What does Bill 124 mean for employers?

The Ontario Government is currently on its summer recess

What does Bill 124 mean for employers?

The Ontario Government is currently on its summer recess, but just before taking the summer break Bill 124 was introduced on June 5, 2019. If Bill 124 is ultimately passed in its current form it will impact public sector employers and their compensation decisions going forward.

Bill 124 or the Protecting a Sustainable Public Sector for Future Generations Act, 2019 has currently only passed first reading. In order to become law it will need to go through committee stages and pass second and third reading, before ultimately receiving royal assent and becoming law. However, as currently drafted, Bill 124 can impact public sector employers as of June 6, 2019.

The legislation will impose a one percent cap on pay raises across many public sector employers in Ontario including, provincial government, provincial agencies, universities, colleges, hospitals and long term not-for-profit care homes. Notably municipalities are not covered by this proposed legislation. The one percent cap will apply for a three year moderation period and both unionized and non-unionized workers will be impacted.

The timeline for the moderation period depends on a few factors. For non-unionized employees the employer can select a three year moderation beginning any date between June 6, 2019 and January 1, 2022. This means that public sector employers can proceed with planned economic adjustments for their non-unionized workforce provided a later moderation period is selected. If no date is selected the default is presumed to be January 1, 2022 and running for three years.

For unionized employees the timing of the moderation period depends on the status of the collective agreement. If a previous collective agreement has expired as of June 5, 2019 the moderation period runs from the day after the previous collective agreement expired. If the parties are negotiating a first collective agreement or are engaged in interest arbitration the moderation period runs from the date the collective agreement is concluded by the parties or awarded by the arbitrator. Finally, if there is an active collective agreement in force as of June 5, 2019 the moderation periods begins the day after its expiry.

Overview for Employers

If you are a public sector employer you should assess when the moderation period will apply to your workforce, and if applicable, determining a time for its application. Employers may also wish to consider how they will approach annual economic adjustments while Bill 124 proceeds through the legislature and how Bill 124 will impact collective bargaining.

Although on its surface Bill 124 appears to limit compensation increases, employers should consider how this limitation may affect bargaining or compensation discussions more broadly such as requests for increased benefits or enhanced scheduling restrictions.

It is expected that the Ontario Government may allow for consultation on Bill 124 prior to proceeding with royal assent. Employers who have concerns about how Bill 124 will affect their operation should consider participating in these consultations, if announced.

If you have questions or concerns about Bill 124 and what it could mean for your organization you may want to seek legal advice. The lawyers at CCPartners can assist you in responding to the legislative changes.

Click here to access CCPartners’ “Lawyers for Employers” podcasts on important workplace issues and developments in labour and employment law.

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