Have you had a chance to read the controversial Liberal Bill being referred to in the press and Twitosphere as the “wage freeze” law? The bill is called Protecting Public Services Act, 2012.
McGuinty: Does Liberal Bill Violate the Charter?
What should we make of this law? Does it violate the Charter’s Section 2(d) guarantee of ‘freedom of association’ as drafted?
That’s the million dollar question, and even the Liberals admit they don’t know the answer. No one does. That’s due in part to the fact that no one knows what the hell the Supreme Court will do these days when a collective bargaining case comes before them. Every new decision is a surprise. All we can do is guess based on the law as it stands now, knowing that the SCC can always change that law, or steer it in unexpected directions.
Here are my early thoughts, for what it’s worth. Comments and conversation welcome, as always.
The Charter: What We Know So Far
Consider the current state of Charter jurisprudence, which I have tried to describe in my paper called The Charter and the Law of Work: A Guide for Beginners.  Essentially, that law boils down to something like this, as applied to public sector workers who are the target of the new legislation:
*Â Workers have a right to establish, join, and belong to employee associations, including unions, without attracting harmful reprisals.
*Â Workers have a right to make collective representations to their public sector employers about important workplace matters.
*  Public sector employers have a legal obligation to receive those representations, to listen to them, to engage in meaningful dialogue with the employee association/union, and to consider the representations in good faith.  All of this comprises the constitutional duty to bargain.
*Â There’s no constitutional right to a particular outcome; the Charter ‘duty to bargain’ is only a right to a process of meaningful discussion.
* There is no constitutional right to strike or to access a neutral arbitration process for settling bargaining impasses. [That issue is currently working its way through the courts on a number of fronts]
These rules could be changed or expanded by any of the cases currently working their way up the courts to the SCC. But that is where we stand now, more or less.
Some Preliminary Observations About the Protecting Public Services Act.
For a detailed walk through of the proposed legislation and all of the Schedules, check out this ve
ry clear overview by the folks at Hicks Morley. The Act introduces 8 new Schedules.  Schedule 1 deals with nonunion employees of certain public sector employers (see the Hicks’ summary for a description of which employers are covered), and includes the much hyped rule capping compensation levels at twice the salary of the premier.  This is interesting insofar as it is an example of the rarely seen “maximum wage” rule.  I’ve discussed before that while we have long had wage floors (minimum wage), our governments have mostly resisted calls for “wage ceilings”. There have been calls from critics of ballooning executive compensation for laws that cap executive salary based on a ratio tied to the average wage of a corporation’s employees, for example.
Schedules 3-8 introduce some new rules relating to interest arbitration procedures and time lines in various sectors our governments treat as essential. Â See the Hicks’ summary for a review of those changes.
Schedule 2 Deals with Collective Bargaining in the Broader Public Service
I’m most interested in Schedule 2, which would regulate collective bargaining processes throughout much of the broader public sector. Â This is a creative piece of legal drafting, which would introduce new and interesting concepts into Canadian labour law, were it to pass. Again, I’ll direct you to the Hick’s summary to learn which employers this Schedule governs.
Note first that Schedule 2 does not actually impose a “wage freeze”. That ultimately may be the outcome of the model, for reasons discussed below. However, the law leaves open the theoretical possibility of the parties agreeing to a wage increase or decrease, or such a change being imposed on the parties by the government.
Here’s how the new law works. The government will create something called a ‘mandate‘, which will include criteria designed to achieve two central policy objectives:  (1) the elimination of the deficit, and (2) protection of public services.  No collective agreement will be approved by the state that does not, according to the state, satisfy the mandate and/or these two objectives.  If the parties can’t reach a deal acceptable to the state, then the government can then impose a collective agreement according to whatever terms it likes, consistent with the mandate and objectives. But before that happens, the legislation creates lots of opportunities for the parties to ‘bargain’ and ‘consult’ with the state. There’s a reason for that.
Does the Protecting Public Services Act Violate the Charter?
This bill was drafted carefully so as to work within the current state of the Charter law. Whether it succeeds is an open question. In many respects, I think it does, at least on its face. Whether the bill will withstand a Charter challenge will likely turn on the details of the ‘mandate’, and on how the government actually exercises the powers the legislation gives it.
Firstly, the bill does not interfere with the ability of workers to join or belong to unions. Secondly, the bill allows for extensive opportunities for those unions to engage in ‘bargaining’ with employers and consultation with government officials. Thirdly, the bill would only govern new collective bargaining and not existing collective agreements. Here, the Liberals are trying to avoid ripping up existing, freely bargained collective agreements, something that got the B.C. Liberals in trouble in the B.C. Health Services decision in which the constitutional duty to bargain was first recognized by the SCC. The Ontario Conservatives are still babling on about ripping up existing agreements and imposing a wage freeze throughout the entire public sector. That approach would be way more perilous in constitutional terms than the Liberal’s approach. My belief is that voiding existing agreements would violate Section 2(d), with the possible result of a big back wage order for taxpayers down the road. If governments can simply ignore contracts they enter into whenever it suits them, then the idea of “meaningful” collective bargaining becomes a farce. The Tories would argue that the wage freeze was justified under Section 1 for economic reasons, but the SCC did not buy a similar argument by the B.C. government.
Fourthly, the bill does not actually impose any contract terms… yet. In theory, it leaves open the possibility that parties could bargain collective agreements that comply with the mandate and objectives. How? I suspect the government has in mind that unions will come to the table with some creative proposals that win benefits for their members or at least that protect jobs, but that also leave overall labour costs unchanged or even reduced. For example, unpaid days off have been used elsewhere to achieve such results.  It’s not like concessionary bargaining is a new idea.  To help the parties think of ways to cut costs, the proposed law appears to permit contracting out of the Employment Standards Act [See s. 22(2), Schedule 2). Allowing for unpaid overtime or waiving of holiday pay and maximum hours of work restrictions could obviously save money, for example. The fact that the government could impose a collective agreement on its own employees that controvenes the ESA is controversial, I’d think. No private sector employer could do that.
The law also permits the government to impose a cut to wages and benefits, so we are not just talking about a potential wage ‘freeze’. Whether the Charter prohibits the state from cutting wages by unilateral fiat is an open question. In the recent Association of Justice Counsel , the Ontario Court of Appeal ruled that the Charter only guarantees a limited period of collective bargaining, after which an impasse can be resolved by a legislative wage order. In that case, the disputed law imposed a slight raise, but the reasoning in it does not preclude a legislative wage cut, so long as the government had first engaged in ‘meaningful dialogue’. The Liberals are counting on the reasoning in that case surviving at the SCC level. That is why the Protecting Public Services Act has so much ‘bargaining’ and consultation built into it. Its all about setting up a process, the end result of which may indeed be a state-imposed collective agreement that includes a wage freeze or even compensation reductions.
Another Violation of International Labour Law, But So What?…
It’s true that there cannot be truly free collective bargaining when the state has imposed a straightjacket that virtually guarantees that the workers will be unable to win any gains. That is why the Protecting Public Services Act violates international labour law standards as promulgated by the ILO. The ILO’s expert bodies on freedom of association have stated unambigously that a law that requires the state to approve of a collective agreement is inconsistent with core ILO Convention 98.  This from the ILO Digest:
1012. Making the validity of collective agreements signed by the parties subject to the approval of these agreements by the authorities is contrary to the principles of collective bargaining and of Convention No. 98. (See 320th Report, Case No. 2030, para. 596.)
1013. Legal provisions which make collective agreements subject to the approval of the ministry of labour for reasons of economic policy, so that employers’ and workers’ organizations are not able to fix wages freely, are not in conformity with Article 4 of Convention No. 98 respecting the promotion and full development of machinery for voluntary collective negotiations. (See the 1996 Digest, para. 869.)
That really couldn’t be clearer, could it. Keen readers will be aware that Canada has not in fact ratified Convention 98.  But that didn’t stop the Supreme Court of Canada from relying on it, and on the decisions of the expert bodies of the ILO interpreting it, as justification for overturning legislation that restricted public sector bargaining rights in B.C. (B.C. Health Services).  (Roy Adams and many argue that mere participation in the ILO binds governments to respect Convention 98 because this is required by the ILO’s Constitution.)  So expect a complaint to be filed with the ILO if this legislation is enacted, and a decision by the expert bodies there ruling that it violates international law.
But Canadian governments have not usually cared too much about ILO rebukes.  Lots of our existing labour laws in Canada are in contravention of ILO law, including the plethora of laws that ban strikes.  The ILO found the Agricultural Employees Protection Act to be a violation of Canada’s international law obligations, while our SCC ruled that the statute was not inconsistent with our Charter. So who knows what the hell our SCC is thinking when it comes to Canada’s international law responsibilities.
Summary
Therefore, the fact that Protecting Public Services Act violates ILO law does not mean it will fail a constitutional challenge. The Liberals are hoping that the Ontario Court of Appeal’s decision in Association of Justice Counsel is upheld, and that when the SCC said in Ontario v. Fraser that unions and employers must be given a chance to engage in ‘meaningful dialogue’, they meant only ‘meaningful dialogue’ in a narrow sense.  That is, as long as the employer talks to the union, it is fine that the outcome of negotiations was pretty much a foregone conclusion. If that interpretation of Section 2(d) wins the day, then there will be little to prevent governments from imposing collective agreements that aren’t acceptable to one or both parties.  All that is required is that the parties be given an opportunity to talk and engage in reasonable dialogue before that happens.
Do you have thoughts on this new legislation, and how it would likely play out if enacted?
Is my analysis way off? Â Why?
Do you think the Charter should prohibit governments from inteferring in collective bargaining in the ways developed in the Protecting Public Services Act?