Ford government backing down on public sector wage-cap law after Appeal Court ruling

EDITOR’S NOTE: This article originally appeared on The Trillium, a new Village Media website devoted to covering provincial politics at Queen’s Park.

The Ford government is giving up its fight to salvage legislation that capped wage increases in the broader public sector.

"The Government of Ontario will not appeal today's Court of Appeal decision and will instead take steps to repeal Bill 124 in its entirety in the coming weeks," the Ministry of the Attorney General said in a statement on Monday.

In a 2-1 decision that was published hours earlier, the Ontario Court of Appeal upheld the bulk of a previous ruling that found the Ford government’s legislation capping public sector wage increases was unconstitutional.

Justice Lise Favreau wrote in the decision that she “cannot accept that the circumstances surrounding the government’s decision to enact the legislation justify its infringement of the Charter.”

“Taking into consideration the context in which Bill 124 was introduced and the restraints imposed by the Act, I am satisfied that the Act substantially interferes with the respondents’ right to participate in good faith negotiation and consultation over their working conditions,” wrote Favreau. 

However, she added that the earlier decision made by Justice Markus Koehnen of Ontario’s Superior Court was “overly broad,” and that striking Bill 124 down “should be limited to a declaration that the Act is unconstitutional in so far as it applies to (union) represented employees.”

Non-unionized workers are a minority of the 400,000 employees of the government and broader public sector organizations affected by the law.

The Ministry of the Attorney General statement that was published on Monday also said that the government "will urgently introduce regulations to exempt non-unionized and non-associated workers from Bill 124 until it is repealed."

Premier Doug Ford and the Progressive Conservatives said the legislation would help the government work towards managing the province’s debt. Bill 124 was passed in November 2019.

Labour groups, meanwhile, were irate about the law that limited wage increases for many public sector workers to one per cent a year for a maximum of three years and decided to take the province to court. 

In November 2022, Koehnen’s Ontario Superior Court ruling deemed the law unconstitutional. The government then appealed, leading to the decision that was published on Monday, which labour unions celebrated.

CUPE’s Ontario Council of Hospital Unions, SEIU Healthcare and Unifor issued a statement calling the ruling a “win for all hardworking families who are trying to get ahead and all unions who fought on their behalf to protect the rights of all workers to freely bargain a collective agreement.”

They called on the Ford government to “end all wage restraint schemes and let Bill 124 go.”

The legislation affected teachers, hospital staff, staff of provincial ministries and others. 

Some groups have been awarded retroactive pay increases above the annual one per cent cap through recent collective bargaining and arbitration triggered by Koehnen’s earlier Superior Court ruling. For instance, last Friday an arbitrator decided teachers and education workers with two unions would get a retroactive wage increase of 2.75 per cent for the third year of their previous contracts. Additional wage bumps for the first two years under Bill 124 were agreed to by the workers and the province’s representatives.

The Financial Accountability Office of Ontario (FAO) estimated in a Sept. 28, 2022 report that the province could be required to spend $8.4 billion over five years in salary and wage increases, including retroactive payments, if Bill 124 was ultimately overturned.

Speaking to reporters at Queen's Park on Monday afternoon, Finance Minister Peter Bethlenfalvy said the government has “incorporated” spending into its budget to account for “Bill 124 re-openers” and “catch-ups,” including in the Ministry of Finance's 2023-24 third quarter finances, which it released on the same day. Its fiscal update showed the government is adding $1.7 billion more spending “in health sector supports,” including “to address pressures related to compensation costs.”

Bill 124 was tabled by Bethlenfalvy in June 2019, when he was Treasury Board president. 

Not all workers’ groups covered by Bill 124 were able to negotiate “re-opener language” in their contracts affected by the legislation, according to CUPE Ontario president Fred Hahn. “We represent 40,000 social service workers, (and) the vast majority of them did not have automatic re-opener language,” Hahn said at Queen’s Park on Monday.

The FAO also estimated in its Sept. 28, 2022 report that Bill 124 would have saved the provincial government $9.7 billion in employee salary and wage costs, as the office assumed non-unionized employees would not be compensated if the legislation was struck down.

The Appeal Court decision determined that while Bill 124 violated constitutional rights that apply to unions that the same rights “do not apply in the same way to non-represented employees.”

“Accordingly the Act (Bill 124) is only unconstitutional in so far as it applies to the represented employees covered by the Act,” Favreau wrote in her decision.

C. William Hourigan was the Appeal Court judge who disagreed with the decision penned by Favreau, which Justice David H. Doherty was onside with. Hourigan wrote in a dissenting opinion that he didn’t believe Bill 124 contravened constitutional rights applying to unions, and that even if it did then it did so to “a reasonable limit prescribed by law.”

Opposition parties applauded both the court’s decision and workers’ efforts to fight Bill 124 after the ruling was released on Monday.

Flanked by labour leaders at a news conference at Queen’s Park, NDP Leader Marit Stiles said the Ford government should take it as a “clear message” to “respect the court’s decision, drop this appeal, back off workers, pay them fairly, respect them and start actually addressing the crises in health care and other public services that Ontarians are facing today.”

Liberal Leader Bonnie Crombie said it’s “a huge, long-overdue victory for the workers,” while the Greens called on the government to “leave this sorry episode to the dustbin of history.”

Labour leaders who accompanied Stiles spoke about the impact of the legislation in various sectors. Erin Ariss, president of the Ontario Nurses' Association, said she saw “nurses leaving in droves” during the pandemic.

Editor's note: The story was updated Monday evening after the Ministry of the Attorney General announced it wouldn't appeal the decision the Appeal Court of Ontario released earlier in the day.