Bill C-39: Proposed Changes to Federal Labour and Employment Law
The federal government has introduced Bill C-39, the Building Canada Strong Act, which proposes significant amendments to several federal statutes, including the Canada Labour Code.
For employers and employees in federally regulated workplaces, the most significant changes are found in Part 3 of the bill, titled “Canada Strong for All.” The proposed amendments would affect collective bargaining, contractor succession, the enforcement of settlements involving unpaid wages, and the interaction between medical leave provisions and collective agreements.
It is important to emphasize that Bill C-39 is proposed legislation only. It received first reading in the House of Commons on September 21, 2026, and has not been enacted into law. The proposals may therefore change as the legislative process continues.
What would Bill C-39 change?
The employment-related provisions of Bill C-39 would amend the Canada Labour Code in four principal areas:
- collective bargaining and labour relations;
- succession rights when certain contractors are replaced;
- enforcement of settlements concerning unpaid wages and other amounts; and
- medical leave where a collective agreement provides equivalent or better benefits.
The proposals would apply primarily to federally regulated employers and employees covered by the Canada Labour Code.
Changes to collective bargaining
Bill C-39 proposes a number of changes to the federal collective bargaining regime.
One of the more significant changes would apply to certain collective agreements. Where a collective agreement resulted from imposed binding dispute resolution, followed bargaining during which a strike or lockout occurred, or has a term of five years or more, the parties would generally be required to begin bargaining between 200 and 180 days before the agreement expires.
The parties would also be required to notify the Minister of Labour and the Canada Industrial Relations Board of the first bargaining meeting and engage with the Federal Mediation and Conciliation Service.
During this 200-day period, the employer would generally be prohibited from changing rates of pay, terms and conditions of employment, or certain employee rights and privileges without the bargaining agent’s consent until the applicable statutory requirements for ending the statutory freeze have been met.
Bill C-39 would also introduce a special mediation process. The Minister could appoint a special mediator for up to 21 days during the federal conciliation process. If a collective agreement is not reached, the mediator’s report could ultimately be made public, subject to appropriate redactions for personal information and confidential business information.
The bill would also permit the Canada Industrial Relations Board, in specified industries and geographic areas, to certify a trade union as the bargaining agent for bargaining units involving multiple employers in certain circumstances.
Implications for employers
Federally regulated employers with unionized workforces would need to pay particular attention to bargaining timelines and the proposed 200-day period. If enacted, collective bargaining preparation would begin considerably earlier in certain circumstances, and employers could face restrictions on unilateral changes to compensation and other employment terms.
Employers involved in a difficult bargaining relationship should also understand the potential implications of the proposed special mediation and post-bargaining processes.
Implications for employees and unions
Employees represented by a trade union could see earlier and more structured bargaining processes in certain circumstances. The proposed rules would also introduce additional federal mediation mechanisms where collective bargaining becomes contentious.
For employees in industries affected by the proposed multi-employer certification provisions, the changes could also affect how bargaining units and bargaining relationships are structured.
New rules when contractors are replaced
Bill C-39 would expand the Canada Labour Code’s existing successor-rights framework to address certain situations where one contractor replaces another.
Under the proposed amendments, a “new contractor” providing the same or substantially similar services could, in prescribed industries, locations or circumstances, become the successor to a previous contractor.
Where the proposed rules apply, the existing bargaining agent would become the bargaining agent for employees of the new contractor, and the new contractor would be bound by the collective agreement applicable to those employees at the time of the succession. The Canada Industrial Relations Board would also have authority to determine questions concerning whether a contractor succession has occurred.
Why this matters
This could be particularly important in industries where employers regularly outsource services or compete for contracts that are subsequently awarded to a different service provider.
For employers, a change in contractor could therefore carry labour-relations obligations beyond simply hiring a new workforce. Businesses considering bids, outsourcing arrangements or contract transitions should consider potential collective bargaining obligations as part of the transaction or procurement process.
Employees could benefit from greater continuity of collective bargaining rights where the proposed successor rules apply.
Stronger enforcement of settlements involving unpaid wages
Bill C-39 would also strengthen the federal government’s ability to enforce settlements reached between employees and employers concerning unpaid wages or other amounts owing under Part III of the Canada Labour Code.
Where an employer fails to pay the amount agreed upon in a written settlement by the specified deadline, the Head of Compliance and Enforcement could issue a settlement enforcement order requiring payment of the outstanding amount. In specified circumstances, the order could also apply to a director of the corporation.
The bill would further permit certain orders to be issued against persons who owe money to the employer or director. An enforcement order could also ultimately be filed in Federal Court and have the same force and effect as a judgment of that Court.
The proposed amendments would also introduce an administrative fee equal to the greater of $200 or 15% of specified amounts payable by an employer under the applicable order or decision.
Implications for employers
Employers operating under the Canada Labour Code would need to treat negotiated settlements with particular care. A settlement would not simply be a contractual commitment between the parties. If the proposed amendments come into force, failure to pay a settlement on time could trigger a statutory enforcement process with potentially significant consequences.
Employers should ensure that settlement agreements are accurately documented, payment deadlines are diarized and funds are available when payments become due.
Implications for employees
For employees who resolve wage complaints through settlement, the proposed amendments could provide an additional mechanism for enforcing an agreement if the employer does not make the required payment.
Medical leave and collective agreements
Bill C-39 would also amend the Canada Labour Code’s medical leave provisions.
The proposed amendment would provide that the statutory medical leave provisions would not apply where an employer and its employees are covered by a collective agreement that provides rights and benefits serving the same purpose and that are at least as favourable as the statutory medical leave benefits. The collective agreement would also have to provide for third-party resolution of disputes concerning those rights and benefits.
This proposal is aimed at clarifying the relationship between statutory medical leave entitlements and collectively bargained benefits.
Importantly, this particular amendment would come into force only on a day fixed by the Governor in Council if the bill becomes law. The wage-settlement amendments would have a different proposed implementation date, 180 days after Royal Assent.
What should employers and employees do now?
Because Bill C-39 has only received first reading, there is no immediate change to the current law as a result of the bill.
Federally regulated employers should nevertheless monitor the legislation if they are involved in collective bargaining, contractor transitions or wage-related complaints. Employers with unionized workforces may also wish to review bargaining calendars and labour-relations strategies in light of the proposed changes.
Employees and unions should likewise distinguish between rights that currently exist under the Canada Labour Code and rights that would arise only if Bill C-39 is enacted in substantially its current form.
The legislative process may result in amendments before any provisions come into force.
Frequently Asked Questions
Is Bill C-39 law?
No. Bill C-39 is proposed legislation. It received first reading in the House of Commons on September 21, 2026, and has not been enacted.
Does Bill C-39 apply to all Canadian employees?
No. The employment provisions discussed above primarily concern employees and employers governed by the federal Canada Labour Code. Most employees in Ontario and other provinces are instead governed by provincial employment legislation.
Does Bill C-39 change Ontario employment law?
Not directly. The employment provisions in Part 3 amend federal legislation, principally the Canada Labour Code. Ontario employees who are not federally regulated would generally continue to be governed by Ontario employment legislation.
What happens if an employer does not pay a settlement under the proposed legislation?
If the relevant provisions are enacted, the Head of Compliance and Enforcement could issue a settlement enforcement order where an employer fails to pay a qualifying settlement by the agreed deadline. The proposed legislation would also provide additional enforcement mechanisms, including potential Federal Court registration of an order.
Would a new contractor have to honour an existing collective agreement?
In certain prescribed circumstances, yes. Bill C-39 proposes that where a new contractor succeeds a previous contractor, the new contractor would become bound by the collective agreement applicable to the affected employees at the time of succession. The precise application would depend on the requirements of the legislation and any applicable regulations.
When would the proposed changes take effect?
That would depend on the particular provision. Bill C-39 contains different proposed coming-into-force mechanisms. For example, the proposed wage-settlement amendments would come into force 180 days after Royal Assent, while the medical leave amendment would come into force on a day fixed by the Governor in Council. Since the bill has not yet become law, no implementation date is currently in effect.
Where can I read Bill C-39?
The complete text of Bill C-39 is available through the Parliament of Canada. Read Bill C-39 on the Parliament of Canada website
Final thoughts
Bill C-39 proposes a number of changes to federal labour and employment law, particularly in the areas of collective bargaining, contractor succession and enforcement of wage settlements.
For now, the existing Canada Labour Code remains in effect. Employers and employees should therefore avoid treating the proposed amendments as current law. The legislation will need to proceed through Parliament, and its final wording and implementation dates may differ from the bill introduced at first reading.
