The Ontario Court of Appeal today released its decision in Ontario English Catholic Teachers Association v. Ontario, ruling that Bill 124 is unconstitutional. Bill 124 froze public sector compensation at 1% for the period of 3 years. A variety of public sector unions challenged the law as a violation of s. 2(d) freedom of association in the Charter of Rights and Freedoms.
The OCA ruled in a 2-1 decision that Bill 124 “substantially interferes” with meaningful collective bargaining contrary to Section 2(d) and that the infringement is not saved by Section 1 of the Charter.
The Court therefore struck down Bill 124 as unconstitutional, but only insofar as it applies to unionized employees affected but the law. Freedom of association only protects collective bargaining not individual (non-union) negotiations. Therefore, governments are free to impose wage freezes on non-union employees. This creates a very strong incentive for non-union workers to unionize (among other reasons).
[In my Law of Work textbook, I note that this reality that governments can impose wage caps on non-union employees but their right to do the same for unionized employees is limited by the Charter has caused non-union employees to unionize in the past. This is an example of “feedback loops” in work law: a decision to freeze non-union employee wages and not union wages will provoke a response by non-union workers who perceive unfairness in the system. This explains why some employers in Ontario have been giving non-union employees back pay as Bill 124 catchup that matches what unions have bargained. Union negotiated improvements are spilling over to non-union employees.]
The OCA ruled that compensation is clearly a matter of central importance to workers so the test of whether Bill 124 violates freedom of association is whether the law preserves a meaningful process of good faith consultations and negotiation, notwithstanding the compensation freeze. The Court ruled that it does not. There was no significant bargaining or consultation preceding enactment of Bill 124; there was no meaningful way that unions could bargain an exemption from the compensation freeze; and the 1% compensation freeze was inferior to what was being negotiated outside of the reach of Bill 124.
Finally, the infringement of Section 2(d) was not “saved” by Section 1 of the Charter. While the Court was prepared to accept that fiscal restraint could be considered a pressing and substantial objective, Bill 124 failed both the “rational connection” test and the “minimum impairment” test that the government needed to satisfy in meeting the Section 1 threshold.
The Bill’s application to the energy and university sectors was not rationally connected to the objective of fiscal restraint since wages in these sectors are not directly linked to government expenditures. In addition, Bill 124 failed the minimum impairment test because the government failed to demonstrate that it could not have bargained wage restraints. Instead it jumped right to an across the board statutory compensation freeze.
In the result, Bill 124 is struck down as unconstitutional as it applies to unionized workers. No damages were assessed in this decision. The Ontario government may appeal to the Supreme Court of Canada, but if they do, I hope the SCC refuses leave. Frankly, we’ve had enough lengthy, divided SCC decisions on the meaning of Section 2(d) to last a lifetime. Let’s hope the SCC says enough and punts any attempt to appeal this decision. There is nothing particular novel in this decision that deserves yet another expanded SCC deliberation on Section 2(d). Time to move forward.
DD