In June 2019, the Ontario government introduced Bill 124, Protecting a Sustainable Public Sector for Future Generations Act, 2019 (Bill 124). Bill 124 limited wage increases for approximately 780,000 unionized and non-unionized workers in the broader public sector to 1% per year for a three-year period. Bill 124 applied to:
- individuals whose wages were paid directly by the Ontario government; and
- individuals whose wages were fully or partially paid indirectly by the government (e.g. university employees, long-term care home employees).
A broad range of labour organizations challenged the constitutionality of Bill 124. Most notably, they argued that Bill 124 violated their members’ rights to freedom of association under section 2(d) of the Canadian Charter of Rights and Freedoms (Charter).
In a November 29, 2022 decision, an Ontario court found that Bill 124 violated freedom of association protections under section 2(d) of the Charter and could not be justified under section 1 of the Charter.
The court reiterated that freedom of association includes:
- the right to a meaningful collective bargaining process that allows workers to meet with employers on more equal terms, to put forward the proposals they wish, and to have those proposals considered in good faith; and
- the right to strike.
The court stated that freedom of association is infringed when government action substantially interferes with collective bargaining. This includes when legislation prevents or restricts certain subjects – including the important issue of wages – from being discussed or negotiated as part of the collective bargaining process.
The court found that Bill 124 substantially interfered with collective bargaining by preventing negotiations for wage increases of more than 1%. This restriction had other significant impacts on the collective bargaining process, including restricting unions’ ability to trade off wage demands against non-monetary benefits and diminishing the usefulness of the right to strike.
In light of this finding, the government was required to justify the infringement under section 1 of the Charter. The court concluded that the government had not done so. In particular, the court noted:
- Other than in cases of clear financial emergencies, budgetary considerations will not ordinarily justify Charter violations. Ontario’s economic situation in 2019 was not sufficiently critical to warrant a violation of the right to freedom of association.
- Bill 124 was too broad. It applied to wages that were: (1) not connected to Ontario’s budget or deficit (e.g. employees of Ontario Power Generation); and (2) only indirectly related to the provincial budget but that the government had other means to cap its contribution (e.g. university employees).
- The government could have taken the position in collective bargaining that it could not pay wage increases of more than 1%. It did not do so in part because it was worried that this position would lead to strikes. The right to strike is constitutionally protected and the government’s attempt to avoid strikes by legislating wage increases could not be justified.
As of right now, Bill 124 is no longer the law in Ontario and has no effect. That being said, the Ontario government has expressed its intent to appeal the decision. The government could request that the court’s decision that Bill 124 has no effect be stayed (or “paused”) pending the outcome of any appeal.
This decision raises important considerations for employers in the broader public sector. In particular, employers will need to consider:
- whether the decision impacts any strategies, positions and proposals in upcoming rounds of collective bargaining;
- whether any current collective agreements have reopener provisions in respect of wages or other monetary or non-monetary benefits; and
- how to approach wage increases for non-unionized employees in the current economic environment.
For advice on how this decision may impact your organization or how to develop an effective strategy in response, please contact the authors or your regular Fasken lawyer.