Digest of Benefit Entitlement Principles Chapter 8 - Section 7

8.7.0 Financing

One of the three exempting conditions provided for in the legislation dealing with labour disputes requires that the claimant not finance the dispute that is occurring at their place of employment (EI Act 36(4) and Digest 8.1.4). The claimant's entitlement to benefits is not tied to the fact that there are other workers of the claimant's grade or class who are financing the dispute.

8.7.1 What does financing a dispute mean

Historically, this expression signified the general fact of providing financial assistance to one of the parties to the dispute, namely the employees, in order to help them set up and maintain a stoppage of work attributable to a labour dispute, resulting in the loss of their employment. This meant that anyone who provided a monetary contribution to this financial support, whether voluntarily or not, directly or indirectly, was considered to be a person who was "financing a dispute", pursuant to the labour dispute provisions of the act.

Since then, a Supreme Court's majority judgment has resulted in a more restrictive interpretation of the word "finance". This judgment better reflects the purpose of the act as a whole, and prevents innocent victims of the dispute from having their benefits denied. It was argued that the act should be interpreted in a way that would be compatible with the values in the Canadian Charter of Rights and Freedoms concerning the right of freedom of association (FCA A-021-77, CUB 4454 and S.C.C 19094, FCA A-175-84, CUB 8764). The judgment maintained the concept that the word "financing" used in the labour dispute provisions implied an active connection between the payment and the dispute, and a direct action on the part of the claimant to provide financial support to the workers involved in the dispute. Furthermore, according to the Court, the word "financing" requires active participation by the claimant, a free and voluntary contribution to this same cause.

The Court found that these elements were not present where the financial support provided to the workers in the dispute is issued from a fund established and administered by the international union; in that case, the person had no choice but to pay union dues, a portion of which was diverted to that fund, and had no voice in the decision of the international union to finance the dispute.

The Court emphasized some important principles regarding the union-employee relationship that exists nowadays in Canada. The point was stressed that, today, unions are neither agent nor mandatory for the employee; upon this construction, a claimant who pays mandatory union dues could not be held to finance a strike through such dues.

To sum up, the word "financing" implies a meaningful connection: a direct action between the contribution and the labour dispute and requires a free and voluntary participation by the claimant to provide financial support to the dispute. These two characteristics are essential.

8.7.2 Who is financing a dispute

When the Supreme Court rendered its landmark majority, it responded to the appeal, and defined the approach that should be followed for all forms of financing that support employees who are a party to the labour dispute (S.C.C 19094, FCA A-175-84, CUB 8764).

The identification of who is "financing a dispute" is no longer dependent on the sole fact of providing financial support to the employees involved in a dispute. Although this contribution is essential, it would be premature to conclude that whoever contributes is "financing a dispute".

The name given to the financial support is not really important, whether it is called a strike indemnity, picket pay, lock-out pay, relief money or a loan of money. What is essential is that such assistance makes its way to the workers who are a party to the dispute.

It would be difficult to determine who contributed and in what manner, without tracing the financing back to its origin. Therefore, the narrow definition and the principles expressed by the Supreme Court will be applied to identify who is "financing the dispute".

8.7.3 Strike fund

The activities of a union are mainly financed from the union dues deducted from the work force that is part of the negotiation units that this union represents. These may be used to set up a general fund for various uses, or to set up a specific fund designed to provide financial support to its members, for example, in case of labour disputes. Such funds may be established and managed strictly by the local union or, as is more frequently the case, by a central union of provincial, national or international scope which represents their common interests. The local unions are affiliated with the central union and remit a percentage of the union dues deducted from their own members in order to guarantee various services, such as professional defense and a relative protection of their income in case of disputes.

It would not be possible to pursue union objectives without these incoming funds and without insuring its continuance through union security by demanding certain measures such as mandatory payment of union dues, among others. An employee is generally required to pay dues to the accredited union, obliged to become a member of the union, may be free to not become a member, or there may be a certain delay before an employee becomes a member.

What this means is that a specific situation where the employees are obliged to pay union dues into a fund over which they have no voice or control, is in line with the Supreme Court's conclusion. It was decided that the two essential elements that characterize who is "financing a dispute" were not present in such a situation (Digest 8.7.1 and Digest 8.7.2).

This is not an exceptional situation since most strike funds are comprised of mandatory union dues. Consequently, in most cases, these individuals will have no difficulty proving that they are not financing a dispute within the meaning of the exempting clause.

This applies regardless of the level of the union’s constitution and administration of a fund that will ultimately support the employees in the dispute. It is independent of the fact that the contributing employees are members of the negotiation unit that is a party to the dispute, or that they are receiving strike indemnity from this fund.

A situation may be different from the one studied by the Court, either because the employees contributed voluntarily to the fund, or had a voice in the decision to use this fund to support the workers involved in the dispute. This would be the case when an employee voluntarily contributes, whether through regular dues or by a special fund-raising campaign, to a fund constituted and administered at some union level, and having a specific objective to help the workers involved in a dispute.

A second situation of this kind may be where the decision to provide financial support to these workers is made at a general or special meeting of union members of the negotiation unit to which an employee belongs. The decision of the majority of the members to provide such a support will bind this employee, whether or not they agree with this decision, and even when there is no other choice than to contribute to the fund that is used for financing. It can be said generally that a person should accept not only the advantages, but also any disadvantages that may result from their association with others.

In both of these situations there is an active and direct connection between the payment and the dispute, and a free and voluntary participation from the employee. These are the two essential characteristics of who is "financing a dispute".

A decision by a union executive, to unilaterally provide financial support to the workers involved in a dispute from a fund made up of mandatory dues, does not bind the individual employees. This is true, even if theoretically they have a right to question this decision or can present a motion of disapproval. It cannot be said that this decision of the union executive means that the individual employee, who was obliged to contribute to the fund used for financing and did not have a significant right to decide in favour or against this support, is "financing a dispute".

While the majority of the members may vote in favour of financial support to the workers involved in a dispute, some may officially declare themselves to be against this position, or as non-unionized or probationary employees, did not have the democratic right to take a position on the question. Such arguments could lead to the conclusion that these persons are not "financing a dispute".

8.7.4 Other forms of financing

Union dues remitted to a consolidated strike fund established specifically for the defense of its members undoubtedly constitute the main source of financing for the payment of strike indemnities. Rarely, however, are such funds so large as to meet all needs, particularly if the strike is prolonged. Some unions will resort to other means, call upon other resources or invoke union solidarity to obtain financial support for the workers involved in the dispute.

Another union organization or local working at the same place of employment but not involved in the dispute may show their solidarity to the workers involved in the dispute and provide financial support either in a lump sum or continuous manner. It will then be necessary to determine whether the two characteristics judged essential by the Supreme Court are present in this situation (S.C.C 19094, FCA A-175-84, CUB 8764; Digest 8.7.1 and Digest 8.7.2). Such would be the case when it is specifically following the decision of the majority of the local union members, that this financing support be provided (Digest 8.7.3).

It may be that a local union will use its own funds to support a dispute, by financing certain activities or operations for the benefit of the strikers, for example by renting premises for their use, printing picket signs, or even advertising in the media. Such expenditures that do not go specifically to the workers involved in the dispute and that are usually authorized by the union executive should not be considered as being financed by each of the members.

In the case of essential services, some employees who are required to continue to work despite the dispute will agree to remit part of their wages as a contribution to the cause of the strikers. By such a direct and voluntary contribution, these employees are without a doubt “financing a dispute".

Certain members of a local union may also be “financing a dispute" on their own. When such persons freely and voluntarily contribute to the dispute by giving money to the group involved in the dispute, they are considered to be "financing a dispute".

8.7.5 Period of financing

Union constitutions usually provide for a waiting period at the beginning of a stoppage of work before benefits may be paid to strikers. Only after this period and if the stoppage of work still continues may payments be made from the strike funds. The scale of such payments varies depending on a person's marital status and the extent of involvement in strike activities in picketing.

Financing does not begin on the day the first payment is made, but on the effective date from which strike benefit is payable (CUB 52514 and CUB 51828), and continues for as long as assistance is provided to the workers involved in the dispute. However, the fact that strike indemnities become payable does not necessarily mean there is someone who "is financing the dispute" (Digest 8.7.1, Digest 8.7.3 and Digest 8.7.4).

In one case where financial assistance consisted of loans of money made by the local union, the period of financing was held to be that interval starting with the first loan and ending with the last loan.

Should the labour dispute be financed through a lump sum payment rather than a weekly strike benefit, financing is considered to start on the day the payment is made and is deemed to continue until the termination of the stoppage of work.

[April 2019]