Revising the Rules: Bill C-39 and the Future of Federal Labour Relations

On September 21, 2026, the federal government introduced Bill C-39 (the Building Canada Strong Act) for first reading – an omnibus bill that proposes significant amendments to the Canada Labour Code (the “Code”). The proposed amendments to the Code are among the most consequential changes to the federal labour relations framework in recent years. These amendments follow the government’s consultations in the spring of 2026, as reported in our April 2026 and July 2026 bulletins, and reflect a number of the themes that emerged therein.

The most significant proposed changes for federally regulated employers relate to:

• a restructured ministerial intervention power under section 107;
• mandatory early bargaining obligations;
• a new special mediator process;
• expanded successorship rights in respect of contractors (initially limited to airports and certain prescribed industries);
• a strengthened first collective agreement arbitration regime;
• the expansion of sectoral and multi-employer bargaining;
• a paid sick leave exemption for collectively bargained workplaces; and
• enhanced wage recovery enforcement tools.

Restructured Ministerial Intervention Power (Section 107)

Bill C-39 proposes to significantly restructure section 107 of the Code, which currently grants the Minister broad authority to take measures to promote industrial peace. Readers may recall that section 107 was used in several high-profile labour disputes in 2024 and 2025, which worker groups have challenged. The proposed amendments would make the following key changes:

• Where a lawful strike or lockout is underway, the Minister could direct the Canada Industrial Relations Board (the “Board”) to order the resumption or continuation of operations, extend the term of a collective agreement, or impose a binding method of resolving issues in dispute, where the following conditions are met:

1. The Minister must be of the opinion that the dispute adversely affects or may adversely affect the “national interest.” The bill codifies factors the Minister may consider, including but not limited to:
   • the significant impact of the dispute on the Canadian economy;
   • serious social disruption; and
   • the impact of any direction on freedom of association.
2. The Minister must have considered a special mediator’s report (see further below) before exercising this power.

• While not limited to the exercise of section 107, a new section 105.1 would require the Minister to appoint a post-bargaining mediator within six months of the conclusion of a collective agreement reached after a strike, lockout, or imposed binding dispute resolution, to try to help the parties improve their relationship.

Rather than relying on ad hoc back-to-work legislation, Bill C-39 creates a specific statutory framework for government intervention in major labour disputes. The codification of the “national interest” standard and the requirement to consider the special mediator’s report introduce procedural constraints on the exercise of this power.

Mandatory Early Bargaining Obligations

Bill C-39 introduces a new section 50.1 to the Code, which would require certain parties to a collective agreement to commence collective bargaining earlier than is currently required. The key features are:

• Bargaining must begin between 200 and 180 days before the expiry of the collective agreement where the agreement:
  • has a term of five years or more;
  • was reached after a strike or lockout; or
  • resulted from an imposed binding dispute-resolution mechanism.
• Before bargaining commences, the parties must provide written notice to the Minister and the Board, and must engage with the Federal Mediation and Conciliation Service.
• The employer’s obligation not to alter terms and conditions of employment without the bargaining agent’s consent would be triggered as of the 200th day before expiry.

The current Code leaves substantial control over bargaining timing with the parties. Bill C-39 creates a statutory obligation to start bargaining much earlier in a number of significant bargaining relationships, and imposes corresponding obligations on employers with respect to maintaining terms and conditions of employment from a much earlier point in the bargaining cycle.

New Special Mediator Process

Bill C-39 creates a new Division V.01 in Part I of the Code establishing a formal special mediator process. This new process appears to be inspired by the recommendations of the Industrial Inquiry Commission on West Coast Ports that examined the underlying issues in certain longshoring disputes and their knock-on impact on Canada’s supply chains. There is currently no equivalent regime in the Code. The key features are:

• The Minister may appoint a special mediator at any time, but no later than 75 days after a conciliation officer or conciliation commissioner is appointed or a conciliation board is established.
• The special mediator has 21 days to confer with the parties and endeavour to assist them in settling their dispute.
• If no collective agreement or tentative agreement is reached, the special mediator must provide a report to the Minister at the end of the 21-day period. If a tentative agreement is reached but subsequently rejected by one of the parties, the special mediator must also provide a report to the Minister without delay.
• The Minister must provide a copy of the report to the parties without delay and, in most circumstances, make the report available to the public without delay after a five day period following the end of the special mediator’s mandate.
• The appointment of a special mediator does not suspend the right to strike or lockout.

This would create a formal public-pressure mechanism in difficult bargaining disputes. The mandatory public release of the special mediator’s report is designed to provide a factual record before any further government intervention under section 107 and may itself influence the parties’ bargaining positions.

Expanded Contractor Successorship Rights

Bill C-39 proposes to dramatically expand the successorship provisions of the Code, beginning with airports and certain prescribed industries. Currently, section 44 of the Code addresses sales of businesses, transfers, and certain jurisdictional changes, while section 47.3 provides limited wage-rate protections in certain successor-contractor situations. Bill C-39 would introduce a new “contractor succession” framework with the following key features:

• Where a new contractor replaces a previous contractor:

1. bargaining rights transfer to the new contractor;
2. certification applications continue against the new contractor;
3. collective agreements follow the work; and
4. pending Board proceedings continue against the new contractor.

• A “new contractor” is defined as an employer who provides the same or substantially similar services as a “previous contractor.”
• A “previous contractor” is defined as an employer who previously provided services at an airport or in a prescribed industry under a contract or arrangement that is no longer in force. The Governor in Council may prescribe additional services, industries, and locations to which these provisions apply.
• The existing section 47.3 of the Code, which provides limited wage-rate protections in certain successor-contractor situations, would be repealed.

Initially, these amendments will have significant implications for employers operating in airports that engage unionized contractors and the associated contractors, particularly when those contracts come up for tender. We will continue to monitor the potential expansion of these amendments to other industries.

Strengthened First Collective Agreement Arbitration

Bill C-39 proposes to substantially reform the first collective agreement arbitration regime under section 80 of the Code. The key changes are:

• Under the current Code, the Minister may refer certain first-contract disputes to the Board. Bill C-39 replaces this with a party-driven process.
• Either party may apply to the Board after nine months have elapsed from the giving of a notice to bargain collectively for the purpose of entering into a first collective agreement.
• Upon such an application, the Board would generally be required to direct a binding method of resolving the issues remaining in dispute.
• The right to strike or lockout would be suspended upon the issuance of such an order until a binding determination is made or the parties enter into a collective agreement.

The proposed framework is more structured, more automatic, and likely easier to invoke than the current model. This would make first collective agreements easier to obtain and reduce the discretion previously held by the Minister in deciding whether to refer a dispute.

Expansion of Sectoral and Multi-Employer Bargaining

Bill C-39 proposes to expand the existing sectoral bargaining framework under section 34 of the Code. Under the current Code, the Board may certify a bargaining unit spanning multiple employers in the longshoring industry and in other industries prescribed by regulation. Bill C-39 would expand this framework as follows:

• The Board would be able to act on application by two or more employers, on referral by the Minister of Labour, or on its own initiative, to certify a union as the bargaining agent for existing bargaining units in designated industries and geographic areas.
• This would create a pathway toward broader sectoral or multi-employer bargaining structures without requiring a traditional union certification application.
• A new section 35.1 would require a newly certified union to provide a copy of its certification order to the Minister without delay, following which the Federal Mediation and Conciliation Service must engage with the parties to assist in entering into a first collective agreement.

Paid Sick Leave Exemption for Collectively Bargained Workplaces

Bill C-39 proposes to amend section 239 of the Code to introduce a narrow exemption from the statutory paid medical leave regime for unionized employers. The key features are:

• The exemption applies where a collective agreement:

1. confers rights and benefits on employees serving the same purpose as paid medical leave and that are at least as favourable as those provided under the Code; and
2. provides for the settlement of disagreements by a third party.

• Where the conditions are met, the collective agreement would apply exclusively to the settlement of disagreements relating to those rights and benefits and the statutory regime would be displaced entirely.

Strengthened Wage Recovery Enforcement

Bill C-39 proposes to strengthen the wage recovery enforcement tools available under Part III of the Code. The key changes are:

• A new settlement enforcement order mechanism would allow the Head of Compliance and Enforcement to issue a written order requiring an employer or, in certain circumstances, a director of a corporation, to pay any amounts outstanding under a written settlement reached with an employee.
• The circumstances in which an order to debtor may be issued are expanded. Such orders may now be made:

1. before a final payment order or settlement enforcement order has been issued; or
2. where the Head has received a complaint and has reasonable grounds to believe the employer has failed or is likely to fail to pay amounts owing.

The Wage Earner Protection Program Act would also be amended to:

• introduce a definition of “former employer”;
• clarify the circumstances in which an employer is subject to a receivership; and
• confirm that the Minister may confirm, vary, or rescind a determination of eligibility even in the absence of a request for review.

Takeaways

The proposed amendments to the Code represent the most significant changes to the federal labour relations framework in recent years. Federally regulated employers should carefully review these proposals and assess their potential impact on collective bargaining relationships, contracting arrangements, and compliance processes.

We at Fasken will continue to monitor this legislation and to assess whether there will be an opportunity for consultation as it proceeds. If you have questions regarding these proposed changes or how they may affect your workplace, please contact one of the authors or your usual Fasken lawyer.