Background

Pursuant to the Status of the Artist Act (the SAA), associations are certified to represent Canadian artists and negotiate agreements on their behalf. These agreements, called ''scale agreements," are analogous to a minimum wage for the use of the artists' work. Certified associations are essentially bargaining agents, and negotiations take place in a manner similar to collective bargaining in the labour relations context.

In 2003, two certified associations (the Associations) began joint negotiations with the National Gallery of Canada. The negotiations included a proposed scale agreement setting out minimum fees for the use of existing works. The National Gallery expressed reservations about the scale agreements for existing works early in the negotiations, and advised that it would seek legal advice.

Throughout the four years of negotiations that followed, the parties exchanged draft agreements that contained scale agreements for existing works. In 2007, the National Gallery announced it had sought a legal opinion on the Associations' authority to negotiate scale agreements for existing works, and, based on that opinion, announced it would no longer discuss the fees. The National Gallery also provided a revised agreement that excluded the scale agreements for existing works. Following attempts to further discuss the matter, the Associations filed a complaint with the Tribunal alleging that the National Gallery failed to bargain in good faith.

History

Under the SAA, the Tribunal determined scale agreements could include minimum fees for the use of existing works, and that the Associations could negotiate those fees. The Tribunal also determined there was no interference with rights under the Copyright Act. The Tribunal then found the National Gallery had failed to bargain in good faith by reversing its position on the scale agreements for existing works after four years of negotiations and by taking an unyielding stance on the issue.

On judicial review of the Tribunal's decision, a majority of the Federal Court of Appeal determined that the scale agreements could not contain minimum fees for existing work, as this would create a conflict with the Copyright Act. In light of that determination, the majority judges concluded that the National Gallery had not failed to bargain in good faith.

The Supreme Court's decision

On appeal, the Supreme Court of Canada held that the scale agreement under the SAA can include existing works, and further determined that the interpretation did not conflict with the Copyright Act.

On the issue of bad-faith bargaining, the Supreme Court of Canada held the Tribunal's finding that the National Gallery had failed to bargain in good faith was reasonable, and should be reinstated. Although the Supreme Court of Canada did not examine the issue in depth, it noted certain facts supporting the Tribunal's conclusion that the National Gallery did not bargain in good faith.

Those facts included the change in the National Gallery's position after four years of negotiations. Also, although the National Gallery expressed hesitations regarding the scale agreements for existing works in 2003, it did not seek to exclude them until 2007. The National Gallery did not follow an established bargaining practice when it provided a revised draft agreement after obtaining the legal opinion. Finally, the National Gallery adopted a rigid stance, and should have known that the revised scale agreement, which excluded existing works, would never be accepted by the Associations after such a long period of negotiation.

Take-away for employers

The Supreme Court of Canada's decision is a good reminder of the difficulty and risk employers will face when trying to change or reverse their position on an issue already subject to negotiation, particularly where the parties are well into the bargaining process. In such cases, employers are likely to meet resistance and open themselves to complaints of bad-faith bargaining.

This decision also highlights the importance of preparing for collective bargaining. In this case, the National Gallery expressed its intention to seek legal advice in 2003, but did not do so until 2007. By that point, the parties had already conducted extensive negotiations, including the negotiation of scale agreements for existing works. Had the National Gallery sought advice in 2003, and bargained on the basis of that advice from the beginning, the outcome in this case may have been different. Before entering into bargaining, employers should consider any changes they want to make or conditions that will be subject to negotiation, in order to ensure they can seek advice in advance.


Note: This is a reprint of an article by Shannon Robinson of Norton Rose Fulbright Canada LLP.