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Can a government legislatively freeze its employees’ wages?

UPDATE:  Here is a video from the Agenda of two labour lawyers discussing Bill 115 and the Charter implication.

A lot of attention is on the teacher’s situation in Ontario right now, and the highly unusual and very complicated Bill 115 introduced yesterday by the Ontario Liberals. That Bill does a lot of things, one of which is freeze teacher wages for a couple of years and fix other terms, thereby rendering collective bargaining over those issues futile.  The law firms and blogs will no doubt be absorbing and analyzing the Bill in the days and weeks to come.  Look for yet another Charter challenge coming down the pipes.

I was interviewed by CBC Radio earlier, and they were interested in the Premier’s comments that an across the board public

Premier McGuinty Says Across the Board Public Sector Wage Freeze Unconstitutional

sector raise freeze of the sort the Conservative Party is proposing would violate the Charter, but the wage freeze imposed on the teachers in Bill 115 does not. For new labour law students just entering class, let’s think about that for a moment.

B.C. Health Services (2007)

The story begins in 2007 with B.C. Health Services,  a case in which the B.C. government did something similar to what the Ontario Liberals are doing now:  pass a law that fixes conditions of employment and bans bargaining about important issues in the future.

The Supreme Court of Canada ruled that the B.C. government had violated Section 2(d) of the Charter (granting everyone the freedom to associate).  Since Section 2(d) guarantees workers a right to engage in meaningful collective bargaining in good faith with their employer, a law that effectively prohibits bargaining over key issues amounts to substantial interference with the Constitutional right to collective bargaining.  The SCC said this in B.C. Health:

B.C. Health Services: Laws or state actions that prevent or deny meaningful discussion and consultation about working conditions between employees and their employer may substantially interfere with the activity of collective bargaining, as may laws that unilaterally nullify significant negotiated terms in existing collective agreements.

This case seems to say that governments could not legislatively freeze raises of unionized workers.   That view seemed to be confirmed by the SCC in the 2011 decision in Ontario v Fraser (at para. 37).

Association of Justice Counsel v. Canada (Summer 2012)

Now flash forward to earlier this summer.  The Ontario Court of Appeal released its decision in Ass’n of Justice Counsel v. Canada (AG). That case challenged federal legislation (the Expenditure Restraint Act) that set a cap on raises for government lawyers.  An arbitrator later imposed those capped percentages, and the lawyers’ union challenged the legislation as a violation of Section 2(d).  They lost at the OCA.  How?

The OCA said that Section 2(d) protects only a process of collective bargaining, and not any particular outcome and not a right to strike.  In this case, unlike in the B.C. Health Services situation, the union and the employer had engaged in extensive bargaining over wages prior to the wage-fixing legislation being enacted.   Some 16 bargaining sessions had taken place, and another 5 days of mediation with one of Canada’s top mediators.  After all this bargaining, the parties had reached an impasse.

According to the OCA, once the workers have had a fair chance to present their collective representations to the employer, and the employer has received those representations and responded to them in good faith, ‘freedom of association’ has been satisfied.   Employers are not required to bargain indefinitely into the future.  At some point, the Constitutional duty to bargain expires, and here it had done so.  The Court summarized its finding as follows:

Ontario Court of Appeal: Further negotiation may be possible after the constitutionally protected phase of the process of bargaining has concluded but that possibility, a remote one on the facts of this case, does not expand the scope of the protected right. Fraser makes clear that s. 2(d) has limits: it does not guarantee any dispute resolution process after the parties have reached an impasse and it does not guarantee any particular outcome. In my view, the validity of the ERA must be assessed on the basis of whether, at the time it was enacted, the parties had had the opportunity for a meaningful process of collective bargaining. If they had, s. 2(d) is satisfied. The faint hope of further negotiations in the shadow of a dispute resolution mechanism not protected by s. 2(d) cannot expand or extend the reach of s. 2(d) beyond its core guarantee.

This decision appears to provide a road-map for governments on how to impose wage freezes or wage fixing legislation, or  any other collective agreement term, without running afoul of the Charter, does it not?

It seems to find that, as long as a government employer sits and listens to public sector unions’ bargaining proposals, nodding along and offering the odd comment here and there, it can then eventually walk away from the table and legislate whatever contract terms it wants.

UPDATE:  The SCC refused leave in this case.  So, watch for every anti-union government in Canada to begin a process of going through the motions of bargaining with public sector unions, followed by a declaration that they are unable to reach a deal, followed by legal imposition of a collective agreement on whatever term the government wants.   And, possible, say goodbye to meaningful collective bargaining in the public sector.  Is the private sector next?

[Back to the original post] If that position is affirmed by the SCC on appeal, then whatever benefit the labour movement thought it had achieved in B.C. Health Services will have been swiftly swept away.  But it is far from clear what the SCC will do with Association of Justice Counsel decision.  It will be decided in the context of other cases moving up the judicial ladder that raise the keystone issue of the right to strike or to access a neutral dispute resolution process.  At the end of the day, the most important question is what options are available to workers when bargaining reaches an impasse.  Note that even in normal collective bargaining under regular labour relations law in Canada, such as the Ontario Labour Relations Act, an employer can engage in ‘hard bargaining’, where the employer meets, discusses proposals, but refuses to offer the unionized employees anything.  That’s lawful in Canada, but normally the solution to hard bargaining is a strike.  In the case of the teachers, the government has removed that option so that it can just impose whatever it likes.  That’s why the real issue that will determine whether Section 2(d) of the Charter actually provides any real benefit to workers will depend on whether freedom of association includes a right to strike or to access to a neutral third party arbitration process when bargaining reaches an impasse.  The Liberals (and the Conservatives) don’t think the teachers should have access to any of those options.  If the Charter permits governments to simply impose whatever terms they want, and to ban strikes and lockouts and prohibit access to neutral and fair arbitration processes when bargaining reaches an impasses, then we are right back to where we began–freedom of association as an empty vessel.

Would that be a good result in your opinion?  Or should ‘freedom of association’ include a right to have bargaining disputes determined by a system of neutral arbitration or a right to strike?

Given this background, can you see why Premier McGuinty is arguing that a legislated wage freeze as applied to teachers is not a violation of the Charter, but that a general across the board wage freeze imposed on all public sector workers would be a violation?

Do you agree with his position?

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12 Responses to Can a government legislatively freeze its employees’ wages?

  1. Jon D. Reply

    August 28, 2012 at 3:21 pm

    “…the parties had had the opportunity for a meaningful process of collective bargaining.”

    I would expect the parties to be the employer and union. The employer being the local school board. Question is, do provincial discussions for a framework for local bargaining satisfy “the parties” even if the school boards withdrew?

  2. Jim S. Reply

    August 28, 2012 at 7:34 pm

    From BC Health Services “To constitute substantial interference with freedom of association, the intent or effect must seriously undercut or undermine the activity of workers joining together to pursue the common goals of negotiating workplace conditions and terms of employment with their employer.” The Ontario government has very clearly substantially interfered with the ability of OSSTF and ETFO teachers to negotiate with their employers (Boards of Education). Not so for ETFO and AEFO who willingly entered discussions with the province and their employers, acting as an association, and reached an understanding with the province on terms & conditions. Though it will take time, it seems certain that Mr. McGuinty is both right (re: across the board freeze and the specific teacher groups who reached understandings) and wrong (re: the other teacher groups).

  3. Brian Farrugia Reply

    August 28, 2012 at 9:26 pm

    I am a teacher and have no law background. I found your article informative from a legalize prespective and know that both unions and governments utlize these tactics as is necessary within the wording of legislation. I find it unfortunate, however, that such posturing can be used by one of the parties involved to gain ultimate control over a process. It amounts to a scary situation and hints to forms of government not especially cared for in civilized Western societies.

  4. Mppac Reply

    September 1, 2012 at 3:54 am

    This is the same strategy the OCA utilized when they overturned Justice MacDonnell’s decision of the Ont Superior Court. We have filed submissions seeking Leave to Appeal to the SCC.

    Copy Of Media Release

    The Fight for Democracy and True Independent Representation For RCMP Members Continues…

    Langley, BC (30 August 2012) – The Mounted Police Professional Association of Canada (MPPAC), the national umbrella organization for RCMP Association members across Canada has been informed by Legal Counsel for the British Columbia Mounted Police Professional Association (“BCMPPA”) and the Mounted Police Association of Ontario (“MPAO”) that they have filed submissions seeking Leave to Appeal to the Supreme Court of Canada (“SCC”), in regard to the recent ruling from the Ontario Court of Appeal (“OCA”). In June this year, the OCA overturned the ruling made by the Ontario Superior Court, which found Sec. 96 of the RCMP Regulations, unconstitutional. This regulation allowed the RCMP management run, Staff Relations Representative Program, (“SRRP”) to operate and exist within the Force. Since the early 1970‘s, the SRRP was imposed on the RCMP membership to maintain the non-union status of the Force and continues today.

    MPPAC Interim President, Rae Banwarie states that, “It will be up to the SCC to decide whether or not the 20,000 Regular and Civilian Members of Canada’s RCMP, will be allowed to exercise the same constitutional rights of freedom of choice, found in collective bargaining and the unfettered choice of labour representation, afforded to approximately 254 other police forces in Canada. Our fight has been ongoing, since the late 1980’s and the RCMP today, remains the only police force in Canada, whose members have never been given a choice to have a free vote as to whether or not they want the current management run SRRP or an independent Police Association and a collective agreement,” states Banwarie. Banwarie is “hopeful that the justices at the SCC,who are entrusted with the protection of democracy and freedom for all Canadians, will grant us leave to appeal, which will lead to the final chapter in this, our greatest fight to date.”

    The Mounted Police Professional Association of Canada was established in 2010 and is fighting for the right to engage in collective bargaining through an independent association on behalf of RCMP regular and civilian members across Canada. The Association does not seek or support the right to strike. To learn more about our national association, visit http://www.mppac.ca.

    Now we will have to deal with bill C-42 (http://parl.gc.ca/content/hoc/Bills/411/Government/C-42/C-42_1/)
    A non compliant Charter piece of legislation destined for second reading in the house this fall. We are going to need labour law expertise to deal with this. Please contact me —- national@mppac.ca

  5. Dmon Reply

    September 3, 2012 at 7:18 pm

    Hi I am a teacher and my question is about fines and sanctions that are availabel to the Ontario Government in the even of illegal work actions. Specifically, some teachers are calling on the leaders of their unions give clear direction about withdrawal of services (especially those are not covered by the ed. act and/or current CBA’s). I understand that the BC gov. modified (or created new) laws in order to make the the actions that the teachers were taking cost prohibitive.

    How much are the fines in ontario? Are there jail terms?

  6. Gord Reply

    September 6, 2012 at 8:23 pm

    Prof. Doorey, I have an interesting question to pose to you: I am an employee of the TTC (unionized ATU113), we have undergone an extremely long arbitration process. It took almost a year and a half for an arbitrator to rule on our CBA which expired on March 31, 2010. Am I to believe that the arbitrator’s ruling can be overturned by the the Provincial Government by an act of legislation? As we have been declared an “Essentional Service” by Bill 150, with binding arbitration to decide if a CBA cannot be negotiated by the two parties cannot reach resolution. Does this mean that the arbitrator’s decision is at the whim of the government? If so, I predict severe labour problems at the TTC. Although we cannot strike or be locked out, I can foresee severe service disruptions if arbitrator’s decisions are overturned by the Provincial Government.

    • Doorey Reply

      September 7, 2012 at 2:34 pm

      Hi Gord, whether a government can legislatively void a collective agreement (bargained or imposed by an arbitrator) is one of the big questions floating around out there. That is essentially what the B.C. government did a few years back, and the Supreme Court said that voiding a collective agreement by legislation violates the Charter. In essence, the Ontario government wants to do the same thing with the teachers: the new legislation would in effect void the rollover clause in the teachers’ collective agreement. The government says that as long as the parties have had an opportunity to bargain and have reached an impasse, they can step in to legislate a collective agreement. I’d be surprised if the Ontario Liberals tried to legislatively void the ATU collective agreement imposed by the process they mandated. I also think that would violate the Charter. The Tories, on the other hand, just might try to do such things if they had a majority.

  7. Sean Bawden Reply

    September 9, 2012 at 3:29 pm

    A small part of me is glad Ass’n of Justice Counsel v. Canada (AG) is going up. With any luck it will focus the SCC on the question of whether 2(d) guarantees more than just procedural rights. If, as you observe, 2(d) only protects the right to negotiate and there are limits on the extent of negotiation (which must be regarded as separate from the right to association and cannot form part of the section 1 analysis, in my humble opinion), then the provision is hollow.

    The question that must be answered is: what is the purpose of 2(d), what are we trying to protect? If one considers the initial motivations behind the Wagner Act, surely it must be more than perfunctory lip service.

  8. Thomas Reply

    September 11, 2012 at 12:54 pm

    Now the interesting question is whether the legislation is actually effective. Reading section 20 which repeals the Act together with section 22 which states the entire Act comes into force on one day would indicate that the law is repealed as soon as it is brought into force, hence making everything ineffective (except perhaps the section 21 amendments to the Education Act).

    • Doorey Reply

      September 11, 2012 at 2:17 pm

      Hi Thomas, yes, I noticed that too, but assumed that I am just rusty on my legislative drafting skills. I have to read the statute again. Thanks for the comment. David

  9. Nabil Mailloux Reply

    September 23, 2012 at 10:00 am

    Doorey,

    What a great resource. I’ve been facinated by the law ever since I drafted a model bylaw, which we presented to then Minister of the Environment and MPP for Kingston, that restricted pesticides. I had the help of Bruce Pardy, prof at Queen’s Law.

    I am now a teacher, and particularly “fascinated”. To my way of thinking, if the right to strike and/or have access to an arbitration process is not respected, then as you say, we are back to square one. Operationally, there is no collective bargaining, since both of these options can at any time be arbitrarily be abrogated.

    While governments also have a charter section (forgot which one) that allows legislated freezes, these are typically reserved for extraordinary circumstances (great depression, war measures act, etc…) Even if we use today’s financial woes as a reason for legislation, it would not pass the test. Ontario is currently in a 13 billion$ deficit. Now compare to The Rae era which had a 10 bilion $deficit. In today’s dollars thaat is almost 20 billion dollars, and Rae did not take this extraordianry measure. This indicates that today’s “crisis” is not really an extraordinary crisis by historical standards.

    I think that when asked the justices must find that striking and the right to arbitration are part of the process, as are lockouts. Without them, collective bargaining is meaningless.

  10. Leif Harmsen Reply

    December 13, 2012 at 7:16 pm

    No. Not without breaking the consitution, which this law is attempting to do and may succeed for a time until it is struck down. What the government can do is declare teachers and their support staff an “essential service”, then all disputes go directly to third party arbitration. That would be fine with the union. Unfortunately, the government wants it both ways – for schools NOT to be an “essential service” and also to deny them their right to strike. If the law stands, everyone will simply strike until it is changed. There’s no point in going to work when you have no ability to bargain – to do so would simply be supporting slavery.

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