On June 5, 2019, the government introduced Bill 124, the Protecting a Sustainable Public Sector for Future Generations Act, 2019. Bill 124 contains compensation restraint measures for non-union and unionized employees employed by the Ontario government, Crown agencies, the broader public sector, and other organizations that receive funding from the government of Ontario.
The Bill creates a 3 year “moderation period”, during which:
- salary rate increases are limited to no more than 1% per 12-month period for any individual position or class of position; and
- any incremental increases to existing compensation entitlements or new compensation entitlements are limited to no more than 1% averaged over all employees covered by a collective agreement or across the employer’s non-unionized employee group.
The bill defines compensation as “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”. The Bill provides the government with the authority to order that a collective agreement is inconsistent with the Act and require the parties to renegotiate terms that are consistent with it.
The government will be returning to the house at the end of October and has asked stakeholders for feedback on the bill in the interim. If passed, Bill 124 would likely have retroactive effects to June 5, 2019 if passed.
Based on our early experience with this issue at the bargaining table since the legislation was introduced, some union representatives appear to recognize that employers can’t reasonably be expected to negotiate deals that would exceed the moderation period limits described above. At the same time, union protests around the province indicate that this legislation won’t pass unchallenged by the labour movement.
In the meantime, we will continue to monitor the situation and will provide you with updates on the developments as they emerge.
Register for the webinar on Bill 124 here.
