Speaker's Corner: Wage controls and the Ontario budget

Ontario Finance Minister Dwight Duncan targeted deficit reduction in his recent provincial budget.

The government’s plan is to cut the deficit in half in five years and  eliminate it in eight years in part through a zero-per-cent wage increase for public sector employees. Unionized employees will escape the immediate impact of wage control since it won’t affect current collective agreements. The controls will come into play as existing agreements expire.

It’s interesting to note that the budget made no mention of a threatened imposition of mandatory unpaid days off through a reincarnation of so-called Rae Days.

The government’s decision to forego that option is interesting because Duncan had suggested that not only wage freezes, but also unpaid leave, were possibilities in the government’s deficit reduction planning.

But perhaps it wasn’t just the unpopularity of the Rae Days that caused the government to back away. It’s likely the government gave some consideration to the possible impact of the Supreme Court of Canada’s 2007 Health Services and Support, Facilities Subsector Bargaining Association v. British Columbia decision.

Had Ontario introduced mandatory unpaid leave, public service union leaders would have relied on the Health Services decision to challenge the government’s legislation.

The Health Services case arose following legislated changes to the terms and conditions of employment for B.C. health-care workers. In 2002, the provincial government introduced legislation invalidating existing provisions in collective agreements, effectively ending good-faith collective bargaining on specific labour issues.

In response, union leaders brought a challenge under the Charter of Rights and Freedoms to the courts. It was in the context of this challenge that the Supreme Court recognized collective bargaining as a protected right under the Charter for the first time by rejecting the B.C. government’s legislated restraints.

As a result, the unilateral imposition of unpaid leave could amount to an interference with negotiated collective agreements and thus a violation of collective-bargaining rights. Now that Rae Days are off the table, will union leaders argue that the imposition of wage controls, even if obtained after the expiration of current agreements, similarly infringe on Charter rights?

While it’s clear the Health Services decision didn’t necessarily sway the B.C. government from attempting to legislate some form of wage control, that wasn’t necessarily the case with the federal government. Last year, the federal Conservatives considered and then chose not to legislate a wage freeze or rollback.

Pundits have suggested the government didn’t want to gamble in the courts on the possible impact of the Health Services ruling. Given that Ontario’s deficit has been growing at an admittedly alarming rate - currently sitting at $21 billion - has the province decided to take up the challenge of the Health Services case and take its chances in court?

While the decision is pivotal for the protection of collective bargaining rights, some people would argue it hasn’t completely shut the door on wage-control legislation.

The Ontario government could try to expand the reasonableness and legislative-process exemptions in the Health Services ruling in order to support its right to implement wage controls. Further, the government’s terminology seems to be a direct response to the case through, for example, its stipulation that it will “negotiate” a zero-per-cent increase with its unions.

Yet, the right to bargain collectively on workplace issues in the labour relations context is non-existent if government legislation has already determined the outcome. Is it possible the Supreme Court could expand the protections of the Health Services decision to include the provisions against legislated bad-faith bargaining?

Or will a Charter challenge fail because no existing collective-agreement rights have been attacked and the Ontario government has indicated a willingness to negotiate even if the results of any talks include wage control?

These are very interesting times. Despite the attempt to water down wage controls in the budget plan, I anticipate a court challenge from the public service unions.

There are strong arguments on both sides, meaning the Health Services decision will be in the middle of a tug of war as the government and unions pull it in both directions. As a result, the Supreme Court may be revisiting the issue in the not-so-distant future.

Perley-Robertson Hill & McDougall LLP partner Barbara Nicholls is a labour, employment, and human rights lawyer in Ottawa. She’s also head of the firm’s insurance law group, where she leads a team whose services include professional liability, personal injury actions, real estate, disability litigation, and the administration of policies and annuities.

For more on the Ontario government's remuneration to its employees, see "Nearly 1,600 AG staff earn over $100,000" and "Keep letting the sunshine in".

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