Wage Suppression Legislation for Ontario Nurses: An Initial Look at the Constitutionality of Bill 124

Katy Beeson, 2L, Volume 80 Articles Editor

I’m tired, done, finished, mentally checked out. I am 100 per cent burnt out.[1]

Background

Ontario nurses are struggling. Faced with staffing shortages, dangerous work conditions, and surging COVID-19 rates, many nurses are leaving the profession altogether. While nurse shortages in Ontario predate the pandemic – in March 2020, Ontario was 22,000 registered nurses short compared to the rest of Canada on a per capita basis – matters have only gotten worse [2]. During the first half of 2021, there was a 56% increase in nursing vacancies [3]. In addition to pandemic stressors, nurses must face the reality that their wage increases are not keeping pace with inflation, which reached a 30-year high in early 2022 [4].

One limitation on wage increases is Bill 124, titled the Protecting a Sustainable Public Sector for Future Generations Act, which was passed by the Ontario government in November 2019 to work towards balancing the provincial budget. The stated purpose of the Act is “to ensure that increases in public sector compensation reflect the fiscal situation of the province, are consistent with the principles of responsible fiscal management and protect the sustainability of public services.” The legislation caps compensation increases at one percent a year for certain public sector employees. In addition to employees, Bill 124 also applies to the bargaining organizations that represent them. The wage increases are restricted for a three-year “moderation period”; yet the impact may last longer, given that the moderation period extends to three years following the day an existing collective agreement expires. 

There are, however, exceptions to the wage limitations. Employee salary increases are not prohibited for increases relating to their length of time in employment, an assessment of performance, or the successful completion of a program. In addition, the Minister has the authority to make regulations exempting collective agreements from the application of the Act. 

This wage suppression legislation may have a unique impact on Ontario nurses given the labour relations scheme under which nurses work. Unionized employees in Ontario generally have the right to strike under the Labour Relations Act, 1995; however, the Hospital Labour Disputes Arbitration Act, 1990 (“HLDAA”) removes the right to strike from hospital and long-term care nurses. Instead, parties must have recourse to interest arbitration. Among the statutorily mandated considerations for interest arbitrators are the economic situation in Ontario and an analysis of comparable employees in the public and private sector.

In December 2019, the Ontario Nurses’ Association (ONA) announced its intention to file a Charter challenge.

Analysis: The Charter Challenge

The constitutionality of Bill 124 is not just relevant to the ONA. In response to Bill 124, a coalition of over 40 Ontario unions have filed a Charter challenge [5]. Parallel Charter challenges are also taking place in other provinces for similar legislation. In Manitoba, wage suppression legislation was struck down as unconstitutional in Manitoba Federation of Labour et al v The Government of Manitoba2020 MBQB 92 (CanLII). This decision has since been reversed on appeal (see 2021 MBCA 85 (CanLII)), though notice of appeal to the Supreme Court of Canada was filed on December 21, 2021. The interaction between wage-suppression legislation and Charter rights is clearly a significant issue.

In its Notice of Application filed with the Ontario Superior Court of Justice, the ONA sought a declaration that Bill 124 violates freedom of expression under s. 2(b) of the Charter, the right to substantive equality for women under s. 15(1), and freedom of association under s. 2(d). A brief overview of the grounds for challenge follows [6].  For the purposes of this post, which provides an initial look at the strength of the Charter challenge, a s. 1 analysis is not considered. Given the existing case law and factual background, it is likely that the strongest basis on which to challenge Bill 124 is s. 2(d), freedom of association. 

Freedom of Expression

The ONA argues that Bill 124 is interfering with the right to bargain and strike over fair compensation and that this violates the s. 2(b) protection for freedom of expression. The ONA may run into several issues with this argument. 

First, Bill 124 does not expressly limit the ability to strike. In fact, section 4 states that “[n]othing in this Act affects the right to engage in a lawful strike or lockout.” There may still be a case to be made, however, within the labour relations scheme as a whole, considering that the HLDAA removes the right to strike from hospital and long-term care nurses.

Second, case law suggests that it may be more appropriate to analyze these issues through the s. 2(d) – freedom of association. In Saskatchewan Federation of Labour v Saskatchewan, 2015 SCC 4 (CanLII), the Saskatchewan government prohibited essential service employees from participating in any strike action against their employer and provided no meaningful mechanism for resolving bargaining impasses. The Supreme Court found that the legislation violated s. 2(d) of the Charter and, as a result, found it unnecessary to consider the arguments under s. 2(b).

These issues suggest that s. 2(b) may not be the strongest vehicle through which to bring the Charter challenge. 

Equality Rights

Women’s work has been historically undervalued. Occupations with higher concentrations of women have a lower earnings distribution as compared to male-dominated professions [7]. The Supreme Court has recognized the “deep and persistent gap between women’s pay and men’s pay” in the context of a s. 15(1) Charter claim: Centrale des syndicats du Québec v Quebec (Attorney General), 2018 SCC 18 (CanLII) at para 2. “Caring” occupations, such as nursing, have traditionally been associated with women’s work. The ONA argues that Bill 124 violates s. 15(1) equality rights because it perpetuates inferior compensation for female-dominated sectors of employment, while expressly excluding male-dominated health care professions and male-dominated sectors of employment, such as municipal firefighters and police.

There are two stages to the s. 15(1) analysis, as most recently outlined in Fraser v Canada (Attorney General)2020 SCC 28 (CanLII) (Fraser). First, whether the impugned law, either on its face or in impact, creates a distinction based on enumerated or analogous grounds. Second, whether the law “imposes burdens or denies a benefit in a manner that has the effect of reinforcing, perpetuating or exacerbating disadvantage” (Fraser at para 27). 

The ONA is unlikely to have trouble at the second stage of the analysis. In Quebec (Attorney General) v Alliance du personnel professionnel et technique de la santé et des services sociaux2018 SCC 17 (CanLII), the Supreme Court found that legislation which results in unfair pay to women condones the power imbalance between employers and female workers, which further perpetuates disadvantage. 

The ONA may, however, have difficulty at the first stage of the analysis: establishing a distinction based on an enumerated or analogous ground. Bill 124 applies to many public sector employees, evidenced by the coalition of over 40 Ontario unions who filed a Charter challenge, including United Steelworkers (USW) and the International Brotherhood of Electrical Workers (IBEW) [8]. When one considers the broad application of Bill 124 in the public sector, a distinction on the basis of sex for application of wage suppression legislation becomes less obvious. There is still a case to be made, however, as Symes v Canada, [1993] 4 SCR 695, 1993 CanLII 55 (SCC) recognizes that legislation which does not facially create a distinction may still have an effect which draws a distinction on the basis of sex. More detailed analysis of the effects of Bill 124 may be required to satisfy the first stage of a s. 15(1) analysis.

Freedom of Association

The ONA argues that Bill 124 substantially interferes with its ability to collectively engage in bargaining on workplace related goals. In Mounted Police Association of Ontario v Canada (Attorney General), 2015 SCC 1 (CanLII) (MPAO), the Supreme Court of Canada noted that s. 2(d) jurisprudence has evolved from “an initial period of reluctance to embrace the full import of the freedom of association guarantee in the field of labour relations” to “a generous approach to that guarantee.” MPAO affirmed the more generous approach by stating that “s. 2(d) guarantees the right of employees to meaningfully associate in the pursuit of collective workplace goals.” In Ontario (Attorney General) v Fraser, 2011 SCC 20 (CanLII), the Court noted that one way to interfere with free association in pursuit of workplace goals “is to set up a system that makes it impossible to have meaningful negotiations on workplace matters” (para 42). Section 2(d), however, does not guarantee a particular model of labour relations: MPAO

While prominent case law offers protection for meaningful collective negotiation, courts have also recognized the ability of governments to enact broad policies of fiscal restraint. In Meredith v Canada (Attorney General), 2015 SCC 2 (CanLII) (Meredith), members of the RCMP brought a constitutional challenge that the Expenditure Restraint Act, 2009 (“ERA”), which imposed a limit of 1.5% on wage increases in the public sector during the 2008 to 2010 fiscal years, violated s. 2(d) of the Charter. The Supreme Court found that the ERA did not substantially impair the collective pursuit of the workplace goals of RCMP members and thus did not violate the Charter

There are, however, notable differences from Meredith and the ONA challenge. The limits imposed by the ERAwere shared by all public servants, were consistent with the rates reached in agreements elsewhere in the core public administration, did not preclude consultation on other compensation-related issues, and were enacted in the midst of the 2008 global financial crisis. In contrast, the limitations imposed by Bill 124 selectively apply to public servants, do not keep pace with the common wage increase metric of inflation, and were imposed in the context of record-high markets [9]. In addition, section 2 of Bill 124 defines compensation broadly, 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.” This broad definition increases the degree of interference in the collective bargaining process. 

A significant difference between Meredith and the present context is the degree of inconsistency with agreements reached elsewhere in the core public administration. For example, while management for public broadcasters have received wage increases in some cases reaching over 10%, most employees of the provincially funded television networks have been held to the maximum increase of 1% under Bill 124 [10]. For a specific healthcare comparator, Ontario doctors reached an arbitrated settlement which guaranteed annual wage increases of 3.5% for four years in February 2019 [11]. This suggests that the reasoning used to support the constitutionality of the fiscal restraint legislation in Meredith may not apply to protect Bill 124. 

It is also important to note that Meredith was released as a companion case to MPAO. While Meredith dealt only with the impact of the ERA on the ability to collectively bargain within the existing scheme, MPAO considered the entire labour relations scheme as a whole for the RCMP and found it unconstitutional. This suggests that an important perspective to consider in the ONA challenge is how Bill 124 interacts with the labour relations scheme as a whole for Ontario nurses. Given that the HLDAA limits the ability of nurses to strike, the ability to meaningfully bargain on compensation is arguably of particular importance to protect the interests of nurses. 

While there are important distinctions to be made from cases where the Court shows deference to fiscal policy goals, it appears the ONA has a strong Charter challenge on the basis of freedom of association. 

Analysis: Appropriate Remedy

In its Notice of Application, the ONA requests a declaration that the provisions of Bill 124 are unconstitutional and of no force and effect to the extent of their inconsistency with the Charter. A declaration may not be meaningful to those affected by Bill 124, however, given that the moderation period may expire this year for some employees. The ONA has also requested an order for recovery of monies for any ONA member who has lost compensation as a result of the Act under s. 24(1). This raises an interesting question on the appropriateness of damages as a remedy under s. 24(1) of the Charter.

Damages emerged as an established Charter remedy fairly recently in Vancouver (City) v Ward, 2010 SCC 27(CanLII) (Ward). For damages to be awarded under s. 24(1) of the Charter, they must serve the functions of compensation, vindication, or deterrence. The state may, however, raise countervailing considerations which render s. 24(1) damages inappropriate, including the existence of alternative remedies and concerns for good governance. 

Given rising inflation levels, Ontario nurses have experienced a wage cut in real terms since the enactment of Bill 124. Notably, this has occurred during a time period where they were on the “front lines” of the COVID-19 pandemic. Awarding damages for lost wages would serve to compensate these pecuniary losses. In her dissent in McKinney v University of Guelph, [1990] 3 SCR 229, 1990 CanLII 60 (SCC), Wilson J recognized that compensatory damages should be awarded for a loss of income and benefits resulting from the breach of a Charterright and should not be limited by the “impecuniosity” or “good faith” of the state. Given the increasing readiness to award Charter damages, it is more likely that courts will be receptive to this approach in the context of the ONA claim.

The functional considerations of vindication and deterrence shift focus away from the impact on the individual to the impact on society. Vindication focuses on the impact of the Charter breach on public confidence in constitutional protection. It is clear that the public has taken notice of the governmental action in Bill 124, evidenced by the multiple Charter challenges and extensive media coverage of the issue. Another element of vindication is “the harm the infringement causes society” (Ward at para 28). If a Charter challenge can be successfully argued, there is an argument to be made that the exacerbation of the nursing shortage, especially during a global pandemic, is a harm to society flowing from the Charter infringement. 

Deterrence has a similar societal purpose: to influence "government behaviour in order to secure state compliance with the Charter in the future” (Ward at para 29). Damages may be a necessary additional tool for deterrence when one considers that concerns regarding constitutionality of Bill 124 were brought to the Legislature’s attention during legislative debates. In both the second and third readings of Bill 124, Members of Provincial Parliament argued against the legislation, going so far as to state that Bill 124 is “a guaranteed violation of the people’s Charter of Rights and Freedoms” [12]. To the extent that this shows a disregard of Charter protected rights, the goals of vindication and deterrence may be appropriately applied. 

The fit with the functions of compensation, vindication, and deterrence in this case seem to suggest that, in addition to a declaration of unconstitutionality, Charter damages under s. 24(1) may be appropriately awarded in this case.

Conclusion

The situation around Bill 124 continues to evolve. As recently as February 3, 2022, the ONA met with the Ontario government to discuss Bill 124, but no commitments were made. On March 7, 2022, the Ontario government committed to give eligible nurses a $5,000 retention bonus. While the outcome of the Charter challenge is uncertain, the case raises interesting questions about the extent of protection afforded to freedom of association and the applicability of Charter damages, should the claim be successful. 


[1] See Ashleigh Stewart, “Canada headed for nursing shortage ‘beyond anything we’ve ever experienced’: experts.”

[2] See Phil Tsekouras, “Ontario's nursing shortage has been an issue for years. Why weren't we prepared for the COVID-19 pandemic?

[3] See Nick Westoll,  “What is Bill 124 and how is it affecting Ontario's nurses, public-sector workers?

[4] See Pete Evans, “Canada's inflation rate rises to new 30-year high of 4.8%.”

[5] See Aidan Macnab, “Public-sector unions file evidence in Charter challenge of law capping compensation increases.”

[6] For more information on how to access Ontario Superior Court of Justice filings, see heading “Access to Court Filings and Exhibits” on the Ontario Court of Justice website

[7] See Claire Cain Miller, “As Women Take Over a Male-Dominated Field, the Pay Drops.”

[8] See CUPE press release, “Coalition of Ontario unions to launch Charter challenge.”

[9] See Fred Imbert’s 2019 article about all-time high markets from strong earnings and international economic developments: “S&P 500 hits fresh all-time high, boosted by strong earnings and US-China trade progress.”

[10] See the Canadian Media Guild press release, “Ontario Sunshine List exposes unfair company practices.”

[11] See Kelly Grant, “Ontario government reaches an arbitrated agreement with OMA.”

[12] See the second reading and third reading of Bill 124 in the Legislative Assembly of Ontario.