confident it will not, employees will earn less because of union dues. CUPE has an organizational incentive not to agree to a two-tier wage system. I am advised that it has no two-tier agreement in Canada and it would be a terrible precedent for it in the public sector.
But to what extent should that be a concern for Flair’s flight attendants?
Flair has polled its employees to determine who will continue to work if CUPE strikes. A large number of flight attendants said that they will continue to work, certainly enough to operate the airline without disruption while new flight attendants are hired. Ironically, if CUPE’s strike were to make the airline unreliable to its passengers, Flair would quickly go out of business, thereby eliminating the jobs of all of its members. Flair has taken steps to ensure accordingly that a strike will not prevent it from reliably flying.
It is hard to imagine why a flight attendant making 30 percent more than their counterparts would strike just to be replaced by a person making less. Where is CUPE’s logic in this?
CUPE has filed an unfair labour practice against Flair for communicating its position to its employees and asked the labour board that it be prevented from doing so. That strikes me as a rather desperate move since the labour board has not entirely eliminated employer free speech. But as things stand, new employees are being hired at the lower wage, consistent with other discount carriers, and existing employees are working under the new, improved employment terms and original wages — what could motivate employees to go on strike?