After years of litigation, the Ontario Court of Appeal (“ONCA”) ruled on the constitutionality of the Protecting a Sustainable Public Sector for Future Generations Act, 2019 (“Bill 124”), which imposed a 1% cap on public sector workers’ compensation annually for a period of three years. In the decision of Ontario English Catholic Teachers Association v Ontario (Attorney General) [OECTA], the ONCA declared Bill 124 invalid as it relates to unionized public sector employees.
This decision significantly affects unionized workplaces in the public sector, as the ONCA identified the limits to which a government can interfere with the right to a collective bargaining process, which is protected under the Canadian Charter of Rights and Freedoms [the Charter].
Background
On November 7, 2019, Bill 124 came into effect and mandated a three-year “moderation period”, during which the provincial government limited compensation increases to just 1% annually. The Ontario government’s stated objective in enacting Bill 124 was to “reflect the fiscal situation” and to be “consistent with the principles of responsible fiscal management”.
Bill 124’s compensation restrictions affected both unionized and non-unionized public sector employees. In total, Bill 124 applied to more than 700,000 workers in Ontario, including employees at hospitals, long-term care homes, school boards, as well as universities and colleges. For more details about Bill 124, please see our previous blog.
General Charter Principles Related to Collective Bargaining
Freedom of association is protected by section 2(d) of the Charter and includes the right to collective bargaining. A long line of Supreme Court of Canada (“SCC”) decisions have outlined Charter principles applicable to collective bargaining, including that section 2(d) provides employees with the right to associate for the purpose of advancing workplace goals through a process of collective bargaining.
While section 2(d) protects the right to a collective bargaining process, it does not guarantee a specific result or outcome of that process. Additionally, the SCC has stated that section 2(d) only protects against “substantial interference” with the collective bargaining process.
Notably, Charter rights are not afforded absolute protection from infringement. Under section 1, measures which limit Charter rights can be deemed lawful if the government establishes that the interference is reasonable and can be justified in a free and democratic society.
Ontario Superior Court of Justice Decision
In 2022, the Ontario Superior Court of Justice (“ONSC”) heard ten consecutive applications challenging the constitutionality of Bill 124. Ultimately, the application judge declared Bill 124 void due to violating section 2(d) of the Charter.
The ONSC found that Bill 124 substantially interfered with collective bargaining and violated the right to freedom of association. The application judge highlighted the importance of being able to negotiate compensation and better work conditions, and the impact of Bill 124 on the right to strike and interest arbitration.
The Court considered whether the interference with the Charter caused by Bill 124 was reasonable, but concluded that the infringement of section 2(d) could not be justified in the circumstances. While the Court held there was a rational connection between limiting compensation increases and the government’s objective of engaging in “responsible fiscal management”, Bill 124 did not minimally impair the right to meaningful collective bargaining. Accordingly, Bill 124 could be saved under section 1 of the Charter.
The Ontario government appealed the decision to the ONCA.
Ontario Court of Appeal Decision
The ONCA upheld the ONSC’s decision that Bill 124 violated section 2(d) of the Charter. The ONCA’s reasoning closely mirrored the ONSC’s findings. One of the key issues addressed was whether the ONSC followed established case law regarding wage restraint legislation in other provinces.
The ONCA identified several factors contributing to Bill 124’s violation of the Charter, including the lack of meaningful consultation by the government, as well as the broad definition of compensation in Bill 124 which reduced the scope of items available at negotiation. While the ONCA upheld the ONSC’s decision on section 2(d), it differed concerning non-unionized public sector workers, as they do not have constitutionally protected rights related to collective bargaining. Consequently, Bill 124 remained applicable to these employees.
Recent Bill 124 Developments
In response to the ONCA declaring Bill 124 invalid insofar as it related to unionized public sector employees, the Ontario government announced that it would not appeal the decision to the SCC, and instead repealed Bill 124 in its entirety on February 23, 2024.
Notably, mere days before the ONCA released its decision, Chair Kaplan awarded two teachers’ unions who originally fell within the scope of Bill 124 an additional 2.75% (for a total of 3.75%, inclusive of the 1% already paid) increase to their compensation.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.
