OTTAWA—A Supreme Court of Canada ruling that says employees have a constitutional right to collectively bargain with their employers may provide unions with additional leverage during contract negotiations and make employers vulnerable to litigation for their actions during negotiations.

The ramifications of the June decision involving a British Columbia law restricting collective bargaining rights have already filtered into other provinces, with unions in Ontario and Alberta recently requesting that similar legislation in those provinces be repealed.

Although the decision involved the actions of a public sector employer, the ruling has implications for negotiations between private sector employers and their employees, attorneys say.

In Health Services and Support — Facilities Subsector Bargaining Assn. vs. British Columbia, the Supreme Court held that the freedom of association right guaranteed by the Canadian Charter of Rights and Freedoms includes a procedural right to collective bargaining.

"The constitutional right to collective bargaining concerns the protection of the ability of workers to engage in associational activities and their capacity to act in common to reach shared goals related to workplace issues and terms of employment," the Supreme Court said in its ruling.

The charter also imposes a duty on government employers to agree to meet and discuss workplace issues with their employees and puts constraints on the exercise of legislative powers in relation to collective bargaining, according to the Supreme Court's ruling.

In its decision, the Supreme Court declared unconstitutional a law passed by the British Columbia government that gave health care employers greater flexibility to hire outside contractors and lay off workers, among other things, regardless of any collective agreements in place. The law—known as Bill 29—also voided any provisions of collective agreements that were inconsistent with its provisions. As a result, thousands of health care workers lost their jobs and their unions sued the government.

The Supreme Court's recognition of constitutional protection for collective bargaining makes this a critical decision for labor unions in Canada, lawyers for unions and employers say.

"For me, it's the single most important labor judgment that the Supreme Court of Canada has issued," said Ethan Poskanzer, a senior research lawyer with Toronto-based Sack Goldblatt Mitchell L.L.P., which intervened in the dispute on behalf of the Canadian Labour Congress. "It's important because it recognizes collective bargaining as a fundamental right."

While the charter does not guarantee the particular goals sought through union activity, it protects the collective bargaining process used to pursue those objectives, the Supreme Court ruled. In that respect, any government legislation that interferes with the employer and union's collective bargaining process would at first glance run afoul of the Supreme Court decision, labor lawyers said.

If the government wants to infringe on the right to collective bargaining, it must undergo a multi-part test to determine whether the infringement is justified, said Joseph J. Arvay of Arvay Finlay Barristers in Vancouver, who was the lead counsel for the plaintiffs in the dispute. To justify such intervention, the government must prove that the objective is "pressing and compelling," that there must be a rational connection between the objective and the means chosen by the law to achieve the objective, and that it has considered a range of alternatives and concluded that the constraint on collective bargaining is the least restrictive approach, he said.

"The government has to go through quite a few hoops now when it wants to infringe on collective bargaining," Mr. Arvay said.

Unions in other provinces are now seeking to overturn collective bargaining restrictions similar to the British Columbia law declared unconstitutional by the Supreme Court. In a letter sent to Alberta's employment minister earlier this month, Gil McGowan, the president of the Alberta Federation of Labor, said the organization is looking at a potential legal challenge of provincial labor laws that restrict the rights of employees. In light of the Supreme Court decision, a number of the laws "will not survive a court challenge," he said.

"The exceptions that presently exist, unless there is strong justification, will ultimately be invalidated by our courts," Mr. Poskanzer said.

While the charter applies only to government actions, the decision has indirect consequences for private-sector employers with unionized work forces, lawyers say. It adds a heightened level of scrutiny to the way all parties negotiate during the collective bargaining process, they say.

For example, the duty to negotiate in good faith means the employer must respect the exclusive authority of the unions to negotiate salary, pensions and benefits, and other employment issues on behalf of their members and must be forthright and clear in presenting proposals, said George Waggott, an associate in the employment and labor group of Lang Michener L.L.P., which represents management in labor disputes. If the employer refuses to meet with the union or provides false information to union representatives, that would be a violation of that duty, he said.

The Supreme Court decision "raises a new level of inquiry or complexity to how (employers) bargain," Mr. Waggott said.

From a risk management perspective, there will be an increased focus on making sure all procedures for appropriate bargaining are adhered to in order to avoid accusations of bad faith negotiating and potential litigation, lawyers say.

Private-sector employers also may be forced to agree to contract provisions simply to avoid an accusation of bad faith negotiating and possible litigation, lawyers say.

During negotiations, employers may be concerned about completely ignoring the implications of the Supreme Court ruling and may agree to contract provisions they normally would not agree to, Mr. Waggott said.

The Ruling

In Health Services and Support—Facilities Subsector Bargaining Assn. vs. British Columbia, the Supreme Court of Canada overturned decades of decisions in ruling that collective bargaining is a constitutionally protected right of Canadian employees based on the Charter of Rights and Freedoms. Points in the ruling include: