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Canadian foreign service officers picket the Prime Minister's office in Ottawa, July 30, 2013. The Public Service Labour Relations Board says the federal government has been bargaining in bad faith with its striking diplomats.

Sean Kilpatrick/The Canadian Press

The federal government has been bargaining in bad faith with its diplomats, only paying "lip service" to the goal of reaching a deal, a federal tribunal has ruled.

The ruling is deeply embarrassing for Treasury Board President Tony Clement, who, the Public Service Labour Relations Board found, tried to create the appearance of being willing to take steps toward a deal while he was in fact obstructing the goal.

Despite that finding, however, labour relations board panellist Margaret Shannon did not order the federal government into arbitration – instead, she delivered a lecture, encouraging Ottawa to take her ruling to heart, and truly try to reach an agreement with foreign-service officers.

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The labour dispute with the Professional Association of Foreign Service Officers (PAFSO), a small union that represents 1,388 foreign-service officers, has dragged on for two years. The union says its members are paid $3,000 to $13,000 less than civil servants who do similar work, but don't get posted abroad.

But the dispute became far more heated this summer as diplomats engaged in rotating strikes. The tourism industry, notably, complained its business was being hit by delays in processing visitors' visas.

In July, PAFSO president Tim Edwards wrote to Mr. Clement to propose the two sides agree to binding arbitration, asserting that would limit the damage to the Canadian economy. Mr. Clement announced that he would accept arbitration – subject to certain conditions that he would not reveal.

But Ms. Shannon found that Mr. Clement's conditions were set up to shoot down hope of arbitration.

"The conditions were untenable to [PAFSO] and merely represented lip service to the proposal put forward by the complainant," Ms. Shannon wrote. By setting conditions that were contrary to what was outlined in the law, and that the federal government knew the union could never accept, the government "is guilty of bargaining in bad faith."

One of those conditions, for example, was that the arbitrator could not compare the salaries of foreign-service officers to those of other classes of federal employees, such as economists and commercial officers. But PAFSO's main beef was that its members were being paid less than those other groups of civil servants.

"The effect of the condition was to take the main issue off the table," said Andrew Raven, PAFSO's lawyer in the case.

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Ms. Shannon, however, chose not to settle PAFSO's complaint by forcing the federal government into arbitration without conditions. The law sets out a voluntary arbitration process, and forcing one side into it, she decided, would not help labour relations. Instead, she "encouraged the parties to be guided by my comments and to renew their attempts" at reaching a deal.

Mr. Raven said declarations such as the board's finding that the government acted in bad faith might not force Ottawa to act, but they typically lead the employer to change its approach. PAFSO issued a statement calling for a return to negotiations.

A spokesman for Mr. Clement, Matthew Conway, said the government intends to issue a statement to respond to the ruling, but he offered no immediate comment.

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