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On, February 12, 2024, the Ontario Court of Appeal (the “Court”) released its much-anticipated decision1 on the constitutionality of Bill 124, the Protecting a Sustainable Public Sector for Future Generations Act, 2019 (the “Act”), which restricts increases to salaries and compensation for employees in the broader public sector to no more than 1% each year of a three-year moderation period. In it, the Court now distinguishes between unionized and non-unionized employees.

Justice Favreau, writing for the majority, confirmed that the Act violates unionized employees’ right to freedom of association under section 2(d) of the Canadian Charter of Rights and Freedoms (the “Charter”). Freedom of association is the right of employees to associate, whether through a union or employee association, for the purpose of advancing workplace goals through collective bargaining.2

Justice Favreau held that the Act substantially interferes with unionized employees’ right to participate in good faith negotiation and consultation over working conditions. By limiting any increase in compensation to no more than 1% per year, it significantly restricts issues which can be negotiated during collective bargaining. The Court also noted that public sector collective agreements to which the Act does not apply generally provide for higher wage increases than 1%. Accordingly, the Act was found to be unconstitutional in its application to unionized employees.

However, Justice Favreau found that the Superior Court erred in declaring the entire Act unconstitutional, as it also applies to non-unionized employees to whom the freedom of association provision of the Charter does not apply. Without the protection of section 2(d) of the Charter, the Act can still be applied to non-unionized employees.

In dissent, Justice Hourigan disagreed with the majority, who he said had overstepped their roles, “wading into matters that have always been within the exclusive remit of the legislative branch”. In his view, “when judges second guess a government’s policy decisions in the course of their Charter of Rights and Freedoms analysis, they are touching the third rail of judicial reasoning. Such conduct imperils the legitimacy of constitutional judicial review.”3 

Act to be repealed following ruling

The Ontario government has announced that it will take steps to repeal the Act to address the inequality created by the decision between unionized and non-unionized workers. In the interim, the government will introduce regulations to exempt non-unionized and non-associated workers from the Act until it is repealed.

If you have questions about what this means for your workplace, or any other employment or labour law matter, please reach out to any member of Siskinds’ Labour and Employment Group

1 Ontario English Catholic Teachers Association v Ontario (Attorney General), 2024 ONCA 101 [OECTA v Ontario (AG)].

2 Health Services and Support – Facilities Subsector Bargaining Assn v British Columbia, 2007 SCC 27, [2007] 2 SCR 391, at para 92, as cited in OECTA v Ontario (AG), supra note 1 at para 55.

3 OECTA v Ontario (AG), supra note 1 at para 232.

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