Open Mind National 2014

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A FORUM ON OPEN SHOP CONSTRUCTION

MERIT CANADA AT WORK: Find out how we are advocating for best business practices

BENEFITS BOOMBuild up your perks with the Merit Hour Bank plan

THE $500,000 TOILETOpen tender avoidsproject inflation

Volume 22 • Issue 2 • 2014

BY THE NUMBERS: Canada’s construction statistics, from coast to coast

The Fuzzy LineWhen is a contractor actually an employee

Find out if executive coaching is right for you

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TOGETHER WEBUILD SUCCESS.

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OPENMIND 2014 3

TOGETHER WEBUILD SUCCESS.

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Find the right corporate coach and establish a relationship that could change your careerBy Michelle Lindstrom Illustration by Steve Adams

25 Merit, Coast to CoastRegional Merit organizations are making a splash in their home provinces advocating for an open shop approach

29 Merit Canada’s EffortsRead about how Merit Canada is taking care of businessBy Terrance Oakey 32 Build Better Apprenticeships Look to successful models, rather than legislating a poor solutionBy Peter Pilarski

38 By the NumbersCanadian construction statistics

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5 Message From Merit Canada’s ChairBy Domenic Mattina

6 The Benefit BoomMerit member employees worked more than 100 million hours in 2013. The Merit Hour Bank is one of the reasonsBy Suzanne Pescod

10 The $500,000 ToiletIf guaranteeing work to unions is inflating the cost of public projects, why aren’t we open tendering?By Terrance Oakey

14 Independent Contractor or Employee?Clarify the fuzzy line that exists between and employee and a contractorBy William Johnston

20 Coaches’ CornerFind the right corporate coach and establish a relationship that could change your careerBy Michelle Lindstrom

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Contents

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INVEST IN YOUR TEAMCUSTOMIZE YOUR CORPORATE TRAINING PROGRAM

NAIT’s 40+ years of corporate training experience shows that we are essential to helping business and industry become more productive, competitive and successful in today’s global economy.

With more than 200 world-class programs, our Corporate and International office customizes and delivers relevant training across a wide range of competencies, in Alberta and internationally.

• Aboriginal Initiatives

• Business and Leadership

• Computer Training

• Engineering Technologies

• Environmental Management

• Information Technology

• Project Management

• Telecommunications

• Trades

Call today 780.471.6248 | nait.ca/cit

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Message From Merit Canada’s Chair

Publisher Ruth Kelly

Executive Editor Stephen Kushner

Associate Editor Suzanne Pescod

Director of Custom Content Mifi Purvis

Production Manager Betty Feniak Smith

Production Technicians Brent Felzien Brandon Hoover

Circulation Manager Karen Reilly

Vice-President Sales Anita McGillis

Advertising Representatives Kathy Kelley Alison DeGroot

Sales Assistants Julia Ehli Michelle Benz Art Director Charles Burke

Associate Art Directors Andrea deBoer Colin Spence

Contributing Writers Ben Freeland, William Johnston, Michelle Lindstrom, Terrance Oakey, Suzanne Pescod, Peter Pilarski

Contributing Illustrators and PhotographersSteve Adams, Stockwell Collins, Nick Crane, Kevin Ghiglione, Heff O’Reilly, Ben Rude, Raymond Stockton

Open Mind is published two times per year by Venture Publishing Inc. for Merit Contractors Association.

Venture Publishing Inc. 10259-105 Street, Edmonton, Alberta T5J 1E3Tel.: (780) 990-0839 Fax: (780) 425-4921 [email protected] www.venturepublishing.ca

Merit Contractors Association 103-13025 St. Albert Trail, Edmonton, Alberta T5L 4H5 Tel.: (780) 455-5999 or 1-888-816-9991 Fax: (780) 455-2109 [email protected] www.meritalberta.com

Merit Contractors Association is a non-profit organization that offers human resource services to the open shop construction industry.

Printed in Canada by Transcontinental LGM Graphics

The opinions conveyed by contributors to Open Mind magazine may not be indicative of the views of Venture Publishing Inc. or Merit Contractors Association. While every effort is made to ensure accuracy, neither Venture Publishing Inc. nor Merit Contractors Association assume any responsibility or liability for errors or omissions.

Canadian Publications Mail Product Agreement #40020055

Copyright © 2014 by Merit Contractors Association No part of this publication should be reproduced without express permission of Merit Contractors Association.


OPENMIND 2014 5

INVEST IN YOUR TEAMCUSTOMIZE YOUR CORPORATE TRAINING PROGRAM

NAIT’s 40+ years of corporate training experience shows that we are essential to helping business and industry become more productive, competitive and successful in today’s global economy.

With more than 200 world-class programs, our Corporate and International office customizes and delivers relevant training across a wide range of competencies, in Alberta and internationally.

• Aboriginal Initiatives

• Business and Leadership

• Computer Training

• Engineering Technologies

• Environmental Management

• Information Technology

• Project Management

• Telecommunications

• Trades

Call today 780.471.6248 | nait.ca/cit

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On behalf of Merit Canada, welcome to the 22nd edition of Open Mind magazine and the fourth edition for Merit Canada.

Domenic MattinaCHAIRMERIT CANADA

Open Mind is Canada’s only magazine dedicated

to the open shop construction sector, focusing on issues that affect the livelihood of an industry employing more than one million people across Canada.

Terrance Oakey has been leading Merit Canada’s advocacy since 2011. In 2013, Merit Canada led the charge on several initiatives

to increase the amount of competition in the construction industry, ending “card check” at the federal level and advocating for the rights of the open shop industry.

In the article “The $500,000 Toilet” (page 10), Oakey unpacks the issues of open tendering, explaining how outdated practices are leading to increasing expenses on federal and provincial projects.

For an update on Merit organizations across the country check out “Merit, Coast to Coast” (page 25) to learn about the issues important to our provincial associations.

What can a good business coach do for your business, and how do you select a good business coach? In the article “Coaches’ Corner” (page 20) we look at the ins and outs of business coaching in the construction industry by interviewing both coaches and leaders to share their insights about their business coaching relationships.

Apprentices are the future of the construction industry, and it is important to increase their abilities to learn while endorsing the trades as a viable career option to a younger generation. So how does our current regulation shape the way apprentices are being taught on the job? With an emphasis on the arguments for and against deregulation, check out the story “Build Better Apprenticeships” (page 32) to learn more.

A challenge to business owners and a legal conundrum in some cases, is defining the difference between an independent contractor and an employee. Written from a legal perspective, the story “Independent Contactor or Employee?” (page 14) defines the two identities and offers tips on how to run your business smoothly and legally while employing both employees and contractors on projects.

We hope you enjoy the 2014 edition of Open Mind, and as always we encourage you to give us feedback or suggestions on future topics.

From all of us at Merit Canada, have a great 2014!

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OPENMIND 2014 7

BY SUZANNE PESCOD

he year 2013 was record breaking for the Merit Hour Bank program. Merit Member employees worked more than 100 million hours,

a significant indicator of Merit’s tremen-dous growth, not only over the past year, but since its inception.

A good benefit package is one of your best tools to attract and retain the best employees. As shown in many surveys, a benefit package is an essential component of preferred employment.

But the construc-tion industry has a diversity not seen in many other industries. Project based, seasonally affected, and skills driven, many components of the industry mean you can’t package just any benefit program into something that meets the needs of employers and employees.

In Western Canada, open shop contrac-tors make up nearly 80 per cent of the work underway in the construction markets. As you venture east across the country, the numbers rise only marginally for the build-ing trade unions, but economic factors have put open shop contractors in a pre-ferred market, as they have a much better ability to provide their clients with the most cost-effective product. This relationship and the strength of a competitive market are great for economics, but when we talk

Why the Merit benefit plan has seen significant growth over

the past 20 years

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BOOM

Merit Hour Bank plan participants know that they and their families

will be taken care of.

about benefits, we need to think about the construction employee.

It is with both the employer and the employee in mind that Merit provides a tailor-made benefit plan that has yet to be topped by anything else in the open shop construction industry.

Merit’s Hour Bank program is the only one of its kind in the free enterprise, non-union environment.

As employees work they build hours in their Hour Bank account in order to qual-ify and maintain benefits, in contrast to stationary industry who use a monthly pre-mium structure.

To become “in-benefit” an employee must first accumulate 300 hours of work for a Merit company, and then for every 150 hours worked following, the employee receives a month of benefit coverage. If any employee ever falls below the 150 hours, they are given a self-pay option in order to maintain their benefits for themselves and their family.

The per-project need for labour in the construction industry provides months, sometimes years of steady work for a

BOOM


8 OPENMIND 2014

skilled construction person, but once the project is completed, many are laid off, or left to find work on another project with another company. The Merit Benefit Plan is portable, and an employee does not lose their benefits, or standing in benefit, if they find work with another Merit company. The ability for employees to transfer their ben-efits to another company is an incredibly important factor in the success of the Hour Bank plan.

If an employee is unable to find work

immediately following a downsizing or layoff, the Hour Bank program provides a self-payment option to the employee, giv-ing him up to six months to retain benefits while out of work.

Imagine the difference in your quality of life if you knew that you and your fam-ily would be OK in the face of job loss. The peace of mind and ease of transition is one of the reasons why employees are often Merit’s biggest source of referrals as they transfer from company to company.

The transfer of benefits between Merit companies is also a huge boost to employ-ers as Merit has seen the search term “Merit Benefits” become one of the more popular searches within the industry for online job-seekers. Companies are now using the industry recognized Merit Ben-

Benefit Boom

efit program as a means to attract new skilled employees.

The economics of the Merit Benefit plan and its cost effectiveness are driven by several factors.

One is that the Merit plan avoids the costly aspects of dealing with an insurance broker, who then engages an insurance company. With the Merit plan there are no commissions being paid and low fees to insurance companies as Merit’s size allows it to negotiate low rates not offered by any

competitors in the market. The result is low premiums to contractors.

The Merit plan comes with the added bonus of Mercon administration, which keeps the bulk of the

paperwork and issues of dealing with ben-efits, out of your office. Mercon acts as a third party administration for members, the only thing companies have to do is report their hours, and then Mercon looks after everything else. Communication about benefits, claims issues, and all ques-tions about benefits are handled through the Mercon office.

Adding to the growth of the benefit plan, Merit recognized a need from members to develop a plan for their office employees, so Merit constructed a salaried plan that is being quickly taken up by member compa-nies across the country. Although it follows a different set of guidelines tailored to the salaried worker, the benefit plan is competi-tive, cost effective and, again, recognized by the construction industry. Recently Merit adopted a new tagline,

“Your People Have People Too.” This sentiment resonates loudly within the industry. By providing not just medical and dental coverage, but optional benefit coverage, retiree plans and several free-of-charge counselling services, employees know that they and their families will be taken care of.

In fewer than eight years, the Hour Bank program has doubled reported hours worked. With its competitive rates, out-standing coverage, and increased adoption across the country throughout the open shop sector, the Merit Hour Bank plan continues to grow in recogntion, use, and value to all of its members.

When we talk about benefits, we need to think about the

construction employee.

YEAR TOTAL 2013 103,774,392 2012 96,729,350 2011 87,908,004 2010 79,583,013 2009 74,140,547 2008 77,595,931 2007 69,743,223 2006 58,264,783 2005 51,931,342 2004 43,693,974 2003 40,670,945 2002 36,126,615 2001 33,033,640 2000 26,644,185 1999 22,617,321 1998 19,474,088 1997 14,990,746 1996 10,843,291 1995 8,232,430 1994 7,332,558 1993 7,244,617 1992 7,188,576 1991 6,585,812 1990 6,729,128 1989 6,341,166 1988 5,713,626 1987 5,045,662 1986 2,158,821

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OPENMIND 2014 11

$500,000TOILET

THE

BY TERRANCE OAKEY

Guaranteeing work to unions is inflating the cost of public projects. So why is this happening?

his past year, Merit Canada focused its efforts to bring a truly open and transparent tendering system to the construction industry at the federal level and – in Ontario and Manitoba – at the provincial level. Merit Canada launched a new website

to bring attention to the issue (opportunitytowork.ca) and ran ads in a number of publications, and those outreach efforts are starting to pay off.

At the federal level, the House of Commons Transport Committee launched an important study called How Competition Can Make Infrastructure Dollars Go Further and held hearings from April to June. On behalf of members across the country, Merit Canada appeared before the Committee and brought other stakeholders together to advance this important issue. The move was timely, coming during continued fiscal challenges at all levels of government coupled with crumbling infrastructure in many jurisdictions.

Since then, Merit Canada’s public engagement has continued to draw attention to outrageous examples of what happens when competitive bidding is not allowed. Consider the lowest bid to build a simple brick public washroom in Kitchener: $564,744. This is 40 per cent higher than budgeted and a whopping 150 per cent more than the average cost to build a house in Kitchener.

T


goes down and costs go up. A study conducted by the City of Montreal found closed tendering inflated project costs any-where from 30 to 85 per cent.

As we argued before the Transport Committee, it is time for Ottawa to take a leadership role and ensure projects that use any federal funds be tendered openly. This policy should be included in all infrastructure agreements and apply to all Crown corporations and any other federal mechanisms used to fund infrastructure.

However, the debate around open tendering is not only tak-ing place at the federal level. For example, the restrictive poli-cies of the City of Toronto have come under scrutiny in recent months. The city continues to have laws on the books that restrict open tendering of projects, including an official fair wage policy that requires all bidders to meet the specified conditions for salary and benefits. This policy restricts competition since it blocks some companies from even bidding, while making sure that the costs for all bidders are raised to those of union-only shops, thus raising costs for taxpayers.

Toronto is also bound by decades-old certifications with unions representing electricians, carpenters, plumbers, brick-layers, painters, glaziers, sheet metal workers, asbestos workers and ironworkers in the industrial, commercial and institutional sector. In addition, the Toronto Transit Commission (TTC) engages in a voluntary closed tendering process, requiring bid-ders to have membership in the building trades council.

All this incurs a major cost to the taxpaying public. During the 2010 municipal election, Rob Ford said the city would save $80 million a year – $320 million in his first term as mayor – by scrap-ping the city’s fair wage policy. According to a Cardus study, construction projects in the city worth approximately $591,000,000 were subject to restrictions due to construction labour monopolies and Toronto Councillor Karen Stintz has put the price of restrictive union rules at $100 million a year.

Another key development in this fight around open tendering is taking place in Ontario where the provincial Conservatives have proposed a policy that would fix the situation in Toronto. The Conservatives have recognized the harm that union-only tendering has brought to that province and have committed to “abolish the practice of closed tendering across Ontario’s munici-pal and broader public sector.” The party is currently the official Opposition in Ontario with an election expected in the spring of 2014. If the Conservatives are elected, this could lead to Ontario being the first prov-ince in Canada to legislate open tendering provisions in public sector infrastructure contracting.

Open tendering is about fairness for taxpayers. Governments have an

There are other examples from the hall of shame in the area. Consider that the City of Waterloo was forced to appeal to the Ontario Labour Board in its effort to open a public tender for a $140 million sewage treatment plant to 27 contractors, rather than just two.

There are many more examples like these across Canada, where too many jurisdictions continue to practice closed tendering, in which specific unionized contractors affiliated with the building trades unions are given privileged access to public sector contracts.

This arcane and indefensible practice means that right off the top, seven out of 10 construction workers in Canada are excluded from employment on these projects because they do not belong to a union. To make things even less competitive, specific unions have privi-leged access to these contracts over other unions, thereby further limiting competition.

It does not take a degree in economics to know what happens when 70 per cent of any industry is barred from competing. Quality

Rob Ford said the city would save $80 million a year – $320 million

in his first term as mayor – by scrapping the fair wage policy.

The $500,000 Toilet

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obligation to use their money efficiently. Real competi-tion ensures that infrastructure dollars go further. More-over, companies that pay federal taxes should not be precluded from bidding on public contracts – paid for with their tax dollars – simply because they do not belong to the right union.

The open tendering fight is also taking place in Manitoba, though in this case it is more focused on the rights of work-ers. Merit Canada has partnered with its provincial affiliate to launch a court action against Manitoba Hydro over the so-called “Manitoba Hydro scheme.” The scheme requires all contractors who obtain work on certain large-scale Manitoba Hydro projects to agree as a condition of obtaining the work that their employees working on the project will become union members, pay union dues and be covered by a collective agreement. A similar scheme has been put in place for work on the Manitoba floodway.

Merit Manitoba’s challenge of both schemes is based on two principle arguments from the Canadian Charter of Rights and Freedoms. The first is that the requirement to join a designated trade union in order to work on the project and/or remit dues to that union, whether or not the employee wishes to be a member of that union or any other, violates the affected employees’ free-dom of association, which is protected by s. 2(d) of the Charter.

The second argument is that, having been compelled to join a union and/or remit dues to the union in order to work on the project, the employees’ freedom of expression, which is protected by s. 2(b) of the Charter, is violated by the union’s public expres-sions of support for political parties or policies that the employ-ees do not support.

These breaches of employees’ freedom of association and expression are not justified in a free and democratic society as required by s. 1 of the Charter. This Charter violation is nowhere more apparent than where unions are participating in the polit-ical process, and are using union dues for political or other purposes outside of representation of workers in collective bar-gaining or contract administration.

These battles continue in 2014 and Merit Canada will happily take them on because the issues at hand deal with fundamental rights for workers and fairness for taxpayers. It is time for gov-ernments to abolish these policies. If not, they will be forced to publicly defend them to taxpayers.

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OPENMIND 2014 15

EMPLOYEE

INDEPENDENT CONTRACTOR

OR

BY WILLIAM JOHNSTON (LAWYER WITH THE FIRM MCLENNAN ROSS)

There are plenty of people working hard on your site. You should know where the potential pitfalls lie that may blur the line between employee and contractor

The use of independent contractors (or “direct service providers”) in business is a means for companies to reduce costs. However, improperly classifying a worker as an independent

contractor can have serious implications. Regardless of the parties’ written agreement or any clear understanding of the intention that a worker is an independent contractor, courts, Labour Tribunals and the Canada Revenue Agency cannot be bound. The government will assess the putative employer to determine his liability for unpaid taxes, workers’ compensation premiums or other levies owing in an employment relationship. The employer may amass penalties if the essence of the relationship is actually one of employment. The independent contractor can also potentially be awarded damages under employment standards legislation or human rights legislation if the relationship is truly an employment relationship.


some more inclusive than others, but most tend to follow the common law test of “employment,” where five considerations are of primary importance: control, own-ership of tools, chance of profit/risk of loss, integration of services into payor’s operations, and fre-quency of payment u n d e r c o n t r a c t . Other factors will also receive consid-eration, particularly the type of services under contract, and the overall circum-stances. There is no exhaustive list of relevant indicators, and we consider each case in context.

Control is perhaps the most impor-tant consideration of all. The ability to delegate tasks on an ongoing basis and to circumscribe the manner and hours in which the work is to be completed are typically essential in an employment relationship. In making these demands, the payor will typically also impact the person’s ability to make a profit, since he isn’t free to innovate, or increase produc-tivity. For the payor to achieve control, the contractor requires direct and ongo-ing supervision, which is not usually indicative of an independent enterprise and therefore points to an employment relationship. In the lists of factors set out above, it is easy to perceive control as a common element throughout.

In addition to the above factors, it is also noteworthy to consider the financial dependence of the independent contrac-tor, particularly in lawsuits against the payor company for wrongful dismissal

and for matters relating to unpaid tax remittances and unemployment bene-fits. Courts are sympathetic to independ-ent contractors terminated after a long history of service and whose livelihood has become dependent on the parties’ business relationship. These people typi-cally provide the overwhelming majority of their services to the other party. The loss of the contract without warning has profound implications to the contractor’s economic well-being. If successful in their action, courts will assess damages for the period of reasonable notice which should have been given in a similar fashion to regular cases of wrongful dismissal of an employee.

IMPLICATIONS OF A “DEEMED EMPLOYER” DESIGNATIONIndependent contractors in a deemed employment relationship can sue for damages when the contract is terminated without reasonable notice. You might think that a termination provision in the contract saves the day but termination provisions that are less than required by the relevant employment standards legis-lation will be void. The payor can also be liable for unpaid overtime, vacation pay, holiday pay and other benefits provided under employment standards legislation. Claims may proceed either in court or in an employment standards tribunal. If suc-cessful, damages for the employer who is improperly holding wages and benefits, as well as damages for failing to provide

Independent Contractor or Employee

Determining if a worker is an employee or an independent contractor is not about whether he is performing services as his own business.

Companies must be aware that in pur-suing this type of business relationship with a contractor they may not achieve the arms-length relationship intended and could be liable just as though the independent contractor were actually an employee.

What are the factors that inform whether an ostensible arms-length independent contractor is actually an employee, despite to the intentions of the parties? The answer should drive home the implications of improperly designating a worker as an independent contractor.

FACTORS INFORMING THE NATURE OF THE PARTIES’ RELATIONSHIPThe tests labour tribunals rely on, in tax court and in regular court, are all very similar although there may be a different emphasis on the various factors, depend-ing on which type of issue is under review.

The intention of the parties is impor-tant but is absolutely not determinative. Beyond the intention of the parties, adju-dicators look at other factors to discern the essence of the relationship. Context is extremely important as different types of independent contractors will necessarily present features of an employment rela-tionship due to the nature of the work. No one factor is decisive, and each factor may have a different importance in the assess-ment depending on the type of services under contract and the forum in which the question is being decided.

There are different definitions of “employee” in various pieces of legislation,


reasonable notice prior to termination, will be awarded to the independent con-tractor. Though uncommon, if the man-ner in which the contract was terminated was egregiously wrong or careless, and the independent contractor suffers emotional harm, the court may also award damages over and above the typical damages for wrongful termination.

The payor may be liable to the inde-pendent contractor under human rights legislation with the potential for damages. An independent contrac-tor whom the court or tribunal deems an employee might claim that the payor discriminated against them on the basis of a protected ground, such as denying maternity and parental leave, discriminating on the basis of family status, or failing to accommodate disabilities.

Another unexpected consequence for employers is that labour boards may be prepared to accept applications for union certifications that include signa-tures of dependent contractors and may certify bargaining units that include these people.

A ruling in any court or tribunal that decides this type of issue is not bind-ing on any other. These decisions are made by reference to the purpose of the legislation or right that will be affected. Therefore, even if a court or tribunal decides that a depend-ent contractor is not an employee for one purpose the possibility remains that the same person will be an employee for a different purpose.

INDEPENDENT CONTRACTOR FROM THE CRA PERSPECTIVEThe distinction between classifying a per-son as an employee rather than an inde-pendent contractor for income tax, the Canada Pension Plan (CPP), Employment Insurance (EI), and Goods and Services Tax (GST) purposes is crucial for determining:• Income tax withholding obligations of the payor. Employers are responsible for

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Even if the parties believe they have not created an employment relationship, the courts may still find that one exists.

making proper income tax withholdings from payments of employment income to employees; no such requirement exists for payments to contractors.• Contributions and premiums required in respect of CPP and EI. Employers are required to make appro-priate EI and CPP contributions and withholdings from an employee’s income, again, something not required with regard to payments to contractors.• Deductions for the recipient in com-puting taxable income for a taxation year. Contractor businesses (with the exception of personal service businesses addressed below) may deduct numerous expenses used for the purpose of earn-ing income, while employees have only restricted deductions available to them.• Whether services provided by the recipient are subject to GST. A contrac-tor’s services will likely be considered a taxable supply subject to GST, while an employee is obviously not required to charge and collect GST.

The test to determine whether a worker is an employee or an independent contractor is whether or not the person is performing the services as his own busi-ness, on his own account. We base this question on a two-step process of inquiry: first, by looking at the subjective intent of the parties; second, by looking at the reality of how the work is being accom-plished to see whether the objective real-ity matches the parties’ subjective intent.

The objective reality considers all rele-vant circumstances focusing on the same factors as above. Even if the parties believe they have not created an employment relationship, if the circumstances do not support that conclusion, the CRA and the courts may still find that an employment


18 OPENMIND 2014

relationship in fact exists. The unfortu-nate outcome for the payor/employer is that they can be liable to pay unpaid remit-tances for income tax, CPP and EI.

TRAP FOR THE UNWARY: PERSONAL SERVICE BUSINESSESGiven the added responsibilities, both under employment law and tax law, a payor wishing to avoid being an employer may choose to hire workers as independent contractors as opposed to employees. One of the ways employers will help push work-ers into the contractor classification is by only paying corporations.

Paying only corporations reduces the risk (from the payor’s perspective) that the CRA will consider the payor to be an employer. Workers often believe being paid through a corporation they own and control is a good idea, as there are numer-ous deductions and tax planning options available to a Canadian small business corporation engaged in an active business. However, both parties should be cautious. Under subsection 125(7) of the ITA, in cir-cumstances where a worker would reason-ably be regarded as an employee, but for the existence of their corporation, the CRA could conclude the worker’s corporation is a personal service business.

Importantly, as the personal service business classification is an anti-avoidance provision, the Tax Court has indicated that the intention of the parties is not relevant to determining whether the corporation is a personal service business, even though intention is relevant in determining whether a worker is an employee in other

parts of the ITA, the CPPA, the EIA, and the ETA.

Personal service busi-nesses are taxed at a higher rate and denied many deductions. While these corporations can take tax planning steps to limit the impact of being clas-sified as a personal ser-vice business, at best the worker will end up being taxed similarly to an employee. If he doesn’t take proper planning steps, the worker and his corporation may end up paying significantly more taxes than he would if he had had simply been an employee. As a result, it is better for the worker to be classified as an employee than a personal ser-vice business. While the direct risk of being found to be a personal service business is largely borne by the worker, there may be business reasons and overall liability rea-sons why a payor may prefer not to place this risk on their workers.

Resist the temptation to treat employees as contractors. You should only do so when it is clear that there is a good argument that they are truly independent contractors.

Independent Contractor or Employee

The unfortunate outcome for the payor/employer is that they can be liable to pay unpaid remittances for income tax, CPP and EI.

® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. ‡ All other trademarks are the property of their respective owner(s). + To get $625 worth of gift cards/certifi cates, you will need a total of 75,000 RBC Rewards points. For more details, go to www.rbcrewards.com. For complete terms and conditions of the group banking offer, go to www.rbc.com/groupterms.

102027 (03/2014)

RBC Group Advantage

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RBC Group AdvantageTM member and have access

to all-inclusive banking packages that could save

you money. Make the switch today and receive

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000OM-RBC-FP.indd 1 2014-03-27 10:38 AMOPENMIND_14_p14-19.indd 18 2014-04-30 10:54 AM

® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. ‡ All other trademarks are the property of their respective owner(s). + To get $625 worth of gift cards/certifi cates, you will need a total of 75,000 RBC Rewards points. For more details, go to www.rbcrewards.com. For complete terms and conditions of the group banking offer, go to www.rbc.com/groupterms.

102027 (03/2014)

RBC Group Advantage

Are you getting the most from your employee benefi ts?

As part of Merit Canada‡, you are an

RBC Group AdvantageTM member and have access

to all-inclusive banking packages that could save

you money. Make the switch today and receive

up to $625 in gift cards!+

Ask us about the RBC Group Advantage program.Call 1-888-769-2566 or visit rbc.com/meritcanada.

TM

Switch today and earn RBC Rewards® points worth up to $625 in gift cards.

000OM-RBC-FP.indd 1 2014-03-27 10:38 AMOPENMIND_14_p14-19.indd 19 2014-04-30 10:54 AM

20 OPENMIND 2014

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OPENMIND 2014 21

A how-to approach to find the right person and establish a relationship that could change your career

BY MICHELLE LINDSTROM

An executive coach has a relationship with a company leader much like a sports coach does with an athlete. The sports coach pushes the athlete to improve habits, endurance, knowledge and ability to be better at his or her sport. But

the coach can’t do the work for the athlete.FMI Corporation, one of many business-coaching options out

there, purposely uses player-to-coach relationship principles when working with executives in the construction industry. Jake Appelman, a principal at FMI, says the fundamental purpose of executive coaching is to help business leaders get better results via a customized, coach-to-coached relationship.


22 OPENMIND 2014

Most executive coaching relationships start with the two parties creating a goal-focused plan that notes specific items the executive wants to improve upon with the coach’s help. It’s a plan both can refer back to along the journey, which typically lasts six months to a year.

Appelman says for FMI, the coach’s first conversation with a client establishes the “criteria for success,” which breaks down how many meetings the two will have, who will contact whom and confidentiality ground rules. Some company owners will sponsor coaching sessions for one of their executives and request to hear the details and plan of what the pair covers each session. The coach makes certain how much detail the coached person is willing to share, and with whom.

“From there, we build our coaching plan, which is a critical document that shows how we’re going to measure success at the end of it all,” Appelman says.

Executive coaching is a foreign concept to many company leaders and therefore, few purposely seek out such assistance. Appelman says much of the coaching business FMI gets is from referrals, but it stems from the consulting work FMI does for overall organizational improvement.

Consulting typically involves a comprehensive analysis of a company, followed by a full report with recommen-dations of areas on which to improve. Consultants would typically leave it to the company to implement the items in the report afterwards, Appelman explains. “If we’re working with a company around its succession plan, ownership transfer or leader development in general, we’ll bring in executive coaching as a way to accelerate that process and to drive individual change or help it change an organization.”

N o t a l l c o a c h e s t a k e F M I ’ s two-pronged approach, but Appelman says that guiding an entire organization, in addition to one-on-one leadership training, tackles a challenge organizations tend to face during phases of change and improvement.

Coaches’ Corner

“If you just do the individual executive work, the executive goes back in and no one else has changed,” he says. “It’s the same culture with people who aren’t supportive and don’t give feedback so the coachee [coached person] is trying out all this new, great stuff he learned with his coach but the environment just rejects it.”

Exective coaching is not therapy, stresses Dr. Marvin Washington, an associate professor for the Alberta School of Business at the University of Alberta who also coaches a few executives each year. The relationship with a coach is meant to be a safe platform to talk about the challenges an organizational leader faces, he says. It is also to guide the conversations, keeping the executive focused on his or her profes-sional goals.

This type of coaching is geared to the top two or three levels of a company because, the higher up in an organization you go, the fewer people there are who have gone where you’ve gone and who have a sense of what you’re going through, Washington says. “This means you have people

looking outside of the organization to get that sort of mentoring, coaching and development.”

Knowing when to seek out that outside advice may not be as obvious as some would think. Washington says the right time should be at the middle-point between a company’s roller coaster ride

of crisis and growth. “ W h e n y o u ’ r e i n crisis, your first job is to solve the crisis,” Washington says of company executives. “If you’re in a rapid growth phase, you’re

probably just trying to manage the growth.” Between those two extremes, executives would benefit from setting aside some time to invest in themselves.

“The real value of executive coaching is that it’s designed to work for very busy executives,” Appelman says. “Instead of saying, ‘We’re going to send you off for a four-day program and pull you out of operations and executive leadership for four days,’ we integrate it into their daily routine. Most of them can spare an hour for a phone call every two or three weeks.”

With each check-in phone call, the coach and executive refer to the initial coaching plan and confirm things are on track. A coach may check if an executive had that planned tough conversation with

Executive coaching starts with two parties creating a goal-focused plan around areas

the executive wants to improve.


OPENMIND 2014 23

From an executive’s perspective, it’s important that he finds the right coach to motivate him, and sometimes the first coach isn’t the right one. Washington compares executive coaches to personal trainers at a gym. “If I’m a yeller-in-your-face, and you need somebody to hold your hand and be a cheerleader, instead of me trying to become that, let me go find you a cheerleader,” he says, adding that a good coach will have relationships with other ones to be able to refer clients appropriately.

He jokes that to determine if a rela-tionship will work for him and a client,

it’s a “three-date thing.” He doesn’t count the first meeting as one of the “dates” because it is just for coffee and it’s free. If there’s enough of a match after that to go further, then they meet two more times to discuss the goals and overall plan. The third date is to finalize a few things and ensure both parties feel this will be a good use of their time. If they don’t, both can walk away and no harm is done.

“It ’s an intimate relationship,” Washington says. “I don’t want to waste your time, but I also don’t want to waste

an employee to see how it went. Also, a coach may suggest a book to read or listen to that pertains to the executive’s current situation, and may ask for feedback at the next scheduled call. When company leaders have a specific request, such as guidance on how to better develop talent for the organization, Appelman has asked executives to keep a journal, noting at the end of each day the success, failure, and general progress of an initiative.

The regularly scheduled check-in calls also present an opportunity for the people being coached to provide feedback about the relationship. If they aren’t getting what they expected, then they need to speak up early on and be clear about what they really want and need. This way the coach can adjust his or her guidance.

Appelman says a good executive coach has no ego and remains committed to the executive’s success. He also cites other attributes a coach should have: great listening skills to provide guidance, not answers; flexibility to the day’s concerns of an executive, which can completely change the focus of a check-in call; and candor because the higher up in an organization an executive goes, the less direct feedback he or she will receive from colleagues.

“I would say that the executives should be prepared for anywhere from four to five hours of homework in between check-in calls to really make it work,” Appelman says . He ’s wary o f a n y o n e w h o requests coaching but then hesitates with the mention o f t h e e f f o r t that both parties have to contribute to this type of relationship. His company has walked away from engagements with potential clients who were not committed enough.

“The coachee really has to be willing to learn, do the work and show up – literally – for the calls and not skip them. He must be committed to the process,” Appelman says. “For that reason, we usually recommend the ideal coachee to be someone who is already a high- performer.”

my time because I could be doing this with someone else.”

When a good connection is made, Washington guides executives to structure their thinking. They have spent years running from crisis to rapid growth and back again and lost the ability to think effectively. “We know that when they do think, good things happen,” Washington says. “The hour of structured thinking time [with a coach] will solve many hours of problems.”

After working his way up through the company his parents founded, Cory Jodoin became a co-owner of Jen-Col Construction Ltd. in 2000. Then last year, he bought his parents out, becoming the sole owner and president of the 36-year-old commercial contracting company in Stony Plain.

The shift from managing to leading triggered Jodin’s memories of an attempt to self-train for an arduous backpacking trip years ago. He trained alone but didn’t pace himself properly or do the specific exercises needed to be truly prepared for the trip and paid for it physically.

“At the end of the day, it really boils down to this,” he says, “You don’t know everything and, to be truly successful, you need to surround yourself with the best people to help you achieve your objective. It doesn’t matter how high up the ladder

you are, you do not know everything and everyone can learn and grow.”

In construction, J o d o i n s a y s t h a t when competitors talk it is never to

share industry insight or to ask for advice. It’s just simple chit chat. So if the solution isn’t in-house, where do you go?

Jen-Col hired FMI to consult the c o m p a n y t h r o u g h i t s l e a d e r s h i p transition, which led to Jodoin and two other executives signing up for about a year’s-worth of executive coaching. He liked that FMI’s sole focus is the construc-tion industry, then he didn’t have to spend time explaining what he does and why.

He wanted coaching because the timing felt right but also he saw the folly

Knowing when to seek outside advice may not be obvious. The right time should be at the

middle-point between crisis and growth.


Coaches’ Corner

of taking the same approach to issues over and over and expecting different results. “Coaching funnels you in the right – or different – direction to analyze something or look at it differently,” Jodoin says. “When you become a leader of a company, you change from doing to leading, and leading is basically working with your people and coaching them to achieve the vision and goals.”

He doesn’ t suggest taking the coaching route if it’s just another thing to check off your to-do list. “You’re not going to get what you want out of it,” he says. “But if you’re really committed to growing, coaching is a great way of doing it.”

The benefits come back to a sports analogy. “The vast majority of executives spend 90 per cent of their time performing and 10 per cent of their time practising,” Appelman says. “If you look at really great performers from an athletic perspective, they spend the vast majority of their time preparing to perform.”

The International Coaching Federation (ICF) is currently the leading certification body for executive coaches. Certification levels are based on the number of hours a person spends coaching and whether he or she has taken an accredited coaching training program. See coachfederation.org for more information.

Once you identify a potential coach based on the coach’s certification level or resumé, it’s time to interview him or her with the following questions:

REFERENCES: Can I speak to a couple of people you have coached?

STYLE: What is your coaching approach? How do you get results?

BENCHMARKING: How do you measure results and mark progress?

EXPERIENCE: How many people have you coached? How long have you been coaching? What level of executives do you coach?

SPECIALIZATION: Do you focus on any particular industry? Do you understand my business at a day-to-day level? Have you worked in my industry before? (Note: The U of A’s Dr. Marvin Washington coaches all industries – police, health care, small-business entrepreneurs – and says if the relationship is good, a coach can provide effective guidance across industries.)

WHERE CAN I GET ONE?

George Pinckney,Director Business Development

Suite 125010303 Jasper Avenue

Edmonton, AlbertaPhone (780) 429-3500


OPENMIND 2014 25

Regional Merit organizations are making a splash in their respective home provinces as they continue to advocate

for a fair open shop approach

All over Canada, Merit Contractors Association is having an effect on the training, compensation and continuing advocacy for the construction industry. Their efforts are transforming our industry’s landscape.

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Merit ManitobaMerit Contractors Association of Manitoba continues to expand its footprint across the province. The membership is currently growing at about 10 per cent annually, and com-prises 235 companies with more than 5,000 employees.

In 2012, a group of construc-tion workers, supported by Merit Manitoba, filed a statement of claim in the Court of Queen’s Bench challenging the Manitoba NDP government policy, and Manitoba Hydro PMAs that put the interest of trade unions over the charter-protected rights of workers who chose to remain non-unionized. Essentially “Does the Canadian Charter of Rights and Freedoms protect the rights of open shop or non-unionized

workers?” In 2013 the case

began to slowly find its way through the court with briefs and affidavits filed, and preliminary hear-ings set for 2014.

Merit Manitoba continues to provide a voice for open shop construction and is very active in providing Gold Seal Credit Courses and other education and training opportunities to members.

New construction in all sectors has sustained a fairly high level of activity across Manitoba, which is experiencing a lack of skilled trades. And although Merit is well represented on trade advisory committees, this situation is only exacerbated by the fact that the apprenticeship system has refused to relax apprenticeship ratios that would permit two apprentices to each journeyperson.

Merit OntarioUnder the leadership of Premier Kathleen Wynne, the minority Liberal gov-ernment, propped up by the NDPs, continues to stand in the way of an equitable and competitive marketplace for construction in Ontario.

I n M a y , 2 0 1 3 , M e r i t Ontario stood alongside MPP Michael Harris as he tabled Bill 73, the Fair and Open Tendering Act, which was designed to preserve and maintain open bidding for public infrastructure projects tendered by Ontario municipalities and school boards. In September, despite overwhelming support from municipalities, local contractors and taxpayers throughout the province, the Liberals and the NDP joined forces and voted against Bill 73.

Merit AlbertaThis year the Alberta associ-ation has stayed strong with its commitment to training by redeveloping and intro-ducing more updates to the Leadership Development for Supervisors course, focused on harnessing an employee’s natural leadership abilities and providing him or her with

the skills to truly mentor and lead within an organization. On the public policy front, Merit Alberta has continued to

work to improve construction competitiveness by participating in an industry stakeholders consultation led by former Alberta Labour Relations Chair, Andy Sims. That process has been com-pleted, and the report has been submitted to the government for review and action. The association is now engaged in a lobby effort to encourage the government to amend legislation in such a way that it improves competitiveness.

Merit Alberta has also taken a lead role on the Alberta Coalition for Action on Labour Shortages. This group of indus-try associations, representing 21 industries across the country, advocates for changes to immigration laws and enhancements to the temporary foreign worker program.

For another year in a row Merit Alberta saw growth in the Merit member employee hours worked under the Hour Bank program, as well as growth in the number of new firms partici-pating in the program. The growth allowed Merit to lower rates and increase coverage for a second year in a row, putting Merit’s plan head-and-shoulders above the rest.

Merit SaskatchewanMerit Contractors Association of Sask-atchewan celebrated its 25th Anniversary in 2013. The association has contin-ued to grow and now provides services for approximately 250 members, with close to 5,000 employees.

I n 2 0 1 3 , M e r i t S a s k -atchewan launched an annual awards program to recognize the achievements of employees of member companies.

Merit Saskatchewan continues to be very vocal as an advocate for the open shop construction sector, lobbying for change to various legislation and regulations pertain-ing to labour standards, workers’ compensation, OHS, and procurement.

Across the Nation

THE MERIT HOUR BANK BENEFIT PLAN IS A STRONG DIFFERENTIATOR FOR OUR MEMBERS, AS THEY

CONTINUE TO GROW THEIR BUSINESS IN A HIGHLY COMPETITIVE MARKETPLACE.

26 OPENMIND 2014


As a result, thousands of contractors who have been unfairly barred from working on public infrastructure – in the com-munities where they live, work and pay taxes – continue to have their rights ignored.

Since its official opening in April 2013, Merit Ontario continues to call into question the integrity of the Liberal-backed Ontario College of Trades. Most recently, MPP Garfield Dunlop has written to the attorney general of Ontario asking for an independent investigation of the apprentice-to-journeyperson ratio review completed by a Ontario College of Trades panel in 2013. The panel’s chair-man failed to disclose a 20-year professional relationship with the International Brotherhood of Electrical Workers (IBEW) union. The IBEW made a recommendation to the Ratio Review Panel that the panel accepted. The outcome has served as a prime example of the lack of process and accountability at the College.

With a provincial election on the horizon for the spring, issues in construction and labour in Ontario will no doubt remain at the forefront of political debate.

Merit New BrunswickAfter mourning the tragic passing of the highly respected Linwood Hupman, former executive director of Merit New Brunswick, and facing the huge void he left, the Board of Directors decided to hit the reset button. A new commit-ment to improved communi-cation, membership, training

and awareness of Merit NB became the new mandate. A strategic planning process leads the way, almost

immediately after hiring a new executive director, Graeme Scaplen. He brings extensive management, marketing, sales and communication skills to the association. Completion and delivery of the new strategic plan (including its goals and actions) is at the top of his challenges. “Reaching out to our existing members, and delivering Merit’s outstand-ing success story and Hour Bank benefits program to all New Brunswick open shop contractors are my top priori-ties,” Scaplen says.

The premier of New Brunswick has officially announced a provincial mandatory health benefits program that affects all employers and employees. Now is the time for open shop construction contractors to embrace and secure an afford-able company health benefits plan for themselves and their employees before the government mandates their program, which will not be comparable to Merit’s in terms of coverage and cost.

Merit Nova ScotiaReady to celebrate its 20th anniversary in 2014, Merit Nova Scotia is proud of its efforts in 2013, which included successfully lob-bying for amendments to Nova Scotia’s restrictive First Contract Arbitration law, and making workplace safety a priority by calling for more safety oversight and stricter rules on all worksites across the province.

The year ahead will provide new training opportunities for open shop employers and employees and focus on changing union-favourable labour legislation that hurts open shop con-tractors of all sizes on any given day.

Merit Newfoundland and LabradorM e m b e r s o f t h e M e r i t Contractors Association of Newfoundland and Labrador are experiencing the benefits of an economic boom in the province. Construction in all sectors is at an all-time high, which brings with it a new set of challenges: recruiting and

retaining qualified people to get the work done. The cyclical trade demands of the natural resource

mega-projects have put a strain on open shop contractors that will continue through to 2017 with the development of both the Hebron oil project and the Muskrat Falls hydroelectric project. The Merit Hour Bank benefit plan is a strong differen-tiator for members, as they continue to grow their business in a highly competitive marketplace.

Merit has been tireless in its efforts to reverse the decision to replace secret ballot voting with automatic card-based cer-tification when deciding the fate of an employer to be union-ized or not. It has the ire of the entire business community. “We are also excited to be working on the harmonization of apprenticeship systems across Atlantic Canada, and providing input to a new provincial immigration strategy and workforce development strategy,” says executive director Paul Dubé. “This will be a very busy year.”

THE YEAR AHEAD WILL PROVIDE NEW TRAINING OPPORTUNITIES FOR OPEN SHOP EMPLOYERS AND EMPLOYEES AND FOCUS

ON CHANGING UNION-FAVOURABLE LABOUR LEGISLATION THAT HURTS

OPEN SHOP CONTRACTORS.

OPENMIND 2014 27


Blue: C 100 M 84.09 Y 11.04 K 3.08

Red: C .91 M 100 Y 92.14 K 0.02

WHY IS BIGLABOURAFRAID OFTHE LIGHT?Canadians are a generous people who support many initiatives. Because of the role that labour organizations play, they receive very favourable tax benefi ts. Dues are 100% tax deductible. They are exempt from income tax. They are exempt from capital gains tax. In return, Canadians have a right to see the

That’s only fair. Yet, we don’t.

Unlike charities, religious organi-zations and political parties, labour organizations are not required to disclose their fi nancial information. And Big Labour leaders are fi ghting to keep it that way.

fi nances of organizations subsidized by their tax dollars.

Labour organizations are also very political. Canadians also have the right to know how organizations receiving public benefi ts are trying to infl uence public policy.

Whose interests are Big Labour leaders protecting by trying to keep their fi nances secret? Canadians or their own?

It’s time to end the special treatment for Big Labour.

opportunitytowork.ca

merit_ad.indd 1 2013-10-21 1:34 PM000OM-Merit-FP.indd 1 2014-04-09 8:38 AMOPENMIND_14_p28-31.indd 28 2014-04-30 10:57 AM

Merit

OPENMIND 2014 29

CanadaWORKS FOR

erit Canada continues to move issues forward that are of concern to the open shop construction sector and, beyond that, people who share our free-enterprise philosophy. As the federal government considers what’s important for the next two years of its mandate, Merit Canada is focus-

ing on three priorities, which the organization developed in response to a considera-tion of many examples of flagrant waste. (See “We Couldn’t Make This Stuff Up” on the following page.)

The examples we listed in the sidebar are just a handful from a longer list of questionable union activity and bizarre outcomes from union-friendly public policies. The long list could ultimately stretch on for several pages. All of these examples are linked by a simple underlying fact: existing laws governing labour organizations have created an environment ripe for abuse, with no accountability to union members, taxpayers or the general public.

It is time to tilt the balance back in favour of transparency, accountability and respect for taxpayers, and there are at least three immediate measures the federal government can implement to make that happen.

M

Blue: C 100 M 84.09 Y 11.04 K 3.08

Red: C .91 M 100 Y 92.14 K 0.02

WHY IS BIGLABOURAFRAID OFTHE LIGHT?Canadians are a generous people who support many initiatives. Because of the role that labour organizations play, they receive very favourable tax benefi ts. Dues are 100% tax deductible. They are exempt from income tax. They are exempt from capital gains tax. In return, Canadians have a right to see the

That’s only fair. Yet, we don’t.

Unlike charities, religious organi-zations and political parties, labour organizations are not required to disclose their fi nancial information. And Big Labour leaders are fi ghting to keep it that way.

fi nances of organizations subsidized by their tax dollars.

Labour organizations are also very political. Canadians also have the right to know how organizations receiving public benefi ts are trying to infl uence public policy.

Whose interests are Big Labour leaders protecting by trying to keep their fi nances secret? Canadians or their own?

It’s time to end the special treatment for Big Labour.

opportunitytowork.ca

merit_ad.indd 1 2013-10-21 1:34 PM000OM-Merit-FP.indd 1 2014-04-09 8:38 AM

BY TERRANCE OAKEY

Three federal-level measures will tilt the balance back in favour of transparency, accountability and respect for taxpayers


30 OPENMIND 2014

First, Parliament needs to pass Bill C-377, which will establish new report-ing requirements for unions, including annual financial statements, the amount of time spent on political activities and financial support for social causes, such as legal defence funds for NDP MPs. Cases of inappropriate or questionable f inan-cial activity by union bosses will persist as along as unions collect over $4 billion annually in forced contributions, and as long as they have no obligation to report how that money is spent to their mem-bers or the public – even though they receive $400 million in tax breaks annu-ally. How can there ever be accountability without transparency?

It is stories like those coming out of Que-bec’s Charbonneau Commission about inappropriate expenses and links between organized crime and union bosses that led countries like the U.S., Britain, France

and Australia to implement union trans-parency legislation. Canada’s peers have had legislation in place for years – decades even in some cases. Continued opposition to Bill C-377 after these latest revelations is confounding and troubling and ulti-mately raises more questions about what may really be going on behind the scenes.

The current system is ripe for abuse – both from union organizers and employers.

Merit Works For Canada

WE COULDN’T MAKE THIS STUFF UPMerit Canada chose to adopt its three federal-level policies in a consideration of the following and other similar events taking place in Canada.

A former union executive told the Charbonneau Commission that Quebec’s largest labour union was controlled by high-ranking mem-bers of the Mafia and Hells Angels.

Union bosses in Quebec helped rebuild a biker strip club that had burned down, and included a $1 million investment from a union-controlled fund.

A union boss allegedly filed more than $125,000 in fraudulent expenses over a six-month period.

The lowest bid to build a simple brick public washroom in Kitchener, Ontario came in at $564,744, which is 40 per cent more than budget-ed and more than 150 per cent in excess of the average cost to build a house in the city – including the cost of the lot.

The City of Waterloo was forced to appeal to the Ontario Labour Board in its effort to open a public tender for a $140-million sewage treatment plant to 27 contractors rather than only two.

Rank-and-file members from at least 17 unions contributing thou-sands of dollars to a legal fund for NDP MP Pat Martin to defend him-self in a defamation suit that had nothing to do with labour issues.


Second, to address the issues highlighted by the Kitchener and Waterloo examples mentioned at the outset, it is time to end the privileged access to public sector contracts enjoyed by unions in many parts of the country, known as closed tendering. Under this system, bidding on public sector projects is restricted to specific unionized contractors affiliated with the building trades unions.

This arcane and indefensible practice means that – right off the top – seven out of 10 construction workers in Canada are excluded from employment on these projects because they do not belong to a

union. To make things even less competi-tive, specific unions also have privileged access to these contracts over other unions, further limiting fair competition.

It does not take a degree in economics to know what happens when 70 per cent of any industry is barred from compet-ing. Quality goes down and costs go up. The example of the half-million-dol-lar bathroom in Kitchener is just one of many. A study conducted by the City of Montreal found closed tendering inflated project costs anywhere from 30 per cent to 85 per cent.

Ottawa should take a leadership role

OPENMIND 2014 31

Finally, the third area in need of reform surrounds union voting. It is time to bring basic democratic practices to unions and guarantee federal workers a secret ballot vote when deciding to join a union. The current system is ripe for abuse – both from union organizers and employers. A secret ballot is the best way to ensure that a decision to join a union is conducted in a fair manner, without any threat of intimidation or offer of reward for voting one way or another.

Such a system will help ensure that an employee’s decision to join a union is based on sound personal reflection – not fear of reprisal. In addition, if unions were

also forced to operate in a more trans-parent manner, as outlined in Bill C-377, potential members could better under-stand the priorities of the organization they are being asked to join.

These three policy changes extend the principles of transparency and accountabil-ity – which are the underpinning of all our democratic institutions – to unions as well.

This is long overdue and those who con-tinue to oppose timely change risk doing irreparable harm to Canada’s labour movement since the general public will not tolerate more stories like the ones listed here.

on this issue and ensure that projects that use any federal funds be tendered openly. This policy should be included in all infrastructure agreements and apply to all Crown corporations and any other federal mechanisms used to fund infrastructure.

Open tendering is about fairness for taxpayers, since governments have an obligation to use their money efficiently. Moreover, companies that pay federal taxes should not be precluded from bid-ding on public contracts – paid for with their tax dollars – simply because they do not belong to the right union.


32 OPENMIND 2014


OPENMIND 2014 33

Let’s look to successful models that encourage respect, rather than legislating a poor solution

anada is experiencing a serious shortage of qualified tradespeople, which will only get worse in the next decade as we are not train-

ing enough apprentices to keep up. In fact, according to the International Labour Organization, Canada had only 30 apprentices per 1,000 employees in 2011, well below Germany with 39, Australia with 40 and Switzerland with 44. To address this problem, govern-ments, employers, industry associations and unions have all implemented a variety of programs, strategies and regulations to get more apprentices into training. They have experienced varied levels of success.

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While some government programs – such as tax credits, employment insurance programs and grants, have provided incentives for workers and employers to utilize the apprenticeship training system in greater numbers – other government regulations have created disincentives to apprentice-ship training. Now, some governments have been suggesting that mandating a minimum ratio of apprentices on government infrastructure project sites could be a way to increase the number of apprentices being trained. Unfortunately, these governments have made this suggestion with no evidence that this approach will actually increase apprenticeship training numbers.

But more regulation might not solve the problem. Government regulation of apprenticeship training could be detrimental to the industry.

According to the 2013-14 World Economic Forum’s global competitive-ness rankings report, amongst the “most problematic factors” for doing business in Canada are “insufficient capacity to innovate, restrictive labour regulations a n d a n i n a d e q u a t e l y e d u c a t e d workforce.” Some of these issues were recently studied by the C.D. Howe Institute, too. Its study, called Access Denied: the Effects of Apprenticeship Restric-tions in Skilled Trades found that overall, “strict provincial regulations on the rate at which firms may hire apprentices, which is relative to the number of certified workers they employ, reduce the number of people who work in a trade.” The study also concluded that “trades in provinces with the strictest regulations on hiring have lower levels of young workers.”

In other words, if provinces want more workers in the trades, they should allow firms to hire more apprentices and should loosen restrictions on entry into apprenticeship training and into the trades.

The C.D. Howe study examined the impact of journeyperson-apprentice ratios and found that, among other things, these ratios “reduce the incentive

34 OPENMIND 2014


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36 OPENMIND 2014

for a firm to grow: if the firm wishes to hire additional apprentices, it would first have to hire more journeypersons (which may not exist or be available), thus increasing the effective cost of labour.” This disin-centive to grow is problematic and can be most harmful to smaller businesses that do not have multiple certified journey-persons; this problem will be exacerbated as the number of certified journeyper-sons retiring from the trades increases

substantially over the coming years. With a growing need to train more apprentices and an aging and retiring workforce, apprenticeship ratios could have a crippling effect on the industry going forward.

The study found that “in trades in provinces where there is a journeyperson-

apprenticeship ratio above one, there are 44 per cent fewer workers as a share of the provincial workforce relative to otherwise comparable trades for which there is no fixed ratio.” The study further found that ratios above one “result in 38 per cent fewer young workers – those between the ages of 25 to 34 – in a trade.”

One of the reasons often cited for high journeyperson-apprenticeship ratios is that they increase the quality of

training and thus protect consumers from unqualified tradespersons. The study’s analysis of the data, however, found no evidence to support these claims. Further, the report concluded that, “while formal apprenticeship does impart valuable skills, there is no evidence that barriers to entry, such as strict journeyperson- apprentice ratios, are necessary to increase skills training.”

Similar to how restrictive policies such as journeyperson-apprentice ratios distort the number of people that participate in apprenticeship training and the ability of companies to grow, potential government policy that would mandate a minimum number of apprentices on government infrastructure projects would create unnecessary market distortions.

For example, regulating a minimum number of apprentices on jobs could

A CANADIAN APPRENTICESHIP FORUM PAPER FOUND

CONSUMERS DO NOT VALUE THE CONTRIBUTION THAT

TRADESPEOPLE MAKE.



OPENMIND 2014 37

mean that smaller firms may not be able to participate on those jobs, especially if journeyperson-apprentice ratios make hiring more apprentices cost prohibitive. It also means that the most qualified and experienced firms may not be able to participate because they don’t have enough apprentices available, or because their apprentices are working on a different jobsites. Such a policy could also create a disincentive for companies to help their apprentices to become journey-persons. After all, such a move would put a company out of line with its arbitrary contractual obligation to employ a set number of apprentices on a job.

Another interesting finding in the study is that the length of apprenticeship training matters. The study found that, relative to trades with apprenticeship terms of less than two years, “employment

is 48 per cent higher in trades with appren-ticeship terms of between two and three years. Trades with apprenticeship terms of three to four years have 34 per cent higher employment than trades with less than two years of apprentice training.” The authors concluded that “lengthier apprentice programs induce workers to enter a program, but there are diminishing returns for the longest programs.” This finding is particularly useful given the fact that it takes “roughly one-third longer to qualify as a carpenter or welder in Canada than it does in Germany,” which is inter-nationally recognized as having one of the most effective apprenticeship systems. There is value in aligning the length and structure of apprenticeship training in Canada with countries that are achieving better outcomes.

We don’t need more regulation based on unproven claims and assumptions in the apprenticeship system.

What we need are policies and part-nerships that get to the root of why apprenticeship numbers are not as high as we would like them to be. According to the Canadian Council of Chief Executives, “resistance to so called ‘blue-collar’ work remains much stronger in Canada than in many other countries, especially in

Europe.” This finding is consistent with a recent Canadian Apprenticeship Forum research paper called Youth Perceptions of Careers in the Skilled Trades. The paper found that, “youth did not feel their parents, guidance counsellors or friends encouraged them to consider the skilled trades.” It also said, “consumers and the general public do not value the contribu-tion that tradespeople make to society; stereotypes exist that prevent women from pursuing many trades careers; and negative impressions of the skilled trades are perpetuated in the media.” The C.D. Howe study comes to a similar conclusion about the reasons behind the shortfall of skilled tradespeople in Canada.

So, rather than continuing to pursue counterproductive, protectionist policies such as restrictive journeyperson-appren-tice ratios, and rather than regulating a minimum number of apprentices on government infrastructure projects without the evidence to back such a policy’s effectiveness, governments should partner with industry. This partnership could reveal real solutions to identified problems – mainly, a lack of appreciation and respect for what have become some of the best paying, highly technical and most exciting careers available in the country.



38 OPENMIND 2014

Capital expenditures for construction in Canada (in $ millions):

St. John’s

Fredericton

Halifax

Toronto

Winnipeg

Saskatoon

Calgary

Vancouver285,045.4

Yearly Value of all building permits by Province (in $ millions)

2012 2013

147.2

108

114.4

116.7

129.3

118.8

97.1

98.2

1,184.60

1,551.10

968.5

29,547.50

2,485.70

3,114.10

14,662.90

10,759.60

149.8

108.3

117.3

119.6

135.6

120.5

102.2

97.1

942.7

1,171.70

1,004.90

28,932.90

2,608.20

3,173.90

17,262.40

9,976.10

Wholesale merchants’ sales by industry unadjusted ($ millions) across Canada2012 2013

Building supplies 81,522.1 83,637.2

Metal products 25,660.9 25,792.2

Lumber and millwork 18,827.8 18,694.8

Machinery and equipment 37,033.4 39,150.2

Average number of employees covered under the

Merit Hour Bank Benefit Plan: 2012 2013

48,015 51,169

(SOURCE: Statistics Canada)

Construction price index for apartment buildings:

2012

2013

Halifax

138.8

140.2

Toronto

144.4

145.2

Calgary

166.4

169.2

Vancouver

144

148

Total person hours worked under the Merit Hour Bank Benefit Plan:

2012

2013

96,729,350103,774,392

(SO

URC

E: M

erit

Cont

ract

ors A

ssoc

iatio

n)

New housing price index ($ thousands)

2012 2013

2012 2013

290,950.4 (preliminary)

Newfoundland and Labrador

Nova Scotia

New Brunswick

Ontario

Manitoba

Saskatchewan

Alberta

British Columbia

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NUMBERSBY THE


Mark’s is a member of the Canadian Tire Corporation Family of Companies

Since 1993 Imagewear has been supplying

more Canadian companies with their branded apparel,

footwear and promotional items. From the front offi ce

to the warehouse, to out in the fi eld we fi nd exactly

what you need to keep your company working

in comfort and safety.

To ensure your workers are comfortable and have the safest gear,

we offer a voucher program and/or employee savings card

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the chance to try on and pick up exactly the right clothing

and footwear at any of our 380+ Mark’s stores across Canada.

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