Bill 124, Doug Ford’s caps on wage increases, ruled unconstitutional by Ontario Court of Appeal

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Ontario says it will not fight a new ruling from the Ontario Court of Appeal that confirmed the government’s public-sector wage-hike cap legislation, known as Bill 124, was unconstitutional, ending a years-long battle with the province’s unions.

In a 2-1 appeal ruling released on Monday, the appeal court upheld a lower-court decision that quashed the law, which limited annual compensation increases to 1 per cent for three years, for violating the collective bargaining rights included in the guarantee for free association in the Charter of Rights and Freedoms.

In a brief statement issued Monday evening, the office of Ontario Attorney-General Doug Downey said the government would not seek leave to appeal the ruling to the Supreme Court of Canada and would instead “take steps to repeal Bill 124 in its entirety in the coming weeks.”

The court ruling was hailed by unions and opposition leaders as a victory for hundreds of thousands of workers against Premier Doug Ford and his Progressive Conservative government, which had imposed the temporary compensation increases across the province’s public sector in 2019.

Health care unions and political critics have long blamed Bill 124 for the shortage of nurses that has shaken the province’s health care system. Although the government declined to lift the wage-hike limits even at the height of the pandemic, it did offer extra pay for personal support workers in long-term care and retention bonuses for nurses.

Speaking to reporters at Queen’s Park just a few hours earlier on Monday afternoon, Ontario Finance Minister Peter Bethlenfalvy said he had not read the appeal court ruling or been briefed on it, and that he was still reviewing the decision and weighing whether to seek leave to appeal to the Supreme Court of Canada.

“We’ll take the time to take a look at it thoughtfully and deliberately,” said Mr. Bethlenfalvy, who initiated the wage-hike limit law when he was president of Ontario’s Treasury Board.

Since the legislation was first struck down in 2022, various reopened collective agreements and arbitration awards have handed raises and back pay to affected unionized workers in Ontario, including one last week that awarded Ontario’s English public-school teachers and education workers a roughly 4-per-cent increase in retroactive pay.

Mr. Bethlenfalvy would not provide an estimate on how much money the back payments would cost or even how much the government has spent in legal fees fighting to restore its wage-cap legislation. In September, 2022, Ontario’s independent financial accountability officer estimated the province would owe workers $8.4-billion through 2026-27 to make up for the lost wage increases.

A long list of unions took Bill 124 to court, and in November, 2022, Ontario Superior Court Justice Markus Koehnen struck it down. The government then took that ruling to the Ontario Court of Appeal.

In its ruling released on Monday, the three-judge appeal court upheld most of the lower court’s findings but said the bill was only unconstitutional in its treatment of unionized workers, potentially leaving the wage caps in place for non-union employees. The government said on Monday that it would “urgently introduce” regulations to exempt non-unionized workers, and those who do not belong to union-like associations, from Bill 124 until it is repealed.

In the appeal ruling, Justice Lise Favreau writes that Bill 124 “substantially interferes with the respondents’ right to participate in good faith negotiation and consultation over their working conditions,” in a decision also endorsed by Justice David Doherty.

The government had argued its objective was to keep costs down to avert a financial crisis. Unions pointed to the government also making large tax cuts at the same time, so it couldn’t be too concerned about its books. In its ruling on Monday, the appeal court agreed with the lower-court ruling that the wage-cap legislation was a disproportionate response and could not be justified under the Charter.

Monday’s ruling distinguishes between Bill 124 and previous wage-restraint legislation enacted by the federal government during the global financial crisis of 2008, where wage-hike limits were upheld by Supreme Court of Canada rulings. In those cases, the limits were imposed after a collective bargaining process and “for the most part were equivalent or higher than negotiated wage increases,” the appeal court said.

In a dissent, Justice William Hourigan accuses the appeal court of trying to “second-guess a government’s policy decisions,” arguing that Bill 124 does not violate any Charter rights and that interfering with it would “undermine our democratic form of government.” He noted that the government had campaigned on fiscal restraint.

Speaking before the government announced it was dropping its fight, Ontario NDP Leader Marit Stiles, flanked by several union leaders, said Bill 124 was an attack on workers as their costs were rising and urged the government to abandon any thought of another appeal.

“Respect the court’s decision,” she told reporters at Queen’s Park. “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.”