Constitutional challenge against Bill 124 launched by Ontario Unions
Bill 124 became law in Ontario in November 2019; it has sparked anger among workers in the broader public sector.
Bill 124 is now known as the Protecting a Sustainable Public Sector for Future Generations Act (the Act).
On March 4, 2020, a coalition of Ontario Unions launched a constitutional challenge to Bill 124. The group, coordinated by the Ontario Federation of Labour (OFL) and which includes UFCW Locals 175 & 633, believes Bill 124 violates the collective bargaining rights enshrined in the freedom of association guarantee of the Canadian Charter of Rights and Freedoms.
WHY is this law being challenged?
The law is controversial because it limits wage and other compensation increases across the public sector and in workplaces that receive public funding, such as not-for-profit long-term care homes and universities.
In the Charter challenge, Unions argue that the government’s compensation cap ties the hands of Unions in negotiations and therefore interferes with the members’ rights to bargain collectively.
Unions representing teachers and nurses have launched legal challenges to Bill 124 as well.
WHO is impacted by the Act?
The Act applies to unionized and non-unionized workers employed by a range of employers including:
- The Ontario government;
- School boards;
- Universities, colleges, and post-secondary institutions;
- Non-Profit Long-Term Care Homes;
- Children’s Aid Societies;
- Agencies, authorities, boards, commissions, corporations, and offices where the majority of board members are appointed by the Lieutenant Governor or the Executive Council;
- Non-Profit agencies, authorities, boards, commissions, corporations, and offices that in 2018 received at least $1 million dollars in funding from the Ontario government.
Who does it NOT apply to?
The Act does not apply to municipalities, municipal boards, police services boards, and Indigenous communities, etc.
For full lists of who Bill 124 does and does not apply to, please see section 5(1) and (2) of the Act.
WHAT are the Salary and Compensation Caps?
Bill 124 deals with salary and compensation separately.
Salary increases for a position, or class of positions, are capped at 1% per year during the “moderation period.” Find the definition of the “moderation period” in the When section below.
This means that during collective bargaining employers cannot agree to a salary increase over 1% for a class of positions even if they were willing to do so otherwise. The 1% cap applies to both bargaining of collective agreements (CAs) and decisions by Boards of Arbitration as well.
Bill 124 also caps compensation increases at 1%.
Compensation is “anything paid or provided, directly or indirectly, to or for the benefit of an employee, and includes salary, benefits…”. So, the 1% cap applies not only to salaries, but also to pensions, health and dental benefits, uniform allowances, etc.
The Act prevents increases to existing compensation or to new entitlements that would equal more than 1% in total on average for all the employees covered by the CA per year. The employer may spend over 1% more on providing benefits, but the benefit received by the employee cannot exceed 1%.
In addition, the Act specifically prevents an employer from compensating an employee before or after the moderation period for compensation not received due to the legislation. And, this means that the employer cannot agree to wait until the end of the moderation period and make up for the capped compensation at a later date.
Are there exceptions to the Salary Cap?
An increase above 1% in salary rate is allowed if the CA provides for an increase based on:
- Length of time of employment;
- Assessment of performance; and/or
- Successful completion of a program or technical education.
But, the 1% cap still applies to each position or class of positions. For example: an employee’s salary may increase beyond 1% if they move up to a different category based on their years of service; however, the salary increase within that category has a cap of 1%.
WHEN will the Act start applying to my workplace?
The Act outlines the “moderation period” as lasting three years but the start date will depend on the status of the CA:
- If the CA was in effect as of June 5, 2019, the moderation period begins the day after the CA expires;
- If the CA has expired as of June 5, 2019, the moderation period begins the day after the CA expired;
- If the parties are bargaining for a first CA on June 5, 2019, the moderation period begins on the day that the first CA commences;
- If there is no CA in effect on June 5, 2019 and the parties are in arbitration to conclude a CA, and an award was issued on or before June 5, 2019 the moderation period begins the day after the CA expires;
- If there is no CA in effect on June 5, 2019 and the parties are in arbitration to conclude a CA, and the award has not been issued on or before June 5, 2019, the moderation period begins on the day that the CA commences;
- If there is no CA in effect on June 5, 2019 and the parties are in arbitration, and no award has been issued on or before June 5, 2019, but the parties reached a settlement, the moderation period begins the day that the CA commences.
Are there any exceptions?
It is possible for a CA to be exempt from the application of the Act. The President of the Treasury Board can do this by enacting a regulation. To date, no such regulations have been enacted.
HOW will this be enforced?
The Act creates strict enforcement procedures to ensure compliance. The President of the Treasury Board has the discretion to make an order declaring that a CA or arbitration award is inconsistent with the Act. The parties will be able to make submissions within 20 days. If the Minister’s order states that the CA is inconsistent with the Act, the CA shall be deemed null and void; the parties will be forced back to the bargaining table as if the CA was never concluded.
The Act also allows the Management Board of Cabinet to direct employers to provide information regarding collective bargaining and compensation for the purpose of ensuring compliance.
 Section 10  Section 2  Section 11(1)   Section 25  Section 10(2)  Section 9  Section 27  Section 26(1)
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