Interest Arbitration in Canada: Explained
When collective bargaining reaches a standstill in hospitals, long-term care homes, or other healthcare settings, a process known as interest arbitration often resolves the dispute. This legal mechanism ensures that essential healthcare services continue without interruption while providing a fair way to settle outstanding issues between unions and employers.
If you work in healthcare in Ontario, British Columbia, or anywhere in Canada, understanding how interest arbitration works can help you approach negotiations with confidence and clarity.
What Is Interest Arbitration?
Interest arbitration is a dispute resolution process used when a union and employer cannot agree on the terms of a new collective agreement. Instead of a strike or lockout, both sides present their final positions to a neutral board of arbitration, which issues a binding decision on outstanding matters such as wages, benefits, or working conditions.
This process is common in essential service sectors, such as hospitals, retirement homes, and healthcare facilities, where strikes could compromise public safety or patient care.
In Ontario, interest arbitration in the hospital sector is governed by the Hospital Labour Disputes Arbitration Act (HLDAA). British Columbia follows its own labour relations legislation, which also restricts strikes in certain healthcare sectors. Despite procedural differences, the goal remains the same: to promote stability and fairness in public healthcare labour relations.
Interest Arbitration vs. Rights Arbitration
While the terms sound similar, they serve different purposes. Interest arbitration determines the terms of a new collective agreement when bargaining reaches an impasse.
Rights arbitration interprets and enforces an existing collective agreement, resolving disputes regarding the application of current terms. For example, a disagreement about overtime pay or seniority would usually go to rights arbitration, not interest arbitration.
Understanding this distinction helps unions and employers choose the correct process for their dispute.
The Legal Framework
In Ontario, section 9(1.1) of the Hospital Labour Disputes Arbitration Act outlines key factors that an arbitration board must consider when making an award:
- The employer’s ability to pay in light of its fiscal situation.
- The extent to which services may need to be reduced if funding and taxation are not increased.
- The economic situation in Ontario or the local community.
- Comparisons with other public and private sector employees performing similar work.
- The employer’s ability to attract and retain qualified employees.
These criteria ensure decisions balance fair compensation for employees with fiscal responsibility and service continuity for employers.
Arbitrators also rely on well-established principles such as replication (reflecting outcomes of free collective bargaining), comparability (aligning with similar workplaces), and demonstrated need (addressing proven issues in the workplace).
Arbitration awards are binding and enforceable under provincial labour laws, giving both parties certainty and finality in their outcomes.
A Recent Example: Primacorp and SEIU Local 1 Canada
In a 2025 decision under the Hospital Labour Disputes Arbitration Act, the arbitration board in Service Employees International Union, Local 1 Canada v. Primacorp o/a Amenida Pickering resolved outstanding issues in a renewal collective agreement.
The board, chaired by Arbitrator Jesse Kugler, approved wage increases of 4% in 2023 and 2024, and 3% in 2025 and 2026, and ordered retroactive pay for eligible employees. The decision applied the statutory factors under the HLDAA, balancing fair employee compensation with the employer’s financial realities.
This case demonstrates how interest arbitration provides a structured and legally sound resolution when negotiations reach an impasse.
How the Process Works
- Notice to Bargain: A union or employer gives notice to begin negotiating a new collective agreement.
- Collective Bargaining: Both sides meet to negotiate terms such as wages, hours, and benefits.
- No-Board Report or Impasse: If no agreement is reached, the matter proceeds to arbitration instead of a strike or lockout.
- Arbitration Hearing: Each side presents proposals and evidence before a neutral board.
- Arbitration Award: The board issues a binding decision setting the new terms of the collective agreement.
This process ensures continuity of care in the healthcare system while protecting the rights of both employees and employers.
Interest Arbitration in British Columbia
While Ontario follows the Hospital Labour Disputes Arbitration Act, British Columbia uses its Labour Relations Code and related essential services legislation.
In BC, healthcare employers and unions may also be restricted from striking under laws governing essential services. When bargaining fails, disputes may be referred to an independent arbitration panel or mediator-arbitrator.
Although BC’s framework differs from Ontario’s HLDAA, the purpose is consistent: to protect public health and maintain fair labour relations through neutral, binding decision-making.
While each province has its own arbitration structure, all share the same goal of ensuring essential healthcare operations continue while safeguarding collective bargaining rights.
Why It Matters
Interest arbitration is essential for maintaining labour peace in Canada’s healthcare sector.
It:
- Ensures uninterrupted delivery of essential services.
- Promotes balanced outcomes for employees and employers.
- Encourages fair, evidence-based decisions grounded in legal criteria.
- Builds stability and trust in the collective bargaining process.
For healthcare workers, it means job security and continued benefits during negotiations. For employers, it provides predictability and protection from service disruptions.
How a Lawyer Can Help
Both unions and employers benefit from experienced labour and employment lawyers who can:
- Represent them effectively during collective bargaining and arbitration hearings.
- Analyze wage comparators and industry standards.
- Ensure compliance with legislation such as the Hospital Labour Disputes Arbitration Act.
- Prepare submissions and evidence for arbitration.
- Advise on post-award implementation and compliance.
A lawyer’s guidance can help both parties achieve fair outcomes while avoiding procedural missteps or unnecessary conflict.
In Summary
Interest arbitration is a cornerstone of Canada’s healthcare labour relations system. It offers a fair alternative to strikes and lockouts, ensuring that patient care continues while workplace issues are resolved effectively.
Whether you are an employer managing a hospital or long-term care home, or a unionized employee seeking fair compensation, understanding this process can help you make informed decisions and protect your rights.
Need Labour Law Advice?
At Achkar Law, we understand the complexities of collective bargaining, arbitration, and employment law across Canada.
Our team assists both employers and employees in managing interest arbitration and related disputes with confidence.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Achkar Law Professional Corporation and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Achkar Law Professional Corporation. ©