On February 12th, 2024, the Court of Appeal released its decision regarding Bill 124. In Ontario English Catholic Teachers Association v. Ontario (Attorney General), 2024 ONCA 101 a majority of the court confirmed that the legislation was unconstitutional, violating section 2(d) of the Canadian Charter of Rights and Freedoms because it limited the collective bargaining rights of unionized workers. Interestingly, unlike Justice Koehnen in the Lower Court decision the Court of Appeal found that the Bill was not unconstitutional in its application to non-unionized workers. The Appeal Court reasoned that non-unionized workers are not protected under section 2(d) since they do not engage in collective bargaining or union representation.
Justice Hourigan, in dissent, found that there was no substantial interference with section 2(b) by Bill 124 and that Justice Koehnen made palpable and overriding errors in his section 1 analysis which should have been sufficient to set aside his decision.
A dissenting opinion could have been a reason for a further appeal to the Supreme Court of Canada but on the same day the judgement was released, the Government of Ontario issued a news release that it would not appeal the Court of Appeal’s decision and instead would repeal Bill 124 in its entirety.
On February 23rd, the Ford government delivered on its promise and repealed Bill 124 through an order-in-council. It is no longer of force and effect for both unionized and non-unionized workers.
Background
Bill 124 or Protecting a Sustainable Public Sector for Future Generations Act, 2019 was passed on November 2019 and limited certain public sector employees to 1% wage increases per year for a 3-year moderation period. For more information on Bill 124 read our article here. At the time the Bill was first declared unconstitutional, some employers had completed their moderation period, some were in the process of negotiating, and others were part way through.
The Bill included language that prohibited employers from providing “make-up” payments to employees whose wage increases were restricted during the three-year moderation period required under the legislation:
24 An employer shall not provide compensation before or after the applicable moderation period to an employee for compensation that the employee will not, does not or did not receive as a result of the temporary moderation measures in this Act.
With the legislation repealed in its entirety, there are no wage restrictions on public sector employers other than the restrictions applicable to executives under the Broader Public Sector Executive Compensation Act, 2014.
Next Steps – Public Sector Employers
After the initial Superior Court decision of Justice Koehnen, we have seen a trend of negotiated increases well in excess of the 1% and interest arbitrators also awarding wage increases above the 1% restriction. We wrote about the interest arbitration awards last September. Recent awards have been consistent with this trend. We have also seen a plethora of wage re-opener interest arbitration awards. The most recent being Ontario Agency for Health Protection and Promotion (Public Health Ontario) v OPSEU, 2024 ONLA 13986. Arbitrator Kaplan awarded additional general wage increases of 0.75% for each of 2020 and 2021 and an additional 3.75% for 2022, which he referred to as the “sector norm.”
We anticipate going forward that public sector unions will continue to seek retroactive remedies, and “make-up” wage increases. In a footnote to a report by the province’s Financial Accountability Office (FOA) it states:
The Province has also recorded a $2.5 billion contingent liability in the 2022-23 Public Accounts of Ontario to recognize the potential impact of retroactive payments. Overall, the FAO estimates that the cost to the Province to provide wage increases to adjust for the impact of Bill 124 from 2022-23 to 2027-28 will total $13.7.
The FOA report does not reference executives, but it will be interesting to see if the Government finally ends the restraint measures that apply to executives in the Broader Public Sector. The most recent “compensation framework” applicable to certain broader public sector executives has frozen salaries and other forms of compensation since August 13, 2018. Broader public sector executives have now been under some form of compensation restraint since the McGuinty government added compensation restraint measures to the Broader Public Sector Accountability Act, 2010 in 2012.