Bill C-39: Proposed amendments to the Canada Labour Code and what they mean for federally regulated employers

On September 21, 2026, the Government of Canada introduced Bill C-39, the Building Canada Strong Act. In a previous Insight, we provided a high-level overview of all three parts of the Bill.

In this Insight, we examine in more detail the more significant proposed amendments to the Canada Labour Code (the “Code”) contained in Part 3 of the Bill. The broadest changes pertain to labour relations and include proposed changes to the federal government’s powers and process to intervene in labour disputes, an extension of the conciliation period, the creation of a special mediation process, the application of successorship rights in specified third-party contractor situations, the certification of multi-employer bargaining units, the introduction of a right of either party to compel first-contract binding resolution and, in certain circumstances, a requirement that parties commence bargaining within a stipulated, generally earlier, period. We also discuss proposed amendments relating to the enforcement of labour standards and the application of the paid medical leave under the Code.

The Bill has passed second reading and is now under committee review in the House of Commons. In addition, a special Senate committee is in the process of conducting its own review of the Bill.

Changes to the collective bargaining process

A recurring theme under Bill C-39 is the desire to prevent labour disputes from arising and, where they do arise, keep them from escalating into work stoppages. Several of the proposed amendments in the Bill work in concert toward that objective:

Mandatory early bargaining for high-risk relationships

The Bill proposes a new section 50.1 to the Code, which would mandate a bargaining timeline for bargaining relationships that, based on the expiring collective agreement, pose a greater risk of a work stoppage. More particularly, where the then-current collective agreement:

• was imposed through binding dispute resolution;
• was reached after a strike or lockout; or
• runs for five years or more;

the parties would be required to begin bargaining between 200 and 180 days before expiry. Currently, parties are largely left to set their own bargaining timelines.

Both parties would also be required to engage with the Federal Mediation and Conciliation Service and give notice to the Minister and the Canada Industrial Relations Board (the “Board”) indicating the date and location of the first collective bargaining meeting and their representative’s contact information.

In addition, employers captured under section 50.1 would be subject to a statutory freeze beginning 200 days prior to expiry of the collective agreement, requiring them not to alter the terms and conditions of employment without consent from the bargaining agent.

A longer conciliation runway

The Bill would amend section 73(2) of the Code, extending the conciliation period following a notice of dispute from 60 to 90 days, providing more time for negotiation before a legal strike or lockout could begin.

A new “special mediation” process including a public report

The Bill also would introduce a special mediation provision under a new Division V.01 to the Code. This new special mediation process would allow the Minister to appoint a special mediator at any time during conciliation before the 75^th day of the 90-day period.

This special mediator would have 21 days to confer with the parties and endeavour to assist them in reaching an agreement. The special mediator’s appointment would not, however, suspend the right to strike or lockout.

If no collective agreement is concluded or tentative agreement is reached, or a party rejects a tentative agreement, the special mediator must provide a report to the Minister detailing:

• the parties’ positions on the issues;
• an assessment of the parties’ participation;
• the likelihood that the parties will enter into, renew or revise a collective agreement within a reasonable time; and
• the special mediator’s views and recommendations.

In the absence of a new collective agreement or tentative agreement being reached during the 21-day period, the Minister will be required to make the special mediator’s report publicly available once five days have passed since the mediator’s mandate ended or, where a tentative agreement was reached within five days after the end of the 21-day period, within five days after the rejection of the tentative agreement.

Mandatory post-dispute mediation

The Bill also introduces a forward-looking requirement in the proposed new section 105.1 to the Code. Where a collective agreement is reached on the heels of a strike, lockout or imposed outcome, the Minister must appoint a mediator within six months to help the parties rebuild their labour relationship.

Government intervention in work stoppages: Rewriting the rules for section 107

No provision in Part 3 of the Bill has attracted more attention than the proposed overhaul of section 107 of the Code. Today, section 107 gives the Minister broad authority to do whatever the Minister considers necessary to maintain or restore industrial peace and promote conditions favourable to the settlement of labour disputes and, to that end, the Minister may refer any question to the Board or direct the Board to do such things as the Minister deems necessary. This has included directing the Board to impose binding arbitration and order the prohibition or cessation of a work stoppage. Alternatively, Parliament can also introduce back-to-work legislation.

Under the proposed changes to section 107, three conditions would need to be met before the Minister could direct the Board to order a return to work, extend a collective agreement or impose binding arbitration:

1. An active work stoppage. A lawful strike or lockout must already be underway. Pre-emptive intervention — before any work stoppage occurs — would not be available.
2. A special mediator’s report. The Minister must have reviewed the findings of a special mediator who engaged with the parties during the conciliation process.
3. A “national interest” determination. The Minister must have concluded that the stoppage is adversely affecting, or may adversely affect, the national interest.

On the national interest test, the Bill provides a non-exhaustive list of factors the Minister may consider: the dispute’s actual or potential impact on the Canadian economy, any serious social disruption it is causing or could cause and whether a direction to the Board would have any impact on the freedom of association.

While the proposed section 107 provides some certainty regarding the government’s exercise of this power and the related considerations, the requirement that a work stoppage must begin before the Minister can act means employers may face a period of real disruption before relief becomes available. Further, despite the greater clarity the proposed section 107 provides, unions are likely to continue to challenge the application of section 107.

Party’s right to apply for first-contract binding arbitration

The Bill also seeks to reform the existing process for binding resolution in first collective agreement scenarios. Currently, the Minister may refer a first-contract dispute to the Board, but neither party has an independent right to compel that step.

Under the proposed changes to section 80 of the Code, if nine months of bargaining pass without a deal, either the employer or the union could apply directly to the Board, and the Board would then be required to issue an order directing a binding method of resolving the outstanding issues. Strike and lockout rights would be suspended once such an order is issued.

Successor rights and third-party contractors

The Bill also proposes to amend the successorship provisions found under section 44 of the Code in situations where a new contractor replaces a previous contractor.

Where a new contractor picks up the same or substantially similar services that were previously provided by an outgoing contractor, the union certification, the collective agreement and any pending Board proceedings would all carry over to the incoming contractor.

Currently, this proposal is limited to employers operating at airports, but it provides that the Governor in Council may extend these rules to other services, industries and locations through regulation.

Certification of multi-employer units operating in the same geographic area

The Bill would also expand the framework for creating bargaining units that include multiple employers through revisions to section 34 of the Code.

Under the proposed changes, the Board could, upon a joint application by two or more employers, on referral by the Minister or on the Board’s own initiative, certify a trade union as the bargaining agent for a unit consisting of the employees of two or more employers working in the same industry and geographic area.

As currently proposed, the Board’s power to certify such a multi-employer unit would be limited to the longshoring industry. However, the proposal also provides that the Governor in Council may extend this to any other industry in any geographic area.

Labour standards-related changes

Increased wage recovery enforcement powers

The Bill also looks to strengthen the wage recovery enforcement tools available under Part III of the Code.

Under the changes, if an employer fails to pay an amount owing under a written settlement made pursuant to Part III by the applicable deadline, the Head of Compliance and Enforcement can issue a written order requiring payment by the employer or, where the entitlement arose during a director’s term and recovery of the amount from the employer is impossible or unlikely, a director of the corporation. A director’s liability would remain limited to six months’ wages.

Each order would also include an administrative fee, which remains equal to the greater of $200 and 15% of the outstanding amount.

Clarity on paid medical leave

Bill C-39 would clarify when the Code’s paid medical leave provisions apply to unionized workplaces by confirming that the statutory paid medical leave would not apply if a collective agreement:

• provides paid medical leave rights and benefits that serve the same purpose as those under the Code;
• provides rights and benefits that meet or exceed the Code’s minimum requirements; and
• includes a third-party dispute resolution mechanism (i.e. the arbitration process).

Key takeaways

If Bill C-39 is adopted in its current form, federally regulated employers will need to carefully consider their labour relations and bargaining strategies. Such employers should start to consider:

• the longer negotiation period created by the extension of the conciliation period;
• the potential for an earlier start to bargaining if they fall within the “high-risk” category and the corresponding longer statutory freeze period;
• the potential for their positions on outstanding issues and participation in bargaining and the special mediator’s views and recommendations to become public, in what is often highly contentious bargaining in which both parties seek to generate public support for their side;
• the risk of a potentially prolonged work stoppage, given that section 107 of the Code could no longer be used pre-emptively and could only be applied once a stoppage is underway;
• the ability of either party to compel first-contract binding resolution after nine months of bargaining;
• for incoming airport contractors (and potentially those in other sectors designated by regulation), the carry-over of union certification and collective agreements when replacing an outgoing contractor; and
• whether their existing paid medical leave provisions meet the conditions to displace the Code’s statutory paid medical leave.

MLT Aikins will continue monitoring Bill C-39 and publish updates as it progresses through the legislative process.

Questions? Please contact a member of our labour and employment team to discuss how these legislative amendments may impact your workplace and labour relations strategies.

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