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Ontario’s Budget: Would a Legislated Wage Freeze Violate the Charter?

This isn’t a political blog, but obviously politics influence the law of work.  We see an example of this every time a government introduces a budget, but some budgets have more direct impacts on workplace law than do others.  Yesterday’s Ontario budget provides a case in point.  It injects an electronic charge into the Ontario industrial relations system that will no doubt produce any number of outcomes.  In this quick note, I want to explore two points:  (1)  Whether wage restraint legislation of the sort threatened by the Liberals would violate the Charter; and (2) Why people earning over $200 grand a year are not making any new sacrifice at all to austerity under this budget.

Here is a nice overview of the budget highlights from the National Post.

Here is the Government description of the budget.

 

The Wage Freeze Threat

The main cost-cutting measure in the budget is a threat to freeze public sector employee compensation for 2 years.  The government is saying it will “ask” public sector workers to bargain 0 percent wage increases for the next two years, failing which they will legislate a wage freeze.  One of the big questions that arises from the Supreme Court of Canada’s decision in B.C. Health Services was whether wage freeze legislation violates Section 2(d) [freedom of association] of the Charter. There are different views on that question within the labour law bar.

Is A Legislated Wage Freeze a Charter Violation?

One view is that legislated wage freezes are a precise example of  what the Court said was unlawful.  The Court ruled that legislation that “substantially interferes” with the right of workers to bargain about important conditions of work violates Section 2(d).  It explaind “substantial interference” thus:

B.C. Health Services: Generally speaking, determining whether a government measure affecting the protected process of collective bargaining amounts to substantial interference involves two inquiries.  The first inquiry is into the importance of the matter affected to the process of collective bargaining, and more specifically, to the capacity of the union members to come together and pursue collective goals in concert.  The second inquiry is into the manner in which the measure impacts on the collective right to good faith negotiation and consultation.

The Court then gave some direction on what sorts of laws would ‘substantially interfere” with freedom of association:

B.C. Health Services: Laws or state actions that prevent or deny meaningful discussion and consultation about working conditions between employees and their employer may substantially interfere with the activity of collective bargaining, as may laws that unilaterally nullify significant negotiated terms in existing collective agreements.

Wage-fixing legislation would “substantially interfere” with the right of employees to bargain about their wages, and wages are probably the most important thing that workers bargain about.   The B.C. legislation that fixed working conditions and thereby removed any meaningful right of unions and workers to bargain over those conditions were found to be unconstitutional in B.C. Health.  Isn’t that precisely what a legislated wage freeze does?  It says to workers and unions that no matter what arguments they try to make, the issue of wages is not up for discussion, since the government has fixed it by law.   Even though the government in B.C. argued the legislation was needed to urgently fix problems in the medical services model in B.C., the Court found that the infringement on collective bargaining rights was not saved by section 1 of the Charter.

The other view is that a legislated wage freeze is not a violation of Section 2(d) provided that the government engages in negotiations and consultations with workers and unions before introducing the legislation.  On this view, what the Court really said in B.C. Health Services is that governments have a duty to consult about  laws that will seriously impact collective bargaining rights.  That is why the Liberals are talking a lot about “talking to the unions” and “consulting with the unions” before passing wage-restraint legislation, in the hopes of avoiding a Charter challenge.

Alternatively, the argument could be made that, even if legislated wage freezes violate Section 2(d), the law would be ‘saved by section 1′ of the Charter in the case of an economic crisis.  In B.C. Health, the Court said this in explaining why the Section 1 argument failed:

B.C. Health Services: This was an important and significant piece of labour legislation.  It had the potential to affect the rights of employees dramatically and unusually.  Yet it was adopted with full knowledge that the unions were strongly opposed to many of the provisions, and without consideration of alternative ways to achieve the government objective, and without explanation of the government’s choices.

Does this open the door to the argument that, as long as the government engages in a discussion with workers and their unions about alternatives, that wage restraint laws can be justified?

“Freedom $200 Grand”:  How Exactly are High Income Earners Sharing the Pain of Austerity in this Budget?

The media is predicting that this will provoke a big battle with public sector workers and their unions. Already, union leaders are talking about Days of Protest.  The Tories are saying they will not support the Budget, and the NDP will likely want some changes.  The result could be the downfall of the Liberal minority government.

I’m no labour strategist, but it seems to me that an argument that the budget is unfair to public sector employees, while true, won’t get a lot of sympathy from the majority of Ontarians.  On the other hand, there is a point about the budget that could have much wider appeal.  While the government talks a lot about how “all Ontarians must share the pain” of  austerity measures, in fact, it is a very narrow group of people who are taking almost all of the pain in this budget–public sector workers and low-income people.

If I were orchestrating a protest movement, I’d focus on the fact that people earning over, say, $200 thousand per year are entirely untouched by this budget. They are not contributing to the “pain” in any way that I can see in the budget. How is that “sharing the pain”, exactly?  I’m a professor, so the wage freeze would impact me personally.  I’m fortunate that this would not have much impact on my quality of life, and I don’t mind doing my share to protect public services.  Lots of other public sector workers are not as fortunate as me.  But what’s most odd to me is that if I was still a practicing lawyer, earning hundreds of thousands of dollars, this budget wouldn’t impact me whatsoever.  No new taxes would be imposed on me, none of the services I use would be lost.  Nothing.  For the wealthy, this budget is a non event.  Austerity is something for other, less fortunate people to worry about.  Very odd.

What possible justification could there be for an austerity budget that does not ask wealthy people to contribute or sacrifice anything new at all?  It’s very peculiar to me that people tolerate that.  I wonder if a “Freedom $200 Grand Movement” will be born from this budget.

What do you think?  Is a wage freeze a violation of the Charter?

Do you think that people earning over $200K per year should be asked to contribute more to the austerity measures?

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