By Thomas A. Roper, Q.C.

Project stability, cost stability and a qualified workforce: these are the primary objectives of project owners and contractors involved in major project construction. These objectives are not new, but will become increasingly important should anticipated construction of LNG facilities, utilities and infrastructure projects get underway in British Columbia. Projections of skills shortage in certain trades combined with an increasing demand for labour will magnify the importance of obtaining and retaining a qualified construction workforce to deliver projects on time and on budget.

(This is an abridged version of a fuller version available online.)

All Hands On Deck
It is fair to say that if all of the projects in the pipeline come to fruition, there will be an “all hands on deck” requirement for qualified labour, drawing upon skilled trades workers in British Columbia, across Canada and internationally. To secure a supply of skilled labour, project owners or EPCMs (contractors who provide engineering, procurement and construction management for large projects in the infrastructure, mining and energy sectors) will want the participation of as many contractors as possible, including building trades unions (unions certified on a craft basis), wall-to-wall construction unions (union certified on an all-employee basis, and non-union trades).

A workforce model that provides project stability, avoids escalating labour costs and also delivers qualified workers would be highly desirable and beneficial for project owners and prime contractors. A project labour agreement is one such model.

Open Site vs. Industrial Construction Models
Historically, most major infrastructure project construction in B.C. has been performed on an “open site” basis whereas industrial construction has been a mainstay for the building trades unions. The proponents of open site construction argue that it is beneficial because it supports competitive bidding and maximizes the potential supply of labour. There has been a growing use of project labour agreements primarily in the industrial construction sector. Proponents of project labour agreements with building trades unions point to project stability derived from no strike/lockout provisions, and the supply of a highly qualified labour force secured through union hiring halls.

An “open site” model allows the owner or EPCM to accept bids from any qualified contractor. Without specifying labour terms, this model potentially leaves the project vulnerable to labour disruption (strikes/lockouts), productivity issues arising from different employment conditions for workers on the same site, and a lack of coordination of labour relations and safety on the site. At the other end of the spectrum is a project labour agreement with building trades unions which guarantees labour stability and provides consistency on key employment terms, but may restrict competitive bidding by non-union contractors (or non-building trades contractors) who are not enthusiastic about signing on to a building trades project labour agreement.

Hybrids of these two models may achieve the best of both.

Project Labour Agreements in Canada
Historically, project labour agreements (PLAs) in Canada have been exclusive to building trades. Such agreements are similar to the construction industry standard agreements negotiated with the same unions, but can include provisions to provide consistency across other participating unions. They also sometimes “enable” certain standard provisions to facilitate the competitiveness of the building trades to attract the work and also contain provisions precluding work stoppages and picketing for the duration of the project.

In British Columbia, the construction of hydroelectric dams in the 1960s and the refurbishing and expansion of certain dams beginning in the 1990s and continuing to today was accomplished under a form of project labour agreement negotiated for B.C. Hydro through its wholly owned subsidiary, Columbia Hydro Constructors Ltd. This model closely resembles the project labour agreements in the US, where the owner negotiates the PLA and stipulates its terms in the bid requirements for contractors.

Other examples of PLAs in the private sector in B.C. include major projects involving Rio Tinto Alcan where the prime contractor, Bechtel, negotiated a project labour agreement with building trades unions through the vehicle of a contractors association. The agreement was structured so all contractors awarded work on the project must belong to the contractors association which is signatory to the PLA. Building trades PLAs have also been negotiated for an expansion at Endako mine, and more recently for the John Hart Generating Station Replacement in Campbell River. The Christian Labour Association of Canada (CLAC), which represents construction workers on a wall-to-wall basis, has negotiated “pre-job” agreements for major projects such as the Cabin Gas Plant near Fort Nelson.

PLAs Unaddressed in BC Labour Relations Code
Project labour agreements are expressly acknowledged and supported in labour relations legislation in Alberta and Ontario. The BC Labour Relations Code contains no provisions with respect to project labour agreements, but they are not precluded either. The Labour Relations Board has confirmed the validity of project labour agreements in a number of its decisions.

To constitute a valid collective agreement, the project labour agreement must be between an “employer” and a “trade union”. Thus, while a project owner may negotiate a PLA with a union or group of unions, the PLA essentially becomes part of the procurement terms that will form part of the bidding requirements. The PLA does not become a “collective agreement” until an employer of construction workers adopts the agreement (which it would be commercially obliged to do). On the union’s side, our Labour Relations Board has recognized pre-hire agreements with building trades unions, holding that the operation of a hiring hall is a proxy for membership ratification of the agreement. The Labour Relations Boards in Alberta and Ontario have extended that reasoning to the non-building trades construction unions.

Variable Options Available
There are however, variations on these themes. Examples exist of contractors or consortiums entering into project labour agreements with building trades unions for the purpose of bidding on the project. In other words, the PLA is in place if the contractor, or consortium, is awarded the contract. As such, the proponent is able to demonstrate to the owner that it can provide labour cost stability and project stability through the PLA.

Another option is for the project owner to negotiate labour terms of procurement (in the form of a PLA) with a union or group of unions and then include those terms in the bid qualifications. Contractors submit bids knowing that they will be bound by the terms of the PLA. This may limit bidding only to contractors who already have agreement with unions that are signatory to the PLA.

Alternatively, a project owner could simply stipulate all of the terms one might expect to see in a project labour agreement, in the bid requirements, leaving it to the contractors to secure agreements with their unions to modify the terms of their own collective agreements to conform to the project bid requirements. The ability of a unionized contractor to bid on a project will be contingent on that contractor negotiating these terms with its union. These models are often referred to as a “managed open site.”

A Hybridized Potential
There is no reason why a hybrid of the open site or managed open site model and the project labour model cannot be created. For example, a project labour agreement need not be negotiated exclusively with building trades unions. It conceivably could be negotiated with both building trades and other construction unions and provide terms and conditions for non-union construction workers on the project as well. The Canadian National Resources Limited, Horizon Oils Sands Project (http://www.cnrl.com/working-together/oil-sands-mining/horizon-project-labour-agreements.html) in Alberta provides an example of multiple PLAs to accommodate the engagement of both building trades and non-affiliated construction unions.

A project labour agreement might consist of a general section setting out terms applicable to all employees and then contain sub-agreements applicable to particular unions or groups of unions, or applicable to different phases of the project. Its terms could also apply to non-union contractors working on the project. In other words, a project labour agreement can be designed to achieve the objective of labour stability, cost certainty, and the supply of qualified labour regardless of the union status of the contractor. The PLA could also facilitate public policy or social license objectives such as those relating to training, local hiring, and First Nations’ involvement.

Permitting non-union contractors to participate on the project with their own workforce has the advantage of opening another source of labour supply, but the disadvantage of creating potential labour risk if that contractor is organized during the project with the union having the attendant right to strike and picket. That possibility can be covered in a PLA which would subsume the non-union contractor within a defined multi-employer, multi-union bargaining unit if the contractor was organized by a signatory union.

Our Labour Relations Board issued a significant decision on April 10, 2014 (Kitimat Modernization Employer Association et al v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local No. 97 BCLRB No. B111/2014) where it recognized that the Rio Tinto PLA created a single multi-employer multi-union bargaining unit for representation purposes; thus precluding segmentation of the PLA workforce.

Conclusion
As we move into a period of tighter labour supply, greater labour demand and potential skill shortages, we are likely to see more consideration of labour models that can deliver the objectives that project owners, construction contractors and, on public projects, the government wish to achieve. Those options are not limited to an open shop or open site model or a project labour agreement with building trades unions. There are variations between those models that can be considered to ensure a successful project outcome.

Thomas A. Roper, Q.C. of Roper Greyell LLP represents employers in the public, private sectors and professional association.

(PeopleTalk Winter 2014)