At long last, DS Sector agencies across Ontario have received their budget packages. For the most part, budgets remain unchanged (including sustainability funding offered up by the Liberals pre-election 2018), a huge relief to a sector that feared delay in the release of budgets would mean cuts and cancellation of sustainability funding.
Now many agencies are asking, can Sustainability Funding be used in the face of wage cap legislation (Bill 124) that was introduced earlier this year? By way of a refresher, 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 also includes “Anti-Avoidance” restrictions that essentially prohibit an employer from paying out compensation before or after the Moderation Period to make up for sums not received during the Moderation Period. Finally, 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 and a likely strike in the education sector (a key sector impacted by Bill 124) may influence the legislative process.
For DS agencies managing budgets that include sustainability funding the key questions will be:
- Can or must sustainability funding be used for wage increases or stipends for staff?
- Will the wage cap legislation limit an agency’s ability to put sustainability funding to the key issues affecting agency sustainability?
The answers to these questions will depend on a number of variables, including:
a) If you are union, what stage of negotiations/bargaining are you in. The application of the Bill and your applicable Moderation Period will depend on whether you had a collective agreement in place and effective on June 5, 2019.
b) If you have a collective agreement in place, the terms of your collective agreement will be key – in particular, if you have a “wage re-opener” is it broad enough to capture the Sustainability Funding?
c) What was your past-practice related to Sustainability Funding or other increases to funding (fiscal or base funding) and payment towards compensation.
Each agency’s situation will depend on these variables and more. We recommend that you speak with your legal counsel to determine how your budget is affected by Bill 124 and best practices for ensuring Sustainability Funding can be put towards the key pressures affecting your agencies long term sustainability.
In the meantime, we will continue to monitor the situation and will provide you with updates on the developments as they emerge.
