Bill C-39: What the Proposed Canada Labour Code Changes Mean for Federal Employers

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If you run HR or labour relations for a bank, an airline, an airport contractor, a railway, a port operator or a trucking company that crosses provincial lines, Bill C-39 is written for you. The federal government introduced the Building Canada Strong Act on September 21, 2026. Most of the omnibus bill deals with project approvals and trade corridors, but Part 3 rewrites a large share of the collective bargaining rules in the Canada Labour Code. Employer-side labour lawyers have described it as the biggest change to Part I of the Code in decades.

Published October 2026

It is still proposed legislation. As of October 9, 2026, the bill has passed second reading in the House of Commons and sits with a legislative committee, where it can be amended. This article sets out how to tell whether your organization is federally regulated, what Part 3 would change, and what unionized and non-union employers in Ontario and British Columbia can do before it passes.

First, is your organization federally regulated?

The Canada Labour Code covers only federally regulated employers. Part I of the Code, which most of Bill C-39 amends, applies to more than one million employees and more than 22,000 employers. Everyone else in Ontario works under the Employment Standards Act, 2000 and the Labour Relations Act, 1995, and everyone else in BC under the Employment Standards Act and the Labour Relations Code.

The test turns on what the business does, not where it is incorporated or where its head office is. A federally regulated employer’s staff in Toronto or Vancouver are governed by the Code, not by provincial employment law. For the two sectors this article is aimed at, the usual split looks like this:

The hard cases sit at the edges. A carrier with only occasional cross-border runs, or a bank’s insurance or brokerage subsidiary, can land on either side. Corporate family does not decide it: a bank-owned insurer is usually provincial even though its parent bank is federal.

Contractors at federal operations

Ground handlers, fuellers, cabin cleaners and other contractors whose work is part of airport and airline operations are often federally regulated because of the work they do, even though they are not airlines themselves. These are the employers most directly affected by the expanded successor rights discussed below. If you bid for airport work that a unionized contractor now holds, the union and its collective agreement could come with the contract.

What Part 3 of Bill C-39 would change

Earlier bargaining for higher-risk relationships (new s. 50.1)

The Code now lets either side give notice to bargain in the four months before a collective agreement expires, and it does not require bargaining to start by any particular date. Bill C-39 would require some parties to begin bargaining between 200 and 180 days before expiry, about six and a half months out. Before starting, they would have to notify the labour minister and the Canada Industrial Relations Board (CIRB) and engage with the Federal Mediation and Conciliation Service (FMCS).

Under the bill text, the obligation applies where the current collective agreement has a term of five years or more, where a strike or lockout happened during the bargaining that produced it, or where it came out of a binding process imposed on the parties. Government summaries describe the five-year trigger more loosely, but the bill itself ties it to the length of the agreement’s term.

The detail most likely to catch employers out is the freeze. For these agreements, the statutory bar on changing rates of pay and other terms and conditions of employment without the union’s consent would start on the 200th day before expiry, well before it can start today, and would last until the parties reach the point where a legal strike or lockout is possible. The minister’s power to order a vote on the employer’s last offer would also become available from that 200th day.

Conciliation extended from 60 to 90 days

For every bargaining relationship under Part I, the statutory conciliation period would grow from 60 days to 90. In practice this pushes back the earliest date on which a legal strike or lockout can begin, and every strike and contingency calendar built on the current timeline would need to be redone.

A special mediator with a public report (new Division V.01)

The labour minister could appoint a special mediator at any point up to 75 days after a conciliation officer or commissioner is appointed or a conciliation board is set up. The special mediator would have 21 days to try to settle the dispute. If no agreement or tentative agreement is reached, the mediator reports to the minister on the issues in dispute, each side’s position, how fully the parties took part, and whether a settlement is likely within a reasonable time, with recommendations. The report goes to the parties and, in most cases, is made public after a further five days. A report is also triggered if a tentative agreement is reached and then rejected.

Appointing a special mediator would not suspend the right to strike or lock out. The point is pressure: each side’s conduct at the table, and the gap between its position and the mediator’s recommendations, could end up in a public document days before a possible stoppage.

A narrower, more structured section 107

Section 107 currently lets the minister direct the CIRB to do whatever the minister considers necessary to maintain or secure industrial peace. Ottawa has used it repeatedly since 2024 to end rail, port and airline disputes, including the Air Canada flight attendants’ strike in August 2025, and unions have challenged those uses in court.

Bill C-39 keeps that general power, including the power to refer questions to the CIRB. What it restricts are the three orders that actually end a dispute. Once a legal strike or lockout is under way, the minister could direct the CIRB to order operations to resume, extend the existing collective agreement, or impose a binding method of resolving the dispute only where both of these conditions are met:

• The minister has considered a special mediator’s report.
• The minister is of the opinion that the strike or lockout adversely affects, or may adversely affect, the national interest. The minister may take into account any relevant considerations, including significant effects on the Canadian economy, serious social disruption, and the effect of the direction on freedom of association.

Employer counsel read this as narrowing the government’s options rather than widening them, because these orders would be tied to a stoppage that has already begun. And because a special mediator can only be appointed up to day 75 of conciliation, Hicks Morley notes that if the minister does not appoint one in time, the power to end the dispute may not be available at all.

Read this together with Bill C-58’s ban on replacement workers, in force since June 20, 2025. A federal employer can no longer count on bringing in replacement workers, and under Bill C-39 it could not count on Ottawa stepping in before the picket lines go up. Contingency plans need to assume that some days of a stoppage will have to be absorbed.

Mediation after a bitter round (new s. 105.1)

Where a collective agreement is reached after a strike, a lockout or an imposed binding process, the minister would appoint a mediator within six months to work with the parties on the relationship before the next round begins.

First contract arbitration on request (s. 80 and new s. 35.1)

Today, a first contract dispute reaches the CIRB only if the minister refers it. Under the bill, once a union is certified it would send its certification order to the minister, and the FMCS would engage with the parties. If there is still no first agreement nine months after notice to bargain, either side could apply to the CIRB, which would generally have to direct a binding method of settling the outstanding issues. The right to strike or lock out would be suspended once that order is made.

Wider multi-employer certification (s. 34)

Section 34 now allows a single union to be certified across several employers in one geographic area, mainly in longshoring. The bill would let two or more employers, the minister, or the CIRB itself start that process for existing bargaining units in designated industries and areas. The CIRB would still decide whether a geographic certification is appropriate.

Successor rights that follow contracted work

Successor rights under the Code have mostly been about the sale of a business. Bill C-39 would add a contractor succession regime, starting with airports and any industries the federal Cabinet adds by regulation. Where a new contractor takes over the same or substantially similar services from a previous contractor, the union’s bargaining rights, the collective agreement, any pending certification application and any pending CIRB proceedings would transfer to the new contractor. The existing s. 47.3, which protects only wage rates in some contract-flipping situations, would be repealed.

Paid medical leave exemption for some collective agreements (s. 239)

Since December 2022, federally regulated employees have been entitled to up to 10 days of paid medical leave a year. Employers have argued that this was being stacked on top of bargained sick leave. The bill would switch off the Code’s paid medical leave where a collective agreement provides benefits for the same purpose that are at least as favourable and allows a third party to settle disagreements about them. The collective agreement would then govern those disputes exclusively. Non-union employees are not affected.

Wage recovery and enforcement

Under Part III of the Code, the Head of Compliance and Enforcement could issue a settlement enforcement order requiring an employer, or in some cases a corporate director, to pay amounts owing under a written settlement with an employee. Orders to debtor, which redirect money owed to the employer, could be issued earlier: before a payment order is made, or once a complaint is filed and there are reasonable grounds to believe the employer will not pay. The Wage Earner Protection Program Act would also be tightened, including a definition of “former employer” and the power to revisit eligibility decisions without a request for review.

Outside the bill itself, the government has announced more inspections and enforcement, a focus on employee misclassification and wage theft in trucking, and more funding for the CIRB. The bill also gives Cabinet power to make regulations for expedited grievance arbitration, for administrative monetary penalties for breaching the bargaining duties (including the new early bargaining rules), and for barring unfair labour practice complaints that are frivolous, vexatious or not made in good faith.

What it means for your sector

Financial services

Most bank workforces are not unionized, so the bargaining timetable matters less day to day than it does for carriers. Two changes still deserve attention. First contract arbitration changes the stakes of an organizing drive at a branch network, call centre or operations group: if a union is certified, a first agreement could be imposed through binding arbitration after nine months rather than left to the parties. And the new wage recovery tools apply to every federal employer, unionized or not, including possible personal exposure for directors on unpaid settlements. Unionized financial employers, including federal credit unions with bargaining units, should look at the paid medical leave exemption.

Transportation

Transportation employers carry most of the exposure. Rail, port and airline bargaining relationships are the ones most likely to have ended in a stoppage or an imposed settlement, which would trigger mandatory early bargaining next time. Airport contractors face the new successor rights on every tender. Interprovincial trucking is the declared focus of the misclassification crackdown. On the West Coast, the multi-employer certification rules grew out of longshoring and would now be easier to start.

How to prepare now

Nothing below requires you to act as if the bill were already law. These are the steps that cost little now and would be hard to rush once the changes take effect.

Where the bill stands, and what could change

The House of Commons passed Bill C-39 at second reading on October 8, 2026 and referred it to a legislative committee. The Senate also scheduled a Committee of the Whole on the bill’s subject matter for October 6, before the bill has formally reached it. Committee study is where amendments are most likely.

The labour provisions are contested. The Canadian Labour Congress has signalled a possible court challenge and says it will file an international labour complaint if the s. 107 changes pass unchanged. Since the Supreme Court of Canada’s 2015 decision in Saskatchewan Federation of Labour v. Saskatchewan, the right to strike has been protected under the Charter’s freedom of association, so any law limiting it can be challenged. The government says the changes are constitutional. Some unions support other parts of the bill: Unifor has welcomed the airport successor rights and the first contract changes.

Timing differs by division. The collective bargaining changes in Division 1 have no separate coming-into-force provision, so as drafted they would apply on Royal Assent. The wage recovery changes would start 180 days after Royal Assent, and the paid medical leave exemption on a date set by Cabinet. The transitional rules matter for anyone mid-cycle: the old notice rules still apply if fewer than 200 days remain on the agreement when the changes start, the old 60-day conciliation rules apply if a notice of dispute was already filed, and post-dispute mediation applies only to agreements reached afterwards. A union that gave notice to bargain a first agreement at least nine months earlier could apply for first contract arbitration immediately.

Frequently asked questions

How Achkar Law helps employers

Achkar Law advises federally regulated employers in Ontario and British Columbia on whether the Canada Labour Code applies to them, on Part III compliance, and on collective bargaining strategy, including how to plan bargaining calendars, contracts and contingency plans around Bill C-39 as it moves through Parliament. Learn more about our labour law services for employers. Employers with port, rail and airport operations on the West Coast can also work with our employment lawyers in Vancouver.

This article is general information about proposed federal legislation and is not legal advice. Bill C-39 has not been passed, may be amended, and will not take effect until it receives Royal Assent and is brought into force. Current as of October 9, 2026. An employment lawyer can advise on your specific situation.

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