Manitoba Court of Appeal finds that legislation temporarily preventing collective bargaining on wages is constitutional

November 22, 2021

In Manitoba Federation of Labour et al v. The Government of Manitoba, the Manitoba Court of Appeal held that the province’s public sector wage restraint legislation did not violate the Charter of Rights and Freedoms (the “Charter”). In deciding as such, the Court of Appeal overturned a ruling by the Court of Queen’s Bench.

Under the leadership of Brian Pallister, the Progressive Conservative Government of Manitoba passed the Public Services Sustainability Act (“PSSA“) in 2017. While the bill received Royal Assent in that same year, it has not yet been proclaimed into force. Upon proclamation, the legislation would freeze the wages of 120,000 public-sector workers for two years and then cap any pay increases in years three and four to 0.75% and 1%, respectively. The government’s objective in passing this law was to provide a “sustainability period” to ostensibly address a fiscal crisis. This wage restraint legislation applies broadly across the public service to both unionized and non-unionized employees, covering almost 20% of Manitoba’s workforce.

In 2020, a host of public sector unions in Manitoba, collectively referred to as the Partnership to Defend Public Services (“PDPS”), sought a declaration that the PSSA was unconstitutional for breaching section 2(d) (freedom of association) of the Charter as it effectively hindered free collective bargaining on wages. In advance of the full trial on constitutionality, in 2018, the PDPS had unsuccessfully sought an interlocutory injunction restraining the Manitoba Government from proclaiming the PSSA into force.[1]

Decision of the Manitoba Court of Queen’s Bench

In June 2020, Justice McKelvey of the Court of Queen’s Bench of Manitoba held that the PSSA substantially interfered with the rights of employees to engage in a meaningful process of collective bargaining and was thus unconstitutional for violating section 2(d) of the Charter. She wrote:

The PSSA is a draconian measure which limits and reduces a union’s bargaining power. The legislation circumvents and compresses the leverage or bargaining power available and inhibits the unions’ ability to trade off monetary benefits for non-monetary enhancements, such as protection from contracting out job security, and layoffs.[2]

Manitoba appealed the trial judge’s decision and argued that the trial judge erred on two grounds: in finding 1) that the manner in which wages are restrained by the PSSA infringes the freedom of association under section 2(d); and 2) that Manitoba’s conduct during the 2016 contract negotiations between the University of Manitoba and the University of Manitoba Faculty Association (“UMFA”) amounted to an infringement of the freedom of association.[3]

Decision at the Appellate Level

On October 13, 2021, the Manitoba Court of Appeal (the “Court of Appeal”) overturned the trial judge’s decision that the PSSA violates freedom of association under section 2(d) but upheld the ruling that Manitoba’s conduct during the 2016 contract negotiations between the University of Manitoba and UMFA infringed section 2(d).

Writing for the Court of Appeal, Chief Justice Chartier wrote that the PSSA does not violate section 2(d) associational rights because the legislation is broad-based, time-limited and does not preclude a meaningful collective bargaining process from occurring on other important workplace matters.[4] The Chief Justice relied on the Supreme Court of Canada’s decision in Meredith v. Canada (Attorney General) and three appellate court decisions which upheld comparable wage restraint legislation.

The Court of Appeal explained that “section 2(d) does not protect all aspects of the associational activity of collective bargaining. It protects only against ‘substantial interference.’”[5] As a result, a “substantial interference” with section 2(d) must be demonstrated to establish a Charter violation. The Court of Appeal articulated the following two-part test for determining whether there is “substantial interference”:

Determining whether a government measure affecting the protected process of collective bargaining amounts to substantial interference involves two inquiries: first, whether the measure substantially impacts the capacity of the union members to come together and pursue collective goals in concert; and second, whether the measure impacts on the collective right to good faith negotiation and consultation.[6]

Manitoba conceded that the first arm of the test was met as the PSSA took wages off the bargaining table. However, with respect to the second inquiry, the Chief Justice found that the PSSA does not preclude unions from collectively bargaining and consulting the province on non-wage workplace issues such as health and safety issues; seniority and bumping procedures; disciplinary procedures; grievance procedures; reclassification issues; performance appraisals; recruitment and retention; contracting out; and job security, including no-layoff clauses.[7] According to the Court of Appeal, “the PSSA preserves a wide scope of bargaining issues as well as a robust process.”[8] The Court of Appeal concluded that removing the issue of wages from the bargaining process for a limited period of time does not substantially interfere with a meaningful collective bargaining process and, thus, the PSSA complied with section 2(d) of the Charter.

Overall, the decision is clear that Manitoba can introduce wage restraint legislation as long as it does not preclude unions from negotiating on non-wage workplace matters and provides for consultation throughout the process.

The PDPS announced on November 3, 2021, that it will be seeking leave from the Supreme Court of Canada to appeal the Court of Appeal’s decision.

[1] Manitoba Federation of Labour et al. v. The Government of Manitoba, 2018 MBQB 125.

[2] Manitoba Federation of Labour et al v. The Government of Manitoba, 2020 MBQB 92, at para 342.

[3] Manitoba Federation of Labour et al v The Government of Manitoba, 2021 MBCA 85, at para 8. By way of context, during bargaining in 2016, the Government of Manitoba had pressured the University of Manitoba to revoke a previously agreed upon wage increase offer to UMFA. The University of Manitoba was subsequently found to have engaged in an unfair labour practice.

[4] Manitoba Federation of Labour et al v The Government of Manitoba, 2021 MBCA 85, at para 125.

[5] Manitoba Federation of Labour et al v The Government of Manitoba, 2021 MBCA 85, at para 127.

[6] Manitoba Federation of Labour et al v The Government of Manitoba, 2021 MBCA 85, at para 127.

[7] Manitoba Federation of Labour et al v The Government of Manitoba, 2021 MBCA 85, at para 119.

[8] Manitoba Federation of Labour et al v The Government of Manitoba, 2021 MBCA 85, at para 119.

Authored by  Harminder Mundi and Paniz Khosroshahy

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