The Ontario Superior Court of Justice recently found Bill 124, Ontario’s public sector wage restraint legislation, to be unconstitutional.[1] As a result, the Court declared the statute to be void and of no effect. However, the government has announced their intention to appeal the decision.
This development has been the subject of significant media focus and repudiates another attempt to restrict compensation through legislation for unionized public sector employees, including teachers and other education workers. Below, we review key aspects of the decision.
Background
Bill 124—formally, the Protecting a Sustainable Public Sector for Future Generations Act, 2019 (the “Act”)—came into force in 2019. It imposed a three-year “moderation period” on salary and compensation for approximately 780,000 employees in the broader public sector upon the expiry of their collective agreements. This resulted in wage and salary increases being capped at 1% annually (with limited exceptions) during this period.
The decision
Various labour organizations (the “Applicants”), including the teachers’ unions, challenged the constitutionality of the Act, arguing that it limited the freedom of association, freedom of speech, and equality rights under the Canadian Charter of Rights and Freedoms (the “Charter”).
Ultimately, the Court found that the Act violated the Applicants’ freedom of association under section 2(d) of the Charter, which the Supreme Court of Canada has previously recognized encompasses the right to collective bargaining and the right to strike.
By preventing collective bargaining for wage increases in excess of 1%, the Court held that the Act interfered with the Applicants’ ability to engage in collective bargaining. Demands for wage increases are often used as trade-offs to obtain improvements on issues unrelated to compensation. The cap on wage increases weakened the Applicants’ bargaining power such that they lacked the leverage to make such trade-offs and address other important issues such as staff shortages. Further, the Act interfered with the usefulness of the right to strike, the independence of interest arbitration, and the overall power balance between employer and employees.
The Court found that the infringement could not be justified under section 1 of the Charter as the negative effects of the Act outweighed its benefits. While the Court recognized that prudent fiscal management is a legitimate government objective, Ontario was not in a dire economic crisis in 2019 that warranted infringing the constitutionally protected right to collective bargaining. The Act did not minimally impair the Applicants’ rights and was not sufficiently rationally connected to its objective in all instances. Accordingly, the Act was declared void and of no effect in its entirety.
The Court’s decision on financial remedies for the Applicants will be rendered at a later date.
The Provincial Government intends to file an appeal and may seek a court order staying the Ontario Superior Court’s decision pending the outcome of the appeal. This would have the effect of delaying the declaration of unconstitutionality until the appeal is resolved.
The decision of the Court comes on the heels of the Provincial Government’s decision to repeal legislation that imposed a contract on CUPE education workers, which included use of the notwithstanding clause in the Charter to avoid such judicial scrutiny.
One would expect that the takeaway from these events would be that efforts should be on bargaining, rather than legislation, to implement contracts in the education sector.
If you would like to discuss the impact of these developments and how they may impact your school board, please contact a member of the Education team.
[1] Ontario English Catholic Teachers’ Association v. His Majesty, 2022 ONSC 6658.
