New Brunswick

What you need to know about binding arbitration

Premier Blaine Higgs has rejected a push by opposition parties for binding arbitration to settle a contract dispute between 47 nursing homes and thousands of workers.

4,100 workers and 3 political parties want binding arbitration for nursing home dispute

A panel of three justices from New Brunswick's highest court will hear an appeal that will determine whether nursing home workers have the right to strike in New Brunswick. (Hadeel Ibrahim/CBC)

New Brunswick nursing home workers want their contract dispute with the government settled by binding arbitration.

The union says an impartial third party will be fair. 

Premier Blaine  Higgs rejects the idea, arguing binding arbitration is a financial risk, given how many other union contracts are up for renegotiation.

What is binding arbitration?

Binding arbitration is a hearing before an arbitrator acceptable to both parties in the dispute. The process is available to both private and public sectors. The hearing can take a few days. 

Basu Sharma, a business professor at the University of New Brunswick, says binding arbitration allows both parties to present their cases before an arbitrator.

"The main point is the arbitrator has to hear the two stories from both sides," Sharma said.

The arbitration can also be performed by a panel of three arbitrators, one chosen by each of the two parties and a third chosen by the two selected arbitrators, says Saint John labour lawyer Gary Lawson of Lawson Creamer.

Arbitrators come from a variety of fields, but it isn't easy to find someone who is impartial and knowledgeable in a certain field, Lawson said. 

To leave your operations in the hands of a single arbitrator who knows nothing about the business other than what limited stuff you can present to him or her in a relatively short hearing process is scary.- Gary Lawson, lawyer

At the hearing, the arbitrator listens to both parties and to the reasons why each side thinks it is right.

In this case, it would be the New Brunswick Council of Nursing Home Locals, which means CUPE, and the New Brunswick Association of Nursing Homes, the employer.

The province, which is in charge of the money, would also have a role.

"The funding comes from the province, so the province will be very closely, if not directly, at the table," Lawson said.

After listening to the parties, the arbitrator decides how the issues in dispute will be resolved and determines the final outcome. 

But binding arbitration can also create some uncertainty for both parties, as there's no guarantee they will receive what they're asking for. 

"When they [parties] go for arbitration, then the arbitrator's decision will be binding," Sharma said. "Whether they like it or not, they have to accept it."

Money can be a problem

Lawson wasn't surprised by Higgs's opposition to binding arbitration. 

"Money is usually the root of all problems," he said.

Sometimes an employer can't afford to pay for an increase in wages and benefits or can't afford operational changes.

Nursing home workers want a pay raise that reflects more than a cost-of-living increase. 

"The government is in tough financial straits," Lawson said. "Where do we get the money to top up the wages the employees would like?

"It's always a balance. Some employers would be rich enough."

Premier Blaine Higgs has rejected calls for binding arbitration to resolve the contract dispute with nursing home workers. ( Joe McDonald/CBC)

Although it isn't law, Lawson said arbitrators have determined that the ability to pay shouldn't be a factor in decisions when the government is the employer. 

"Arbitrators generally don't consider the financial impact of a decision on the employer," he said. "If that's the case, generally it will not fall in favour of the employer."

But in a hearing, Sharma said, each party has an opportunity to present its case, and an employer's argument could be that it doesn't have the funds to increase wages. 

Employers and binding arbitration

Lawson said employers don't typically like using binding arbitration.

And although the process might determine terms and conditions of an employment contract, it doesn't necessarily smooth things over between the two parties. 

"To leave your operations in the hands of a single arbitrator who knows nothing about the business other than what limited stuff you can present to him or her in a relatively short hearing process is scary," he said.

Lawson said the perception of employers is that arbitrators tend to side more with unions than employers.

In 2017, an arbitration board sided with the Saint John firefighters union in its wage dispute with the city, as happened with the settlement of the City of Saint John's contract with firefighters. The board approved a 2.97 per cent annual wage increase from 2015 to 2018 and a 2.96 per cent increase in 2019.  

Sharma said arbitrators are supposed to be independent and try to be fair to both parties.

"The arbitrator is a third party, so it doesn't side with the union or the management and will make a decision on the objective facts," he said.   

Other options?

Another form of arbitration that isn't commonly used is, final offer arbitration, where negotiations lead to an impasse. Each side makes a final offer, and the arbitrator makes a final decision on which one will be used to settle the dispute. 

"It's a game somewhat of Russian roulette," Lawson said.

In 2001, the province and New Brunswick doctors used final offer arbitration to settle their dispute.

A party can also go on strike, if it's allowed.

A strike in the nursing home case has been prevented by court order for the past two weeks. But a panel of three justices from New Brunswick's highest court will hear an appeal that will determine whether nursing home workers have the right to strike. 

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