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Labour (Ont) - Protecting a Sustainable Public Sector for Future Generations Act, 2019 (PSPSFGA). Ontario English Catholic Teachers Association v. Ontario (Attorney General)
In Ontario English Catholic Teachers Association v. Ontario (Attorney General) (Ont CA, 2023) the Court of Appeal considered (and mostly denies) a Crown appeal from a successful lower court Charter s.2(d) ['freedom of association'] application by unions and employees associations against Ontario legislation ['Protecting a Sustainable Public Sector for Future Generations Act, 2019' (PSPSFGA)] limiting public sector salary raises by statute.
In these quotes, the court usefully summarizes the PSPSFGA legislation:B. THE ACT AND THE SCOPE OF ITS APPLICATION
[8] Bill 124 was introduced in the Ontario legislature on June 5, 2019, and received royal assent on November 7, 2019.
[9] The Act imposes a three-year “moderation” period on compensation, including salary rates, for all employees in the broader public sector. For those three years, compensation increases are not to exceed 1% per year. The Act applies to represented and non-represented employees.
[10] In order to properly address the issues on appeal, it is helpful to review the scope and application of the Act in some detail.
(1) Preamble, purpose and other preliminary matters
[11] As indicated above, the short title of the Act is Protecting a Sustainable Public Sector for Future Generations Act, 2019. Its long title is “An Act to implement moderation measures in respect of compensation in Ontario’s public sector”.
[12] The preamble to the Act emphasizes the government’s goal of reducing the deficit and balancing its budget, stating that “Ontario’s accumulated debt is among the largest subnational debts in the world”. The preamble also states that sustaining the province’s finances is in the public interest and is needed to “maintain important public services”, and that the “[g]overnment also seeks to protect front-line services and jobs of the people who deliver them.” The preamble then addresses the role of public sector compensation in maintaining a sustainable public sector. In doing so, the preamble states that compensation represents a “substantial proportion” of government program expenses and that “the growth in compensation costs must be moderated to ensure the continued sustainability of public services for the future.” The preamble further states that the measures imposed by the Act “would allow for modest, reasonable and sustainable compensation growth for public sector employees” and that, for represented employees, the measures “respect the collective bargaining process, encourage responsible bargaining, and ensure that future bargained and arbitrated outcomes are consistent with the responsible management of expenditures and the sustainability of public services.” The preamble concludes with a statement that the “[g]overnment believes that the public interest requires the adoption, on an exceptional and temporary basis, of the measures” in the Act.
[13] Besides the preamble, s. 1 states that the purpose of the Act is “to ensure that increases in public sector compensation reflect the fiscal situation of the Province, are consistent with the principles of responsible fiscal management and protect the sustainability of public services.”
[14] Section 3 of the Act explicitly states that “the right to bargain collectively” is preserved, subject to the provisions of the Act. Section 4 preserves the right to strike lawfully.
(2) Employees affected
[15] Pursuant to s. 5(1), the Act applies to employers in the broader public sector, including to the Crown, Crown agencies, school boards, universities and colleges, hospitals, licensed not-for-profit long-term care homes, and children’s aid societies. It also applies to not-for-profit organizations that received at least $1 million in funding from the government in 2018.
[16] Section 5(2) of the Act specifies categories of employers to which the Act does not apply. These include municipalities and for-profit organizations.
[17] Pursuant to s. 8, the Act applies to “bargaining organizations”, which include unions and other organizations that bargain collectively on behalf of the broader public sector employees affected by the Act. In addition, the Act applies to the non-represented employees in the broader public sector.
(3) Scope of compensation affected and length of “moderation period”
[18] The Act limits “salary rate” and “compensation” increases during the moderation period. Salary is a subset of compensation.
[19] The Act defines “salary rate”, at s. 2, as:[A] base rate of pay, whether expressed as a single rate of pay, including a rate of pay expressed on an hourly, weekly, bi-weekly, monthly, annual or some other periodic basis, or a range of rates of pay, or, if no such rate or range exists, any fixed or ascertainable amount of base pay. [20] The Act defines “compensation” very broadly as meaning “anything paid or provided, directly or indirectly, to or for the benefit of an employee, and includes salary, benefits, perquisites and all forms of non-discretionary and discretionary payments”: s. 2. As a practical matter, and as found by the application judge, it is understood that compensation includes matters such as pension contributions, vacation days, sick days, bereavement days, meal and travel allowances, and any other benefits to which a monetary value can be assigned.
[21] Sections 9 to 16 of the Act address the limits on increases to salary rates and compensation during the moderation period for represented employees covered by the Act.
[22] Pursuant to s. 10(1) of the Act, a collective agreement or arbitration award cannot provide for a salary rate increase of more than 1% per year during the three-year moderation period. This 1% cap applies to any position or class of positions.
[23] In addition, pursuant to s. 11(1) of the Act, increases in compensation, which, as noted above, include salary rates for all employees covered by a collective agreement, are limited to 1% per year during the three-year moderation period:During the applicable moderation period, no collective agreement or arbitration award may provide for any incremental increases to existing compensation entitlements or for new compensation entitlements that in total equal more than one per cent on average for all employees covered by the collective agreement for each 12-month period of the moderation period. [Emphasis added.] [24] Therefore, in combination, s. 10(1) and 11(1) mean that no individual employee can receive a salary rate increase of more than 1% per year during the moderation period. In addition, the overall increase for all compensation, including salary rates, within the bargaining unit cannot exceed 1% per year overall. This means that employers can agree to an increase of compensation for some employees beyond 1% per year, so long as the increase does not apply to their salary rate and so long as the overall compensation for all employees in the bargaining unit does not exceed 1% per year. In other words, an increase above 1% in compensation, other than the salary rate, for some employees would have to be offset against no increases or lesser increases for other employees.
[25] There are some exceptions to the limitations on compensation increases. For example, s. 10(2) of the Act provides for three exceptions to the 1% per year cap on salary rates, allowing for salary rate increases that recognize an employee’s “length of time in employment”, “assessment of performance”, and “successful completion of a program or course of professional or technical education.” Also, s. 11(3) of the Act provides that an employer’s increase in the cost of providing a benefit that existed before the moderation period does not constitute an increase in compensation.
[26] In accordance with s. 9 of the Act, for represented employees, the moderation period begins at different times. For example, if a collective agreement was still in effect on June 5, 2019, the three-year moderation period starts on the day immediately following the end of the collective agreement. If the collective agreement had already expired on June 5, 2019, the moderation period starts running on the day immediately following the date on which the previous collective agreement had expired. The same principles generally apply to arbitration awards.
[27] Sections 17 to 23 of the Act set out the provisions that apply to non-represented employees. They are similar to those that apply to represented employees. However, pursuant to ss. 18 and 19, the cap imposed on salary rate and compensation increases is focused on individual employees or classes of employees and not on bargaining units. In addition, for non-represented employees, the start date of the moderation period is different than for represented employees. The moderation period starts on a date selected by the employer that is after June 5, 2019, but no later than January 1, 2022.
(4) Enforcement, oversight and exemptions
[28] The Act includes a number of measures designed to prohibit employers from avoiding compliance with the 1% limit on compensation increases during the moderation period. For example, s. 24 prohibits an employer from providing compensation before or after the moderation period to make up for compensation the employee did not receive during the moderation period.
[29] The Act also gives the government broad powers of enforcement. Section 25 of the Act gives the Management Board of Cabinet the power to obtain information from employers about collective bargaining or compensation to ensure compliance with the Act. Section 26 gives the Minister responsible for administration of the Act the sole discretionary power to make an order declaring that a collective agreement or arbitration award does not comply with the Act, which then requires the parties to enter into a new collective agreement that is compliant with the Act.
[30] Finally, s. 27 of the Act provides that the Minister “may, by regulation, exempt a collective agreement from the application of [the] Act”. However, the Act does not set out criteria or the basis on which the Minister may make such an exemption.
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