OTTAWA — A big issue in the Conservative government’s upcoming showdown
with federal unions over a plan to eliminate accumulated sick leave is what
to do with the $5.2 billion in unused leave that public servants have already
banked and rolled over.
Treasury Board President Tony Clement has a few options to choose from
when he sends his department’s negotiators into 2014’s round of collective
bargaining with orders to attain a new short term disability plan to replace
accumulated sick leave.
By all accounts, he has been presented with proposals that range from
generous and reasonable compromises to a hard-line approach the unions would
never accept.
Many suggest that the one he picks will reveal how big a battle the
government is willing to wage with its unions.
But the government’s sweeping amendments to the Public Service Labour
Relations Act will so dramatically weaken the bargaining power of 17 unions
that many expect Treasury Board will pretty Public service unions brace for
coming showdown over sick leave
well get whatever concessions it wants. And
if it can’t, the government has the ultimate weapon: it can legislate.
Andrew Graham, a former senior bureaucrat and now a professor at
Queen’s University, says the sick leave negotiations could have been among
the most divisive and intractable in years — until the government changed the
ground rules.
With those changes, he says, the government can effectively call the
shots on which unions get to strike and which go to arbitration to resolve
disputes. On top of that, it will have the exclusive right to decide which
workers are essential and not allowed to strike.
The amendments also reduce the independence of arbitrators and ensure
they base their awards on the government’s budgetary priorities and that the
recruitment and retention of talent are done at current pay rates.
The amendments mark the biggest overhaul of the law since it was passed
by the Pearson
government in 1967, giving public servants the right to
unionize and to bargain collectively. Clement has said he wanted the changes
in place for the 2014 round of bargaining.
The big question is what the
unions will do.
They had a bargaining strategy before learning of the reforms, which
were included in the omnibus budget bill. Their leaders have since closeted
themselves in secret strategy sessions, exploring the options, implications
and repercussions — not only for this round of bargaining but into the
future.
So far, they have vowed to try to get the government to remove the
amendments from the omnibus bill and discuss new legislation.
“The deal this government makes will depend on how much they want
labour peace,” says Graham. “And what will the union position be? Are they
going to fight what I think is a losing fight? Despite their public and
private protestations, they should look around and see how alone they are in
this ball game with sick leave and try and cut the best deal they can for
their members. They can be stubbornor have a sweetened transition.”
But Ron Cochrane, co-chair of the union-management National Joint
Council, says that while the government may have the power in this round, it
still has an obligation to bargain in good faith. “The omnibus bill tilts the
bargaining in favour of the Harper government but it continues to be governed
by the duty to ... make every reasonable effort to conclude a collective
agreement,” Cochrane says.
The government will approach the talks with a basic design that’s built
around three critical factors: the number of sick days per year public
servants will get, the amount of time the short-term disability plan will
cover 100 per cent of salary, and the contribution rates for a revamped
long-term disability plan.
An early draft of the business plan obtained by the Citizen shows
options that would give public servants between five and seven paid sick days
before going on short-term disability. Short-term Public service unions brace
for coming showdown over sick leave
disability typically covers employees for
26 weeks, offering graduated incomes that drop the longer employees are off
work. Long-term disability kicks in after that.
The parties would have to decide whether to allow the carry-over of
unused days, but clearly the government wants to stop the accumulation of
unused sick leave.
The government’s plan has been years in the making. In fact, unions
were warned changes were coming when Treasury Board launched a $5.6-million
disability management initiative several years ago to get a handle on the
government’s record-high absenteeism rates and soaring disability rates, led
by an epidemic of mental health claims.
The project team set up to lead the initiative developed a strategy for
departments, along with a guidebook, manual and training, and was supposed to
provide cabinet with a business plan on next steps last year.
The new strategy is aimed at preventing injury and illness in the
workplace and getting managers to actively support workers who are on sick
leave by ensuring they get early care and return to work as quickly as
possible. The team came up with a four-year plan which would cost $26 million to
unroll and could generate hundreds of millions in savings by 2018.
One of the big changes is early intervention by third-party case
managers who would step in to monitor and support sick and ill employees as
soon as they go on short-term disability. But scope of the proposed four-year
overhaul is sweeping.
Along with negotiating with unions, the government has to seek tenders
for new short- and long-term disability plans. The labour minister has to
hammer out new arrangements with the various provincial workers’ compensation
boards to improve the timeliness and handling of injury-on-the-job claims.
At the same time, the Employee Assistance Program has to be retuned and
expanded and Health Canada’s role in conducting the fitness-to-work
evaluations could be shifted to the short- and longterm disability
insurers.
The unions are in a tough spot. They have been a part of the disability
management initiative and they also have concerns about the way sick leave
and disability is now managed. Many, however, feel the existing system is
workable and can be fixed rather than charging ahead with a
wholesale overhaul.
Many of the problems with the existing system are embedded in the
design of the plan, which has remained unchanged for 40 years. Managers are
failing to monitor and track the use of sick leave like they should, a
weakness that when combined with a generous sick leave benefit has invited
abuse.
Canada’s public servants now get 15 days of fully paid sick leave a
year. They can carry over any unused days and roll them over year to year,
which they do at a cost of $325 million a year. A big question is what will
happen to all that banked sick leave that many public servants feel they
earned.
The government is worried about a run on banked sick leave from
public servants who may want to use it before they lose it. Steps are being
taken to ensure that doesn’t happen.
Public service unions brace for coming showdown over sick leave. But
the government also has a fiscal imperative to deal with banked sick leave,
which if reported as
an ongoing employee benefit that could be payable in the
future would be worth $5.2 billion for the core public service and separate
agencies. The government is under pressure to record its total compensation
costs, including sick leave and disability costs, in its books.
“They want to get rid of it from two perspectives,” says Graham.
“First, as a contingent liability on the books and as a residual entitlement.
They could let it die out but that would take a long time — it would be years
— or they could do what Ontario did and make a deal with unions which
essentially gave a lump sum for earned sick leave.”
The joint council’s Cochrane says the unions want to see a business
case for the overhaul. They have long suspected the reforms are driven by
getting the $5.2-billion liability for accumulated sick leave off the books
to help reduce the deficit before the 2015 election. Treasury Board officials
say that amount isn’t officially on the books and acknowledge the liability
is much less than $5.2 billion because not all public servants will use their
banked leave and whatever is left can’t be cashed out.
But some critics say
the Conservatives don’t want to shell out more money to public
servants, especially when they’re still paying them billions of dollars for
buying out of the accumulated severance pay for voluntary departures the
government eliminated during the last round of bargaining.
Rather, the
government could kill unused sick credits or it could compromise and offer to
carry them over to be used only to top up the 70-per-cent salary typically
guaranteed by short-term disability plans.
But banked sick leave is just one of the many variables that will be up
for discussion.
The number of discretionary sick days will also be a
contentious issue. The government would like to limit those 15 days to
between five and eight a year. It also wants no further
year-over-year accumulation of unused days.
Once those days are used, a short-term disability plan would kick in
that would be managed by a plan administrator. With short-term disability
comes case management — done by a third party — to help all workers get the
rehabilitation, support and medical care needed to get back to work
faster.
Another big issue on the table will be the sick leave formula to
replace salaries while on short-term disability. The task force recommended a
graduated scale that starts at 100-per-cent salary and would fall to between
70 and 75 per cent the longer an employee remains on disability. The
parties will have to negotiate the number of days that will be on full
pay.
Short-term disability is typically about 26 weeks before long-term
disability begins. The hope is that earlier intervention will mean fewer
employees will have to resort to long-term disability.
The government will
have to call new tenders for its two existing long-term disability plans — one
for unionized workers managed by Sun Life Assurance and another managed by
Industrial Alliance for executives. The plans could be merged into one and
the waiting period would be extended from 13 weeks to 26 weeks that someone
could be on short-term disability. Public servants now get 70 per cent of
their salary under the existing plan. That’s unlikely to change.
Public
service unions brace for coming showdown over sick leave
Contribution rates for long-term disability will also be up for
discussion. Employees now pay 15 per cent of contributions and the government
covers the rest. A move to shift half or three-quarters of the cost to
employees could also be on the table.
The unions did have input into the disability initiative and the
government is well aware of their concerns, which could be addressed as
trade-offs or “inducements” to help reach a settlement.
Unions have long
raised concerns that young or new employees can’t bank enough sick leave
to cover recurring or chronic illnesses. At the same time, healthy older
workers who have built up lots of sick leave have to exhaust it all if they
fall ill before getting the rehabilitation they need. And then the bank is
empty if they relapse. Others simply abuse sick leave and feel entitled to use
it as they ease into retirement.
The government would prefer to negotiate with all unions, representing
employees in both the core public service and separate agencies, all at once.
It wants a uniform transition to a new system and to avoid having two systems
with some still operating under the old system and others under a new
one.
Unions expect the government will approach negotiations similar to the
special round of bargaining it called several years ago to get rid of
severance pay for voluntary departures.
In that case, the government targeted the largest union, the Public
Service Alliance of Canada, struck a deal and then offered the same
take-it-or-leave deal to all the other unions. Many objected and took it to
arbitration, which eventually sided with the government because the largest
union had accepted the deal.
But PSAC President Robyn Benson has been unequivocal in her refusal to
negotiate sick leave in this round: “We won’t trade it, sell it, swap it,
lose it or give it away.”
Cochrane agrees: “The fact that this government is
so anti-employee and will go to the extreme to get its way makes it the bully
in the schoolyard that needs to be put in its place. Hopefully the
employees will recognize the bully and stand up to it.”