Canada Prepares Major Labour Code Overhaul as Ottawa Rethinks Intervention in Strikes

Canada's federal government is preparing a significant overhaul of labour law as Parliament returns for its fall sitting, with proposed changes expected to address when and how Ottawa becomes involved in major strikes and lockouts.

At the centre of the debate is Section 107 of the Canada Labour Code, a provision that has allowed the federal government to refer labour disputes to the Canada Industrial Relations Board and has become increasingly controversial following interventions in major transportation disputes.

Government House Leader Steven MacKinnon has said the objective is to make it easier for employers and unions to reach collective agreements rather than undermine the right to strike. Jobs Minister Patty Hajdu has similarly said the government wants to reduce situations in which Ottawa feels compelled to resolve disputes itself.

The legislation comes after months of consultations involving unions, federally regulated employers, employee organisations and Indigenous partners.

Those consultations examined considerably more than government intervention in strikes. Ottawa sought feedback on issues including bad-faith bargaining, expedited grievance arbitration, first collective agreements, paid medical leave, wage theft and enforcement.

The precise measures included in the legislation remain important, however, because consultation proposals should not be treated as provisions that Parliament has already approved.

Section 107 Has Become the Core of the Debate

Section 107 gives Canada's labour minister broad authority in matters considered capable of maintaining or securing industrial peace.

Its use has attracted particular attention following federal intervention in high-profile labour disputes.

During the Air Canada flight-attendant dispute in 2025, Hajdu used the provision to refer the dispute to the Canada Industrial Relations Board and direct binding arbitration shortly after workers began strike action. Flight attendants continued their walkout before the parties eventually reached an agreement.

That episode added to an already contentious debate over how much authority a federal government should exercise when collective bargaining reaches an impasse.

Unions argue that frequent intervention can weaken workers' bargaining position if employers expect Ottawa eventually to end a disruptive strike.

Employers, particularly those operating transportation and communications infrastructure, counter that prolonged disruptions in nationally important sectors can impose substantial costs on businesses, supply chains and the wider economy.

Those competing concerns were visible during the government's consultations.

Ottawa's second consultation phase specifically examined possible “guardrails on section 107”, rather than simply proposing its abolition.

That distinction is significant.

The policy question is not merely whether the federal government should possess intervention powers. It is also what conditions should exist before those powers can be exercised and what mechanisms could help unions and employers settle disputes before government intervention becomes necessary.

Ottawa Considered Broader Changes to Collective Bargaining

The federal review extends well beyond Section 107.

During its first consultation phase, the government considered changes to timelines for direct bargaining, conciliation and cooling-off periods, as well as the notice required before a strike or lockout.

Officials also examined creating a special mediator role that could become involved in difficult negotiations.

The second phase narrowed the discussion towards specific issues identified during the initial process.

Among them were expedited grievance arbitration, bad-faith bargaining rules, the duration of strike or lockout mandates, first collective agreements, paid medical leave and stronger enforcement against wage theft.

The government also sought views on worker protections connected with artificial intelligence and automation, misclassification of employees and workplace health and safety.

These consultations do not mean every proposal will appear in the final bill.

They do show that Ottawa's review has been considerably broader than simply determining how to end disruptive strikes.

The government's stated goal is to strengthen the bargaining framework so that more disputes can be settled by the parties themselves.

Hajdu said ahead of Parliament's return that the government would not compromise workers' right to strike or collectively bargain.

Unions and Employers Want Different Safeguards

The prospect of reform has produced different demands from labour organisations and federally regulated employers.

Canadian Labour Congress president Bea Bruske has argued that the right to strike is an important source of bargaining power for workers and warned against new mechanisms that could prevent or terminate lawful strikes.

Employers have focused more heavily on the economic consequences of prolonged disruptions.

Derrick Hynes, CEO of Federally Regulated Employers – Transportation and Communications, has called for mechanisms capable of reducing the risk of severe disruptions, including the potential use of an independent special mediator who could report publicly on negotiations.

The disagreement illustrates the challenge confronting the government.

Making intervention easier could provide Ottawa with additional options during economically damaging work stoppages but could face opposition from organised labour.

Restricting intervention too heavily could leave governments with fewer tools when disputes affect national transportation, communications or other federally regulated services.

The Canada Labour Code applies specifically to workplaces under federal jurisdiction rather than every Canadian employee. Part I covers employees working in or connected to federal works, undertakings and businesses.

That includes nationally significant sectors where labour disruptions can have effects far beyond the workers and employers directly involved.

Parliament Will Determine What Actually Changes

The coming legislation is arriving as Prime Minister Mark Carney's government begins a busy fall parliamentary session covering economic policy, major projects and the federal budget.

Reports ahead of Parliament's return indicate that the Liberal government intends to introduce its labour legislation early in the sitting.

Until the bill itself is tabled, however, there are limits to what can be stated definitively about the new framework.

The government's consultations establish the range of measures under consideration, while statements from ministers indicate that reducing unnecessary government intervention and improving collective bargaining are priorities.

The final legislation will reveal whether that results primarily in restrictions around Section 107, new mediation mechanisms, changes to bargaining procedures or a broader package combining several reforms.

Once introduced, the bill will also face parliamentary scrutiny and could be amended before becoming law.

For federally regulated workers and employers, that legislative text will be the crucial next development.

What is already clear is that Canada is preparing to reconsider the rules governing some of its most consequential labour disputes, including the controversial federal powers that have repeatedly placed Ottawa between employers and workers at the bargaining table.