Understanding Bill 124: The Government’s Control Mechanism for Public-Sector Salaries

January 29, 2020

On November 8, 2019, the Ontario legislature passed Bill 124. Bill 124 is aimed at the broader public sector, including: hospitals, crown agencies, school boards, universities, colleges, long term care homes, ornge, children’s aid societies, and other boards, corporations, offices or organizations that do not carry on activities for the purpose of gain or profit and in 2018 received at least $1,000,000 in funding from the Government of Ontario.

The legislation essentially imposes a series of 3 year “moderation periods”. These are salary and total compensation caps. During moderation periods increases to salaries and total compensation are capped at 1% per year subject to certain exceptions.

What is a moderation period?

The legislation uses the term “moderation period” as the time period where there is a wage restraint or cap. These moderation periods last for 3 years.

When does a Moderation Period Start?

The commencement of a moderation period depends on the effective dates of the collective agreement or arbitration awards.

• Collective agreement in operation on June 5, 2019: Moderation period begins on the day immediately following the day the collective agreement expires
• No collective agreement in operation on June 5, 2019 and previous agreement expired: Moderation period begins on the day immediately following the day that the previous collective agreement expired
• Parties bargaining a first collective agreement on June 5, 2019: Moderation period begins on the commencement date of the collective agreement
• Arbitration awards that came down before the Act came into force: these will not be re-opened, the moderation period begins on the day immediately following the day the agreement giving force to the award expires

What does this mean for compensation?

According to the legislation, no collective agreement or arbitration award can provide any incremental increases to compensation more than one per cent on all average for each 12 month of the moderation period. Therefore increases are limited to 1% each year for 3 years, this includes salary.

Are there any exceptions?

The following exceptions allow a salary rate to increase in recognition of the following matters if provided for in the CA:

• the employee’s length of time in employment (ex. seniority based increases)
• assessment of performance
• the employees successful completion of a program or course of professional or technical education

Workers can move up on pre-existing grids or receive merit increases, but the grids must not be altered beyond the annual 1% caps imposed during the moderation periods.

The Ministry may actually make an order declaring that a collective agreement is inconsistent with the Act. The government can also direct employer to provide information regarding collective bargaining or compensation.

The legislation prohibits employers from providing larger compensation increases before or after to make up for wage restraints.

Many unions have voiced intent to constitutionally challenge this legislation. For now this restrictive legislation remains in force while we anxiously await the result of any legal challenges.

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