It has been a busy time in Ontario for controversial labour legislation. Following the government’s decision to repeal contentious legislation that imposed a collective agreement on education workers and prevented striking, the Government has suffered a new blow.

A recent Ontario Superior Court of Justice decision struck down legislation that limited public sector salary increases to 1% for a three-year period. This article examines Ontario English Catholic Teachers Assoc. v His Majesty, in which several unions successfully argued that Bill 124 or the Protecting a Sustainable Public Sector for Future Generations Act 2019 (the “Act”) violated the protection for freedom of association under the Canadian Charter of Rights and Freedoms (the “Charter”).

Protecting a Sustainable Public Sector for Future Generations Act 2019 limited public sector wage increases

The Act was signed into law in November 2019. Section 5 of the Act states that it applies to a wide range of employers, employees and unions in Ontario’s broader public sector, including school boards, universities and public hospitals.

Sections 9 and 10 are the key provisions which created a three-year moderation period and imposed a 1% limit on salary increases, for each individual salary, during each 12-month period. The moderation period begins at the end of the collective agreement in force on June 5, 2019. Compensation was broadly defined by the Act, such that increases to things such as benefits or pension plans would count towards the 1% limit.

Unions challenged the constitutionality of the Act

Multiple unions commenced ten applications challenging the Act’s constitutionality, arguing that the Act infringed on a range of Charter protected rights, including the freedom of association. 

The thrust of the unions’ argument was that the Charter’s protection for freedom of association includes the right to engage in collective bargaining and the Act restricted the scope of bargaining over wage increases. 

The Act substantially interfered with collective bargaining

Justice Koehnen started by examining whether the Act violated the freedom of association as protected by the Charter. The Supreme Court of Canada has previously held that the right to freedom of association prevents “substantial interference” with collective bargaining, so the issue was whether the provisions of the Act rose to the level of substantial interference.

His Honour opined that:

“The Charter protects not just the right to associate but also the right to a meaningful process in which unions can put on the table those issues that are of concern to workers and have them discussed in good faith. Legislation that takes issues off the table interferes with collective bargaining.”

To determine if the Act substantially interfered with collective bargaining, the Court looked at the importance of the issue and impact of the Act.

Importance of the issue to collective bargaining

Justice Koehnen considered that the 1% cap on salary increases was very important to the ability of the unions to engage in effective collective bargaining. His Honour noted that inflation was higher than this limit and demands for wage increases were often used as trade-offs in negotiations to secure improvements on issues not relating to compensation.

Impact of the measure on the right to negotiation

His Honour analyzed the impact of the wage limit on a range of matters and concluded that the Act substantially interfered with collective bargaining.

For example, his Honour was of the view that the 1% cap:

• affected the process of collective bargaining by taking off the table any discussion of higher wage increases;
• prevented unions from seeking higher wage increases as a tool to obtain non-monetary benefits;
• did not allow employees to negotiate for improved conditions and reduced staff shortages; and
• provided a substantial disincentive to strike, given that walking off the job for 2.6 days (in which employees are not paid) would exhaust the benefit associated with any gain from striking.

Act not demonstrably justified in a free and democratic society

The Government could not prove that the Act was saved by section 1 of the Charter as a limit that was “demonstrably justified in a free and democratic society”. The Government argued that the cap was needed to manage Ontario’s public finances and protect the supply of public services.

Justice Koehnen held that the Government did not establish that the economic conditions in 2019 were critical enough to warrant infringing the right to freedom of association. His Honour pointed out that it provided tax cuts that were ten times larger than the savings from the wage restraint measures and had not explained why this was necessary while infringing a constitutional right. The Government also failed to explain why it could not have achieved voluntary wage restraint.

The Court found that the Act breached the Charter right to freedom of association without justification under section 1. The Act was declared void and of no effect.

What happens now that Bill 124 is struck down?

The Government has indicated that it plans to appeal the decision. It may ask for a stay of the decision pending the outcome of the appeal.

The Superior Court deferred the consideration of remedies to a further hearing. Given that the Act has applied since June 2019, the Court could make orders beyond simply declaring the Act unconstitutional going forward.  

Contact Grosman Gale Fletcher Hopkins LLP in Toronto for Advice on Collective Bargaining 

Grosman Gale Fletcher Hopkins LLP has extensive experience guiding both public and private sector employers on labour relations issues, including collective bargaining. We provide the complete spectrum of services relating to collective bargaining, including reviewing and advising on the terms of collective agreements, drafting new agreements, providing advice on bargaining strategies and representing clients during negotiations. We also offer representation for proceedings at the labour relations boards, such as the Ontario Labour Relations Board.  

Our knowledgeable labour lawyers assist employers in moving forward expediently. Contact the team at Grosman Gale Fletcher Hopkins LLP online or at 416.364.9599 to schedule a consultation.