Update: On December 29, 2022, Ontario filed a notice of appeal of the decision of the Ontario Superior Court of Justice in Ontario English Catholic Teachers Assoc. v. His Majesty, 2022, ONSC 6658.

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In Ontario English Catholic Teachers Assoc. v. His Majesty, 2022, ONSC 6658, Ontario’s Superior Court of Justice declared Bill 124, Protecting a Sustainable Public Sector for Future Generations Act (Act), to be void and of no effect.

On June 5, 2019, Ontario introduced the Act, which limits wage increases¹ for approximately 780,000 workers in the broader public sector² to 1% per year³ for a three-year moderation period. The Act came into force with respect to a particular bargaining unit when the collective agreement that was in force as of June 5, 2019 expired.  Accordingly, when the court’s decision was released, the Act had already begun to apply to some bargaining units but not to others.

Labour organizations challenged the constitutionality of the Act in 10 separate applications, all of them heard consecutively by Ontario’s Superior Court of Justice over 10 days in September 2022.  The applicants argued that the Act limited the freedom of association, freedom of speech, and equality rights of their members under the Canadian Charter of Rights and Freedoms (Charter). Ontario denied this and, in the alternative, argued that if the Act did infringe on any Charter rights, it was saved by s. 1 of the Charter as a reasonable limit that is demonstrably justified in a free and democratic society.

The Court found that the Act (i) infringed on the applicants’ right to freedom of association under s 2(d) of the Charter; (ii) did not violate the applicants’ freedom of speech or equality rights under the Charter; and (iii) was not saved by s. 1 of the Charter.  After declaring the Act to be void and of no effect, the court deferred consideration of any remedy to a further hearing, as requested by the parties.

Decision

Does the Act violate section 2 (d) of the Charter (i.e., the right to freedom of association)?

The court determined that the Act infringed on the applicants’ right to freedom of association under s 2(d) of the Charter. In conducting its analysis, the court emphasized the following:

• The Supreme Court of Canada (SCC) granted constitutional protection to collective bargaining and the right to strike as part of the freedom of association guaranteed under s. 2(d) of the Charter;
• As Charter rights are to be interpreted generously and purposively, the constitutional right to collective bargaining goes beyond merely the right to associate (i.e., having a right to meet together), and guarantees the right to a meaningful collective bargaining process that allows workers to meet with employers on more equal terms, to put forward the proposals they wish, and to have those proposals considered and discussed in good faith;
• SCC jurisprudence holds that governments infringe on this right when a government measure “substantially interferes” with collective bargaining, i.e., when it prevents or restricts subjects from being discussed as part of the collective bargaining process.

The court determined that the Act’s prevention of collective bargaining for wage increases of more than 1% amounted to a “substantial interference with collective bargaining both collectively and individually” because it had the detrimental effects of: (i) limiting “the scope of bargaining over wage increases”;  (ii) preventing unions from “trading off salary demands against non-monetary benefits”; (iii) preventing the collective bargaining process from addressing staff shortages; (iv) interfering with the usefulness of the right to strike; (v) interfering with the independence of interest arbitration; and (vi) interfering with the power balance between employer and employees. 

Does the Act violate the applicants’ freedom of speech or equality rights under the Charter?

The court determined that the Act did not restrain freedom of expression because it did not restrain the unions’ ability to speak or render any political action they may wish to take less effective.  The court stated that it preferred to analyze the issue through the framework of freedom of association and interference with collective bargaining.  

The court also determined that equality rights under s. 15 of the Charter were not violated.  The applicants argued that the Act disproportionately targeted women and racialized women in particular; however, the court found that this argument failed because the Act “creates distinctions based on the employer, not occupation, gender or race.”

Is the Act saved by s. 1 of the Charter?

Next, the court determined that the Act could not be saved by s. 1 of the Charter. It noted that a justification under s. 1 requires the government to establish a “pressing and substantial objective, a rational connection between the means and the objective, minimal impairment of the Charter right and that the benefit of the Act outweighs its detriment.” 

Pressing and substantial objective

The court emphasized that the SCC has on numerous occasions held that budgetary considerations will not ordinarily constitute “pressing and substantial objectives” under s. 1. Although the court acknowledged that there is a line of cases that upheld the constitutionality of certain wage restraint legislation, it found these cases distinguishable because: (i) almost all arose in situations where the government was facing a financial or economic crisis, which was not the case in 2019; and (ii) the legislation limited wage increases at a level that was consistent with results achieved in free collective bargaining negotiations when the legislation was introduced, but the Act set the wage cap at a rate below the rate employees were obtaining in free collective bargaining negotiations.

Rational connection

The court acknowledged a “rational connection between the objective and wages that Ontario pays directly.” It found, however, that the Act went “far beyond that” by, in some cases, applying to wages that are completely unconnected to Ontario’s budget or deficit, and in other cases (e.g., in the university sector) “applying to wages that are only indirectly related to Ontario’s budget but in respect of which Ontario already has other contractual protections that control Ontario’s contributions.”

Minimal impairment

The court stated that, with respect to minimal impairment, the same considerations applied as to rational connection. It noted that in any collective bargaining negotiation, Ontario was free to take the position that it could not pay wage increases of more than 1%, but the province was reluctant to do so because it could lead to strikes. The court concluded that this was not “a reasonable limit on the right to collective bargaining that can be demonstrably justified in a free and democratic society” because “the right to strike is a component of a free and democratic society.”

Balancing benefits and negative effects of the Act

With respect to balancing the benefits and negative effects of the Act, the court found that in the absence of a satisfactory explanation for why wage increases could not be limited during collective bargaining negotiations, the negative effects of the Act outweighed its benefits. The court concluded that based on SCC jurisprudence, it was not appropriate for Ontario to breach Charter rights to pursue its “essential government responsibilities” of “fiscal prudence and ensuring the sustainability of public services.”   

Bottom Line for Employers

As the court in Ontario English Catholic Teachers Assoc. v. His Majesty determined that the Act is void and of no effect, the Act does not apply at this time to the many workers in the broader public sector within its scope.  Following the release of the decision, however, Ontario’s government expressed its intention to file an appeal.  It is possible that the government will request a stay of the decision pending the appeal.