Section 107 and Labour Disruptions: A Clearer Federal Response to Major Transport Strikes

Economic Note showing that the recent spike in costly transport work stoppages requires clearer rules for the use of Section 107 of the Canada Labour Code

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New bill should help prevent strikes in the ‘centre of the economy,’ think tank report says (National Post, October 1st, 2026)

This Economic Note was prepared by Gabriel Giguère, Senior Policy Analyst at the MEI. The MEI’s Regulation Series aims to examine the often unintended consequences for individuals and businesses of various laws and rules, in contrast with their stated goals.

Since 2023, Canada has experienced several major labour disputes in areas that affect the whole country, as well as causing serious damage to Canada’s international reputation as a reliable global trading partner and dependable link in the North American supply chain. Examples include labour disputes at the Canadian National (CN) and Canadian Pacific Kansas City (CPKC) railways, the ports of Montreal and British Columbia, and the airline sector.

To mitigate the economic strain, the federal government has invoked Section 107 of the Canada Labour Code numerous times over this period. Such interventions have limited the economic harm caused by these rail, port, and airline stoppages. In each case, while pressure was aimed at the employer, most of the cost fell on ordinary Canadians. A Senate report released in June 2026 stated that reform is needed and that it must consider the effects of labour disputes on the population.(1) In September 2026, the federal government introduced Bill C-39, which proposes a clearer process for government intervention in major labour disputes.(2) This Note examines the economic costs of transportation disruptions and how the proposed framework could address them.

The Recent Spike in Work Stoppages

Section 107 of the Canada Labour Code gives the federal jobs and family minister (formerly the labour minister) broad powers. When the minister thinks it is useful to maintain industrial peace or help settle a dispute, he may refer a question to the Canada Industrial Relations Board or direct it to take action. The law does not list a fixed test or a set number of days before action may be taken. In recent disputes, governments have used this power to ask the Board to order work to restart, extend an expired collective agreement, or impose final binding arbitration.(3)

On September 21, 2026, the federal government introduced Bill C-39, which proposes new conditions for the use of Section 107. Under the proposed framework, the jobs and family minister would first have to review a special mediator’s report and determine that an ongoing strike or lockout affects, or could affect, the national interest. The minister could then direct the Canada Industrial Relations Board to take certain measures, including establishing a binding process to settle the dispute.(4)

Section 107 of the Canada Labour Code gives the federal jobs and family minister broad powers.

For most of its existence, Section 107 was invoked rarely and for narrow purposes. Ministers typically referred technical questions to the Board, such as whether a collective agreement remained in force and when it expired. By the Canadian Labour Congress’s count, Section 107 was invoked only a few times between 1995 and 2022.(5) It was notably used in 2011, when Minister Lisa Raitt asked the Board to consider imposing a settlement or binding arbitration in an Air Canada dispute after flight attendants had twice rejected tentative agreements. A strike was averted, and the parties then agreed to arbitration on their own.(6)

That changed on July 29, 2023, when the minister of labour invoked Section 107 in the British Columbia port dispute and directed the Canada Industrial Relations Board to impose either a new collective agreement or final binding arbitration if it found that a negotiated settlement was no longer possible.(7) The federal government then made eight referrals under Section 107 in 2024, and another one in 2025. Nine of these ten referrals were made to end or temporarily pause a strike or lockout, or to impose binding arbitration.(8) Eight involved the ports [4], railways [2], or airlines [2]. The other two involved Canada Post and the courier company ICS Courier.

These ten referrals coincide with rising work stoppages in the federally regulated transportation sector in recent years. These increased from six in 2023 to 12 in 2024, and remain high at 10 in 2025 (see Figure 1).

This matters because railways, ports, airlines, and other federally regulated transportation services are key links in Canada’s supply chains. When these networks are disrupted, the effects can quickly spread to other businesses, including exporters, and to consumers, negatively impacting the broader Canadian economy.

The Economic Strain of Transport Work Stoppages

Transport work stoppages have an outsized economic effect. A small number of workers can stop a network used by thousands of firms and travellers, spreading the cost beyond the employer and the union. A stoppage meant to pressure one employer instead holds countrywide supply chains hostage. This also creates several tough challenges for Canadian small and medium-sized businesses, including lower sales, the loss of perishable goods, inventory shortages, reduced production, and contractual penalties due to delivery delays.(9)

The federal government made eight referrals under Section 107 in 2024.

Factories may run short of parts, farms may miss export windows, retailers may wait for inventory, and passengers may face cancellations. Most of the damage lands on people who have no say in the dispute. That is why governments have felt compelled to intervene. Three recent cases illustrate the different types of harm that can result.

In August 2024, the simultaneous shutdown of CN and CPKC affected the two main freight rail systems. These railways normally move more than $1 billion in goods each day. The Conference Board of Canada estimated that a two-week stoppage could reduce nominal GDP by about $3 billion and lower employment by about 15,000 jobs on an annual-average basis. A four-week stoppage could bring the GDP loss close to $10 billion and the job effect close to 49,000. This could also affect the reputation of the industry and thus the capacity to attract private investment.(10) Moreover, as the recent Senate report noted, some industries are highly dependent on rail transportation to move their goods. This is particularly true for many mining companies, which are thus vulnerable to an immediate and significant negative impact from rail strikes.(11)

The November 2024 lockouts at the British Columbia and Montreal ports affected approximately $1.2 billion in goods each day. The 13-day West Coast port strike in 2023 had already disrupted about $10.7 billion in trade, and exports through British Columbia ports fell by 23% that July.(12) This does not mean that these amounts disappeared from GDP. Some cargo was merely delayed, but delays raise costs and weaken Canada’s reliability, which can ultimately move future business to use other routes. Both lockouts came in response to union pressure. In British Columbia, the employers locked out the foremen’s union after it served a strike notice and began industry-wide strike activity. In Montreal, the employer tabled a final offer and, citing the union’s actions, warned that longshoring would stop on November 10 without an agreement.(13)

Canada’s ports are already among the least productive in the world. The World Bank’s index ranks container ports on the time ships spend in port. In the 2025 edition, Vancouver placed 375th out of 400 ports, and Montreal 338th. Union efforts to block automation have contributed to Canada being near the bottom of the list, while ports such as Singapore and Yokohama, which have embraced automation, rank near the top.(14)

Transport work stoppages can stop a network used by thousands of firms and travellers, spreading the cost beyond the employer and the union.

The Air Canada labour disruption in August 2025 shows the direct effect on people, and on one company’s bottom line. Air Canada cancelled more than 3,200 flights and estimated that about 500,000 customers were affected. The airline later estimated a $375-million impact on operating income and adjusted earnings, including revenue impact from refunds, compensation, and weaker bookings.(15)

These various costs were all incurred despite federal intervention. In the rail case, the minister acted on the first day of the lockout, and the Board ordered operations to resume four days later. The shutdown therefore lasted just days rather than the weeks modelled by the Conference Board. In general, the harm recorded in 2024 and 2025 reflects what occurred even with intervention, not what a full-length dispute would have cost.(16)

It is possible to estimate the larger costs these interventions avoided. In a typical year between 1946 and 2023, each worker involved in a stoppage in the sector lost about 13 working days. As an illustration, applying that duration to the seven cases in which Section 107 actually ended a stoppage suggests that roughly 130,000 person-days of lost work were avoided, most of this related to the rail lockouts.(17)

A Clearer Federal Response to Major Labour Disputes

The federal government has introduced Bill C-39 to set clearer rules for the use of Section 107 of the Canada Labour Code. Under the proposed law, a special mediator would first work with the parties and report to the minister if they cannot reach an agreement. The minister would then have to review that report before using Section 107 to order, through the Canada Industrial Relations Board, a return to work or impose a binding method to settle the dispute(18) (see Figure 2).

The bill also sets a condition for these measures: a strike or lockout must be under way, and the minister must consider that it harms or could harm the national interest. In making that decision, the minister may consider the impact on the Canadian economy, serious social disruption, and the effect of an intervention on freedom of association.(19)

These changes make the economic consequences of a work stoppage an explicit consideration under Section 107. However, the bill does not set a dollar threshold for intervention or require the minister to act whenever a strike causes economic losses. It leaves it up to the minister to assess the circumstances of each dispute.(20) Bill 89, granting similar powers to the provincial minister, was passed last year by the Quebec government in response to union actions.(21)

Bill C-39 would provide clearer rules for federal intervention when a major work stoppage threatens the national interest.

The rail, port and airline disputes discussed above show why this assessment matters. Their costs can extend beyond the employers and workers involved, affecting businesses and ordinary Canadians who depend on our transportation networks. Bill C-39 would provide a more detailed process for considering these wider effects when deciding whether to intervene. It would provide clearer rules for federal intervention when a major work stoppage threatens the national interest. A clear process is needed to protect Canadians from serious economic harm.