In June of 2019, the Ontario Government introduced the Protecting a Sustainable Public Sector for Future Generations Act, 2019, commonly known as Bill 124 (“Bill 124” or “the Act”). The Act limited salary and compensation increases for approximately 780,000 workers in the public and broader public sector to 1.0% per year during a three-year moderation period.

The Ontario Superior Court of Justice declared Bill 124 to be entirely unconstitutional in November of 2022.  It held that Bill 124 substantially interfered with collective bargaining, thereby violating the right to freedom of association under the Charter of Rights and Freedoms.  On December 12, 2024, the Ontario Court of Appeal decided that the Act is only unconstitutional for workers represented by unions, who have different rights because they bargain collectively with their employers.

In reaching its decision, the Court of Appeal considered the extent to which the government engaged in a process of collective bargaining or consultation before passing the Act.  Unlike some past cases involving wage restraint legislation, the Act had not been introduced by the Government after a period of significant collective bargaining with the affected trade unions.  Although the Government had engaged in consultations over a four-week period prior to introducing the legislation, the Court of Appeal found the consultations to be wanting in several respects.  It noted several concerns regarding the consultation process, including the Government’s failure to circulate a consultation paper to the affected parties before the consultations.

Another concern of the Court of Appeal was that the Act did not provide the affected workers with any meaningful opportunity to seek an exemption from the wage increase cap.  Bill 124 provided the Government with the ability to exempt certain collective agreements from the application of the legislation.  However, the evidence indicated that the possibility of an exemption was largely illusory.  The Government had only granted one exemption, despite multiple requests, and the exemption process involved lengthy delays.

Lastly, the 1.0% cap on salary and compensation increases did not replicate the wage increases negotiated in other public sector bargaining.

The Government of Ontario will not appeal the decision and will take steps to repeal Bill 124 in its entirety in the coming weeks. We will continue to monitor this situation and provide updates as they become available.

If you have any questions about this decision or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer.