A very recent Supreme Court of Canada (SCC) decision, Canadian Artists’ Representation v National Gallery of Canada, considered the parameters of the duty to bargain in good faith.  The Court found that a labour tribunal’s conclusions regarding bargaining in bad faith were reasonable, where a company took a “rigid stance” it knew would not be acceptable to the other side and failed to exchange information prior to bargaining.

The collective bargaining being considered related to the terms of “scale agreements” governing employment terms between artists and producers. These agreements provide the basic terms and conditions for the use of artists’ work by artistic producers – in this case, the National Gallery of Canada in Ottawa (the “Gallery”). According to the Status of the Artist Act, these agreements act as a floor for artists’ wages across an identified sector and are administered by certified artist associations.

In 2003, two artist associations jointly began negotiating scale agreements with the Gallery. Over the course of four years, the two parties exchanged many drafts of scale agreements that included minimum fees for using artists’ existing works. Although the Gallery had some reservations about these fees, it did not voice the concerns until 2007 when it put forward a draft agreement that made no mention of minimum fees for existing works. The Gallery took the position in collective bargaining that it was not required to pay such fees based on a legal opinion about the relationship between scale agreements and the Copyright Act.  The artist association filed a complaint with the Canadian Artist and Producers Professional Relations Tribunal (the “Tribunal”) alleging that the Gallery had not fulfilled its duty to bargain in good faith.

The Tribunal found that the Gallery had indeed not bargained in good faith by refusing to accept that the licensing or assignment of the copyright in existing works could be subject to minimum fees in a scale agreement, even though this was a widely held practice and well-established component of the particular agreement being negotiated.

The Tribunal’s reasoning was was overturned on judicial review. A unanimous SCC  overturned the lower courts and reinstated the Tribunal’s decision, finding that the Tribunal’s decision was “reasonable” and should not have been reconsidered. In particular, it was found reasonable to conclude that the Gallery was not bargaining in good faith when it did not follow past practice of exchanging draft agreements before bargaining meetings and when the Gallery proposed an agreement without minimum fees for existing works. Taking a rigid stance on that proposal, which would be clearly unacceptable to the opposing party, amounted to bad faith bargaining.

While this decision should be read in the context of this particular bargaining relationship, there are useful take-aways for unionized employers. First, the SCC re-iterated its long-held position that deference should be accorded to labour tribunals in determining issues of fact and law on judicial review. This case provides further reason for reviewing courts to be hesitant in challenging determinations of specialized labour tribunals where such decisions make findings of fact through weighing of the evidence.

Second, bargaining in bad faith may be found where a negotiating party takes an intransigent or “rigid” position, knowing that the position will be unacceptable to the other side, where the position is a departure from widely accepted practices and previous agreements.

Finally, the decision makes clear that the manner in which bargaining is conducted can be relevant to determining whether bad faith is present. Bargaining protocols, like exchanging proposals in advance, should not be departed from lightly, particularly where significant changes to the existing bargaining relationship are being proposed.  In this respect, the procedure may well be considered along with the substance of the negotiations in determining the issue of bad faith.