On Monday, February 12, 2024, the Ontario Court of Appeal (ONCA) released its highly anticipated decision in Ontario English Catholic Teachers Association v. Ontario (Attorney General), 2024 ONCA 101.
A majority at the ONCA affirmed that the provincial government’s Bill 124, Protecting a Sustainable Public Sector for Future Generations Act, 2019 (Bill 124) is unconstitutional as it violated unionized workers’ collective bargaining rights contrary to section 2(d) of the Canadian Charter of Rights and Freedoms (the Charter), and was not a reasonable limit of such rights in order to be saved by section 1 of the Charter. However, the ONCA also found that Bill 124 remains constitutional in its application to non-unionized employees.
The Ontario government announced late the same day that it will not appeal the decision to the Supreme Court of Canada. Accordingly, this decision has finally resolved the question of Bill 124’s constitutionality in Ontario.
Arbitrators have already awarded additional wage increases in a series of retroactive pay decisions for certain public sector workers affected by Bill 124 following the lower court’s decision in 2022. We expect more of these decisions to follow as the province now takes steps to repeal Bill 124.
Bill 124: Background
Bill 124, which came into force on November 8, 2019, provided for a three-year “moderation period” and compensation restraint measures for unionized and non-unionized employees in the broader public sector, including a range of organizations that receive funding from the provincial government (e.g., hospitals, universities and colleges, school boards, crown agencies, long-term care homes and non-profit organizations). The provincial government limited total compensation increases for broader public sector employees to 1% for each 12-month period within the requisite three-year “moderation period.”
Over 700,000 Ontario employees were impacted by Bill 124. For unionized employees, the requirements of Bill 124 came into force with respect to any particular bargaining unit upon the expiry of a collective agreement that was in effect as of June 5, 2019. For non-unionized employers, the salary moderation period had to begin by no later than January 1, 2022.
Ruling from the Ontario Superior Court of Justice
In 2022, ten labour organizations and unions brought applications challenging the constitutionality of Bill 124.
In Ontario English Catholic Teachers Association v. His Majesty, Justice Koehnen of the Ontario Superior Court of Justice (the “Lower Court”) held that while Bill 124 did not restrain the equality rights protected by section 15 of the Charter, it substantially interfered with collective bargaining and violated the freedom of association rights protected under section 2(d). The Court further found that this violation could not be saved by section 1 of the Charter, as the infringement could not be demonstrably justified in a free and democratic society.
To establish a justification under section 1, the Ontario government had to show that: (i) the objective of Bill 124 was pressing and substantial; (ii) there was a rational connection between Bill 124 and this objective; (iii) Bill 124 minimally impaired the Charter-protected right to a meaningful collective bargaining process; and (iv) the benefit of Bill 124 outweighed any detriment to the applicants. In its November 29, 2022 decision, the Lower Court determined, among other things, that the province could not establish a pressing and substantial objective underlying Bill 124. The Lower Court accordingly declared Bill 124 to be void and of no force or effect.
ONCA’S ruling
Writing on behalf of a two to one majority of the ONCA panel, Justice Favreau determined that Bill 124:
- Violated the section 2(d) rights of unionized public sector employees in Ontario and substantially interfered with these workers’ right to participate in good faith negotiation and consultation over their working conditions;
- Was distinguishable from other cases where wage restraint legislation was deemed constitutional because of the circumstances leading up to its passage, as well as the terms of the legislation; and
- Could not be justified by section 1 of the Charter because it minimally impaired the unionized employees’ right to freedom of association and because Bill 124’s deleterious effects outweighed its benefits.
Constitutionality of Other Wage Restraint Legislation
After reviewing similar legislation enacted in Québec, Manitoba, British Columbia and Nova Scotia, all considered constitutional by the courts in their respective jurisdictions, the ONCA determined that the circumstances leading up to the passage of Bill 124 demonstrated substantial interference with unionized workers’ ability to enter into good faith negotiation and consultation with their employers.
Section 1 of the Charter
The ONCA concluded that Bill 124’s beneficial effects were not proportional to its detrimental effects. Notably, the provincial government failed to demonstrate that wage restraint could not have been achieved through good faith bargaining completed in the normal course. Without sufficient reasons and no mechanisms for seeking exemptions, Bill 124’s system of bypassing bargaining to arrive at a predetermined outcome of wage increases of 1% or less, could not be justified.
Application to Non-Unionized Workers
Notably, the ONCA upheld the constitutionality of Bill 124 as it applied to non-unionized public sector workers, as they do not bargain collectively and are not represented by a union.
Conclusion
This decision provided an important opportunity for the ONCA to comment on the constitutionality of wage restraint legislation in Ontario. More importantly, the ONCA decision, together with the Ontario government’s announcement to not seek appeal, means we can expect to see further arbitral decisions awarding retroactive pay increases for certain unionized public sector workers.
