BREAKING: Wage Restraint Law “Bill 124” is Struck Down as Unconstitutional

In very significant news, this afternoon the Ontario Superior Court of Justice struck down “Bill 124” (officially called the Protecting a Sustainable Public Sector for Future Generations Act). The Court decided that Bill 124 violated the Charter of Rights and Freedoms’ protections for freedom of association (which protects the right to collective bargaining) and was unconstitutional. This means that Bill 124 will no longer have effect as law (at least for the moment).

Our firm has written extensively about the operation and requirements of Bill 124, and will not recap its detailed operation here. In brief, Bill 124 limited salary and compensation increases to 1% per year for three years for the public sector and much of the broader public sector. It had a large impact on the developmental services sector, contributing to wage and staffing pressures throughout the COVID-19 pandemic.

The full implications of this decision are not yet fully understood, as the Court has not issued a decision yet on what the “remedy” will be for the Government’s breach of the Charter. However, here are some of the key issues and what we do and don’t know:

Will Collective Bargaining Agreements (“CBA’s) be Reopened?

With this decision comes the possibility of current or event past CBAs being reopened for renegotiation. This possibility is highest where a CBA (or an interest arbitration decision settling a CBA) has an explicit “reopener” clause permitting the parties to revisit its terms if Bill 124 is struck down. It’s unclear whether this decision will also put CBAs without such explicit language at risk. At this point, likely not, but it’s always possible that a court could decide otherwise if the CBA was negotiated “under the shadow” of Bill 124

Bargaining Table Strife

Unions facing the negotiation of new CBAs going forward may increase their wage proposals to compensate for years of lost growth under Bill 124. Bill 124 had an “anti-avoidance measures” provisions that forbade this, but that is no longer in force. Combined with union bargaining proposals to combat inflation, this could lead to much starker negotiating gaps.

Will the Government Fund It?

It is unknown at this time whether the Provincial Government will be providing funding to compensate for any increased costs from Bill 124 being struck down.

Is Bill 124 Truly Dead?

This decision very likely represents just the first step of the legal fight over Bill 124 and an appeal to the next level of courts (the “Ontario Court of Appeal”) is a virtual certainty. The Province may ask that the lower court ruling be stayed (in effect, paused) while that appeal is made. It’s very possible that the Court of Appeal reinstates the law in a few months or years time. Finally, the Provincial Government may simply invoke the “notwithstanding clause” to reimpose Bill 124 regardless of the Charter. Ultimately, we will need to wait and see, with the possibility of much uncertainty in the months ahead.

PooranLaw will continue to monitor developments related to Bill 124 that are relevant to the developmental services sector. In the meantime, if you require legal assistance in determining how this decision may impact your organization, we encourage you to reach out to your regular PooranLaw lawyer, or any member of our team.

Note: This article provides general information only and does not constitute, and should not be relied upon as, legal advice or opinion. PooranLaw Professional Corporation holds the copyright to this article and the article and its contents may not be copied or reproduced in any form, in whole or in part, without the express permission of PooranLaw Professional Corporation.