COURT OF APPEAL FOR ONTARIO

CITATION: Ontario English Catholic Teachers Association v. Ontario (Attorney General), 2024 ONCA 101

DATE: 20240212

DOCKET: COA-23-CV-0010

Doherty, Hourigan and Favreau JJ.A.

BETWEEN

Ontario English Catholic Teachers Association, Karen Ebanks and Alexandra Busch

Applicants (Respondents)

and

His Majesty the King in Right of Ontario, as represented by the Attorney General of Ontario, the President of the Treasury Board, and the Minister of Education

Respondents (Appellants)

AND BETWEEN

Ontario Secondary School Teachers’ Federation, Paul Wayling and Melodie Gondek

Applicants (Respondents)

and

His Majesty the King in Right of Ontario, as represented by the President of the Treasury Board, the Minister of Education, and the Attorney General

Respondents (Appellants)

AND BETWEEN

The Elementary Teachers’ Federation of Ontario, Association des enseignantes et des enseignants franco-ontariens, Jade Alexis Clarke, Christine Galvin, and Yves Durocher

Applicants (Respondents)

and

His Majesty the King in Right of Ontario, as represented by the Attorney General of Ontario, the President of the Treasury Board, and the Minister of Education

Respondents (Appellants)

AND BETWEEN

Ontario Nurses’ Association, Vicki McKenna and Beverly Mathers

Applicants (Respondents)

and

His Majesty the King in Right of Ontario, as represented by the Attorney General of Ontario, the President of the Treasury Board, Minister of Health and Minister of Long-Term Care

Respondents (Appellants)

AND BETWEEN

Ontario Public Service Employees Union and Warren (“Smokey”) Thomas, Eduardo Almeida, Sandra Cadeau, Donna Mosier, Erin Cate Smith Rice, and Heidi Steffen-Petrie

Applicants (Respondents)

and

The Crown in Right of Ontario, as Represented by the Attorney General of Ontario and the President of the Treasury Board

Respondents (Appellants)

AND BETWEEN

Ontario Federation of Labour, Canadian Union of Public Employees, Service Employees International Union Local 1 Canada, Ontario Confederation of University Faculty Associations, Association of Professors of the University of Ottawa, Brescia University Faculty Association, Brock University Faculty Association, Faculty Association of the University of Waterloo, Huron University College Faculty Association, King’s University College Faculty Association, Lakehead University, Laurentian University Faculty Association, McMaster University Academic Librarians’ Association, McMaster University Faculty Association, Nipissing University Faculty Association, Ontario College of Art and Design Faculty Association, Queen’s University Faculty Association, Renison Association of Academic Staff, Ryerson Faculty Association, St. Jerome’s University Academic Staff Association, Trent University Faculty Association, University of Ontario Institute of Technology Faculty Association, University of Toronto Faculty Association, University of Western Ontario Faculty Association, Wilfrid Laurier University Faculty Association, Windsor University Faculty Association, York University Faculty Association, Association of Management, Administrative and Professional Crown Employees of Ontario, United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Public Service Alliance of Canada, Society of United Professionals Local 160, Amalgamated Transit Union Local 1587, Canadian Office and Professional Employees Union, International Brotherhood of Electrical Workers Local 636, Workers United Canada Council, Professional Institute of the Public Service of Canada, United Food and Commercial Workers Local 175, Association des enseignantes et des enseignants franco-ontariens unité 203, Aefo unité 103, Educational Assistants Association, Halton District Education Assistants Association, Dufferin-Peel Education Resource Workers’ Association, Association of Professional Student Services Personnel, Unite Here Local 272, Seiu Local 2, Canadian Media Guild, Local 30213 of the Newspaper Guild/Communications Workers of America, Ron Babin, Stephanie Bangarth, Carmen Barnwell, Rocklyn Best-Pierce, Pamela Boniferro, Andrew Brake, Neil Brooks, Natasha Brouillette, Daniel G. Brown, Colleen Burke, Mitchell Champagne, John Ciriello, Fabrice Colin, Claire Copp, William Cornet, Allyson Cullen, Gautam Das, Ryan Devitt, Timothy Edney, Melissa Ellis, Kimberly Ellis-Hale, Pedram Karimipour Fard, Carrie Gerdes, Alison Griggs, Myron Groover, Elkafi Hassini, Elizabeth Hanson, Jean-Daniel Jacob, Melissa Jean, Betty Jones, Nadia Kerr, Nathan Kozuskanich, Sahver Kuzucuoglu, Min Sook Lee, Richard Lehman, David Lengyel, Kristina Llewellyn, Susan Lucek, Elizabeth Macdougall- Shackleton, Terry Maley, Meredith Martin, Brandi Matthias, Stephanie Mcknight, Lucie Ménard, David Monod, David R. Newhouse, Kimberly Nugent, Lisa Pattison, Louis Pelletier, Tom Pocrnick, Kevin Porter, Wanda Reid, Pauline Rickard, Lois Ross, Lorna Rourke, Allan Rowe, Ellen Simmons, Colleen Dietrich Sisson, Ryan Studinski, Alberto Tonero, Ari Johan Vangeest, Joy Wakefield, Judy Watson, Michelle Webber, Don Wilson, Peter Zimmerman, and Terezia Zoric, on their own behalf and on behalf of all other employees in bargaining units affected by this Application

Applicants (Respondents)

and

His Majesty the King in Right of Ontario, as represented by the Attorney General of Ontario and the President of the Treasury Board

Respondents (Appellants)

AND BETWEEN

Unifor, Kelly Godick, Sarah Braganza, and Kathleen Atkins

Applicants (Respondents)

and

His Majesty the King in Right of Ontario, as represented by the Attorney General of Ontario and the President of the Treasury Board

Respondents (Appellants)

AND BETWEEN

Carleton University Academic Staff Association, Angelo Mingarelli, Root Gorelick, and R. Gregory Franks, on their own behalf, and on behalf of all the members of the Carleton University Academic Staff Association

Applicants (Respondents)

and

The Crown in Right of Ontario, as represented by the President of the Treasury Board

Respondents (Appellants)

AND BETWEEN

Society of United Professionals, Local 160 of the International Federation of Professional and Technical Engineers, Jo-Ann Kinnear, Cindy Roks, and Janet Sakauye

Applicants (Respondents)

and

His Majesty the King in Right of Ontario, as represented by the Attorney General of Ontario and the President of the Treasury Board

Respondents (Appellants)

AND BETWEEN

Power Workers’ Union (Canadian Union of Public Employees, Local 1000), Andrew Clunis and Robert Busch

Applicants (Respondents)

and

The Crown in Right of Ontario, as represented by the President of the Treasury Board, and the Attorney General of Ontario

Respondents (Appellants)

Peter Griffin, Nina Bombier and Samantha Hale, for the appellants His Majesty the King in Right of Ontario et al.

Paul Cavalluzzo and Balraj Dosanjh, for the respondents Ontario English Catholic Teachers Association et al.

Susan Ursel, Karen Ensslen and Emily Home, for the respondents Ontario Secondary School Teachers’ Federation et al.

Howard Goldblatt and Benjamin Piper, for the respondents Elementary Teachers’ Federation of Ontario et al.

Janet Borowy and Danielle Bisnar, for the respondents Ontario Nurses’ Association et al.

David R. Wright, Mae Jane Nam and Rebecca Jones, for the respondents Ontario Public Service Employees Union et al.

Steven Barrett and Melanie Anderson, for the respondents Ontario Federation of Labour et al.

Anthony Dale, Dijana Simonovic and Jenna Meguid, for the respondents Unifor et al.

Colleen Bauman, for the respondents Carleton University Academic Staff Association et al.

Michael Wright, Alex St. John and Nora Parker, for the respondents Society of United Professionals et al.

Andrew Lokan and Shyama Talukdar, for the respondents Power Workers’ Union et al.

George Avraam and Ajanthana Anandarajah, for the intervener Canadian Association of Counsel to Employers

Tim Gleason and Adrienne Lei, for the intervener Canadian Civil Liberties Association

Christine Davies, Danielle Sandhu and Kat Owens, for the intervener Women’s Legal Education and Action Fund Inc.

Heard: June 20-22, 2023

On appeal from the order of Justice Markus Koehnen of the Superior Court of Justice, dated November 29, 2022, with reasons reported at 2022 ONSC 6658, 165 O.R. (3d) 1.

TABLE OF CONTENTS

Favreau J.A.: 11

A. OVERVIEW.. 11

B. THE ACT AND THE SCOPE OF ITS APPLICATION. 13

(1) Preamble, purpose and other preliminary matters. 14

(2) Employees affected. 15

(3) Scope of compensation affected and length of “moderation period” 16

(4) Enforcement, oversight and exemptions. 19

C. THE RESPONDENTS. 20

D. THE APPLICATION JUDGE’S DECISION. 25

(1) Application judge’s finding that the Act violates s. 2(d) of the Charter 25

(2) Application judge’s finding that s. 1 of the Charter does not save the Act 28

(3) Remedy. 30

E. ISSUES ON APPEAL. 31

F. THE STANDARD OF REVIEW.. 31

G. DOES THE ACT INFRINGE S. 2(D) OF THE CHARTER?. 33

(1) General principles regarding protection of collective bargaining under s. 2(d) of the Charter 34

(2) Previous wage restraint decisions. 40

(a) Decisions challenging the Expenditure Restraint Act 42

(b) Manitoba wage restraint legislation decision. 49

(c) General principles that arise from prior wage restraint legislation decisions 52

(3) Application of s. 2(d) jurisprudence to this case. 57

(a) The government did not engage in a significant process of collective bargaining or consultation before passing the Act 59

(b) The Act removes the ability to negotiate over significant matters. 64

(c) The Act does not provide a meaningful process for exemption. 67

(d) The Act does not match other collective agreements negotiated in the public sector in the same time period. 70

(4) Conclusion on s. 2(d) interference. 72

H. IS THE ACT SAVED BY S. 1 OF THE CHARTER?. 73

(1) Pressing and substantial objective. 75

(a) Definition of objective. 76

(b) The objective is pressing and substantial 80

(2) Rational connection. 88

(3) Minimal impairment 94

(4) Proportionality. 99

(5) Conclusion on s. 1 of the Charter 103

I. REMEDY. 103

J. CONCLUSION AND DISPOSITION. 104

Hourigan J.A. (dissenting): 105

A. INTRODUCTION. 105

B. ANALYSIS. 106

(1) Separation of Powers. 106

(2) Section 2(d) 109

(i) Association Rights and Collective Bargaining. 109

(ii) Distinguishing Factors. 114

(a) Economic Crisis. 115

(b) Bargaining Outcomes. 115

(c) Pre-legislation Negotiations and Consultation. 118

(d) Renegotiated Agreements. 122

(e) Summary Regarding Distinguishing Factors. 123

(iii) Compensation and Other Gains. 123

(iv) Impact on the Right to Strike. 129

(v) Summary Regarding s. 2(d) 132

(3) Section 1 Analysis. 133

(i) Background. 133

(ii) Oakes Test 135

(a) Pressing and Substantial Objective. 136

(b) Rational Connection. 141

(c) Minimally Impairing. 145

(d) Balancing Step. 148

(e) Conclusion Regarding s. 1. 151

(4) Reading Down. 153

(5) Disposition. 154

Favreau J.A.:

A. Overview

[1] In 2019, the Ontario legislature passed Bill 124, the Protecting a Sustainable Public Sector for Future Generations Act, 2019, S.O. 2019, c. 12 (“Bill 124” or the “Act”), which imposed a 1% cap per year on increases to salary rates and compensation for three years for employees in the broader public sector.

[2] The respondents, which include organizations that represent employees in the broader public sector, brought applications challenging the Act on the basis that it violated their members’ rights to freedom of expression (s. 2(b)), freedom of association (s. 2(d)) and equality (s. 15) under the Canadian Charter of Rights and Freedoms.

[3] The application judge granted the applications, finding that the Act violated the respondents’ freedom of association and that this violation was not saved by s. 1 of the Charter. The application judge did not accept the arguments that the Act violated the respondents’ s. 2(b) or s. 15 rights.

[4] His Majesty the King in Right of Ontario (“Ontario”)[^1] appeals on the basis that the application judge’s decision is contrary to decisions of the Supreme Court, this court and other appellate courts that have found similar wage restraint legislation to be constitutional. Ontario also argues that the application judge erred in his analysis of s. 2(d) by essentially turning the right to freedom of association, which the Supreme Court has said is a procedural right, into a substantive right. Ontario further contends that the application judge erred in his analysis and application of s. 1 of the Charter by failing to sufficiently defer to its policy choices in the face of a pressing need to address the deficit through control of public sector wages and compensation.

[5] I would dismiss the appeal with one exception. I agree with the application judge that the Act violates the s. 2(d) rights of broader public sector represented employees in Ontario and that it is not saved by s. 1. Taking into consideration the context in which Bill 124 was introduced and the restraints imposed by the Act, I am satisfied that the Act substantially interferes with the respondents’ right to participate in good faith negotiation and consultation over their working conditions. The circumstances of this case are distinguishable from other cases where wage restraint legislation was deemed constitutional because, here, there was no meaningful bargaining or consultation before the Act was passed, the Act significantly restricts the scope and areas left open for negotiation in the collective bargaining process, there is no meaningful mechanism for collective agreements to be exempted from the Act, and public sector collective agreements to which the Act does not apply generally provide for higher annual wage increases than 1%. Further, I find that the Act is not saved by s. 1 of the Charter because it does not minimally impair the respondents’ right to freedom of association, and because the Act’s deleterious effects outweigh its benefits.

[6] However, the application judge erred in declaring the entire Act unconstitutional. The Act applies to represented and non-represented employees in the broader public sector. Non-represented employees, given that they do not bargain collectively, do not benefit from the same protections as their represented counterparts under s. 2(d) of the Charter. Accordingly, the application judge’s declaration was overly broad, and should be limited to a declaration that the Act is unconstitutional in so far as it applies to represented employees.

[7] I start with a review of the Act, the parties and their interests, and the application judge’s decision. I then address the s. 2(d) and s. 1 analyses. It is in the context of these analyses that I provide a more detailed review of the evidence, where relevant.

B. The Act and the scope of its application

[8] Bill 124 was introduced in the Ontario legislature on June 5, 2019, and received royal assent on November 7, 2019.

[9] The Act imposes a three-year “moderation” period on compensation, including salary rates, for all employees in the broader public sector. For those three years, compensation increases are not to exceed 1% per year. The Act applies to represented and non-represented employees.

[10] In order to properly address the issues on appeal, it is helpful to review the scope and application of the Act in some detail.

(1) Preamble, purpose and other preliminary matters

[11] As indicated above, the short title of the Act is Protecting a Sustainable Public Sector for Future Generations Act, 2019. Its long title is “An Act to implement moderation measures in respect of compensation in Ontario’s public sector”.

[12] The preamble to the Act emphasizes the government’s goal of reducing the deficit and balancing its budget, stating that “Ontario’s accumulated debt is among the largest subnational debts in the world”. The preamble also states that sustaining the province’s finances is in the public interest and is needed to “maintain important public services”, and that the “[g]overnment also seeks to protect front-line services and jobs of the people who deliver them.” The preamble then addresses the role of public sector compensation in maintaining a sustainable public sector. In doing so, the preamble states that compensation represents a “substantial proportion” of government program expenses and that “the growth in compensation costs must be moderated to ensure the continued sustainability of public services for the future.” The preamble further states that the measures imposed by the Act “would allow for modest, reasonable and sustainable compensation growth for public sector employees” and that, for represented employees, the measures “respect the collective bargaining process, encourage responsible bargaining, and ensure that future bargained and arbitrated outcomes are consistent with the responsible management of expenditures and the sustainability of public services.” The preamble concludes with a statement that the “[g]overnment believes that the public interest requires the adoption, on an exceptional and temporary basis, of the measures” in the Act.

[13] Besides the preamble, s. 1 states that the purpose of the Act is “to ensure that increases in public sector compensation reflect the fiscal situation of the Province, are consistent with the principles of responsible fiscal management and protect the sustainability of public services.”

[14] Section 3 of the Act explicitly states that “the right to bargain collectively” is preserved, subject to the provisions of the Act. Section 4 preserves the right to strike lawfully.

(2) Employees affected

[15] Pursuant to s. 5(1), the Act applies to employers in the broader public sector, including to the Crown, Crown agencies, school boards, universities and colleges, hospitals, licensed not-for-profit long-term care homes, and children’s aid societies. It also applies to not-for-profit organizations that received at least $1 million in funding from the government in 2018.

[16] Section 5(2) of the Act specifies categories of employers to which the Act does not apply. These include municipalities and for-profit organizations.

[17] Pursuant to s. 8, the Act applies to “bargaining organizations”, which include unions and other organizations that bargain collectively on behalf of the broader public sector employees affected by the Act. In addition, the Act applies to the non-represented employees in the broader public sector.

(3) Scope of compensation affected and length of “moderation period”

[18] The Act limits “salary rate” and “compensation” increases during the moderation period. Salary is a subset of compensation.

[19] The Act defines “salary rate”, at s. 2, as:

[A] base rate of pay, whether expressed as a single rate of pay, including a rate of pay expressed on an hourly, weekly, bi-weekly, monthly, annual or some other periodic basis, or a range of rates of pay, or, if no such rate or range exists, any fixed or ascertainable amount of base pay.

[20] The Act defines “compensation” very broadly as meaning “anything paid or provided, directly or indirectly, to or for the benefit of an employee, and includes salary, benefits, perquisites and all forms of non-discretionary and discretionary payments”: s. 2. As a practical matter, and as found by the application judge, it is understood that compensation includes matters such as pension contributions, vacation days, sick days, bereavement days, meal and travel allowances, and any other benefits to which a monetary value can be assigned.

[21] Sections 9 to 16 of the Act address the limits on increases to salary rates and compensation during the moderation period for represented employees covered by the Act.

[22] Pursuant to s. 10(1) of the Act, a collective agreement or arbitration award cannot provide for a salary rate increase of more than 1% per year during the three-year moderation period. This 1% cap applies to any position or class of positions.

[23] In addition, pursuant to s. 11(1) of the Act, increases in compensation, which, as noted above, include salary rates for all employees covered by a collective agreement, are limited to 1% per year during the three-year moderation period:

During the applicable moderation period, no collective agreement or arbitration award may provide for any incremental increases to existing compensation entitlements or for new compensation entitlements that in total equal more than one per cent on average for all employees covered by the collective agreement for each 12-month period of the moderation period. [Emphasis added.]

[24] Therefore, in combination, s. 10(1) and 11(1) mean that no individual employee can receive a salary rate increase of more than 1% per year during the moderation period. In addition, the overall increase for all compensation, including salary rates, within the bargaining unit cannot exceed 1% per year overall. This means that employers can agree to an increase of compensation for some employees beyond 1% per year, so long as the increase does not apply to their salary rate and so long as the overall compensation for all employees in the bargaining unit does not exceed 1% per year. In other words, an increase above 1% in compensation, other than the salary rate, for some employees would have to be offset against no increases or lesser increases for other employees.

[25] There are some exceptions to the limitations on compensation increases. For example, s. 10(2) of the Act provides for three exceptions to the 1% per year cap on salary rates, allowing for salary rate increases that recognize an employee’s “length of time in employment”, “assessment of performance”, and “successful completion of a program or course of professional or technical education.” Also, s. 11(3) of the Act provides that an employer’s increase in the cost of providing a benefit that existed before the moderation period does not constitute an increase in compensation.

[26] In accordance with s. 9 of the Act, for represented employees, the moderation period begins at different times. For example, if a collective agreement was still in effect on June 5, 2019, the three-year moderation period starts on the day immediately following the end of the collective agreement. If the collective agreement had already expired on June 5, 2019, the moderation period starts running on the day immediately following the date on which the previous collective agreement had expired. The same principles generally apply to arbitration awards.

[27] Sections 17 to 23 of the Act set out the provisions that apply to non-represented employees. They are similar to those that apply to represented employees. However, pursuant to ss. 18 and 19, the cap imposed on salary rate and compensation increases is focused on individual employees or classes of employees and not on bargaining units. In addition, for non-represented employees, the start date of the moderation period is different than for represented employees. The moderation period starts on a date selected by the employer that is after June 5, 2019, but no later than January 1, 2022.

(4) Enforcement, oversight and exemptions

[28] The Act includes a number of measures designed to prohibit employers from avoiding compliance with the 1% limit on compensation increases during the moderation period. For example, s. 24 prohibits an employer from providing compensation before or after the moderation period to make up for compensation the employee did not receive during the moderation period.

[29] The Act also gives the government broad powers of enforcement. Section 25 of the Act gives the Management Board of Cabinet the power to obtain information from employers about collective bargaining or compensation to ensure compliance with the Act. Section 26 gives the Minister responsible for administration of the Act the sole discretionary power to make an order declaring that a collective agreement or arbitration award does not comply with the Act, which then requires the parties to enter into a new collective agreement that is compliant with the Act.

[30] Finally, s. 27 of the Act provides that the Minister “may, by regulation, exempt a collective agreement from the application of [the] Act”. However, the Act does not set out criteria or the basis on which the Minister may make such an exemption.

C. The respondents

[31] There were ten groups of respondents on the appeal. While the respondent organizations[^2] represent employees that fall within the scope of the Act, they are not all similarly situated. They work in different sectors, including education, health and energy. In addition, some of their members are directly employed by the province, whereas others are employed by other bodies that fall within the scope of the Act; therefore, in some cases, the collective bargaining takes place directly with the province and in other cases it takes place with an employer other than the province. Finally, some of the respondents’ members work for employers that are fully funded by the province, partially funded by the province and, in some cases, not funded by the province at all.

[32] In order to highlight these differences, it is helpful to provide a brief description of each organization:

a. Ontario English Catholic Teachers Association (“OECTA”): OECTA is the designated bargaining agent for teachers employed by the English-language Catholic district school boards in Ontario. While the members of OECTA are employed by their individual school boards, OECTA participates in a process of “central bargaining” with the Crown and school boards over significant issues, such as salary increases.

b. Ontario Secondary School Teachers’ Federation/Fédération des enseignants-enseignantes des écoles secondaires de l’Ontario (“OSSTF”): OSSTF is the designated bargaining agent for secondary school teachers employed by the English-language public district school boards in Ontario. It also represents a variety of other education workers employed by both French and English school boards. While these OSSTF members are employees of their respective school boards, like OECTA, OSSTF participates in a process of “central bargaining” with the Crown and school boards over significant issues. In addition to its school board members, OSSTF also represents members who work for employers offering transportation services to school boards and members who are non-teaching employees at some universities.[^3]

c. Elementary Teachers’ Federation of Ontario (“ETFO”) and l’Association des enseignantes et des enseignants franco-ontariens (“AEFO”): ETFO is the designated agent to bargain on behalf of English-language elementary teachers in Ontario as well as certain other education workers, such as early childhood education workers and professional support personnel. AEFO is the designated bargaining agent for all public and Catholic French-language elementary and secondary school teachers in Ontario. While the members of ETFO and AEFO are employees of their respective school boards, ETFO and AEFO also participate in a process of “central bargaining” with the Crown and school boards.[^4]

d. Ontario Nurses’ Association (“ONA”): ONA represents registered nurses, nurse practitioners, registered practical nurses, personal support workers and other health care professionals across Ontario. ONA’s members work in a variety of settings, including hospitals, long-term care homes and community health clinics.

e. Ontario Federation of Labour (“OFL”): OFL’s application was brought on behalf of several organizations, including OFL, the Canadian Union of Public Employees (“CUPE”), the Association of Management, Administrative and Professional Crown Employees of Ontario (“AMAPCEO”) and various university faculty associations. These organizations represent a broad variety of employees in different sectors, including hospitals, long-term care, social and community services, education, universities, transportation, the justice system and the Ontario Public Service.[^5]

f. Ontario Public Service Employees Union (“OPSEU”): OPSEU represents a broad range of workers who work in the Ontario Public Service or who are employed by broader public sector employers. They include cleaning staff, personal support workers, college professors, office administrators, correctional officers and education assistants.[^6]

g. Unifor: Unifor represents employees in the private and public sector. The public sector workers Unifor represents work in a variety of areas, including health care, social services and education.

h. Society of United Professionals, Local 160 of the International Federation of Professional and Technical Engineers (“Society” or “Society of United Professionals”): The Society represents employees in the energy sector who work for Ontario Power Generation (“OPG”), the Independent Electricity System Operator (“IESO”) and the Ontario Energy Board (“OEB”). The Society’s members include professionals, such as engineers, accountants, lawyers and managers. The Society bargains with OPG, IESO and OEB, which are self-funded and receive no funding from the province.

i. Power Workers’ Union (Canadian Union of Public Employees, Local 1000) (“PWU”): PWU represents employees in the energy sector who work for OPG and IESO as well as other entities not subject to the Act. Its members work in clerical, technical and skilled trade positions. As with the Society, PWU bargains with OPG and IESO, which, again, are self-funded and receive no funding from the province.

j. Carleton University Academic Staff Association: The Association represents faculty members, librarians and instructors employed by Carleton University. The members of the Association are employed by Carleton and their collective bargaining agreement is with Carleton. The province provides funding grants to Carleton, which covers 30 to 35% of its budget. However, the province does not directly fund the compensation paid to the Association’s members.

D. The application judge’s decision

[33] The application judge rejected the respondents’ position that the Act violated their right to freedom of expression or their equality rights. However, he found that the Act violated the right to freedom of association under s. 2(d) of the Charter, and that the Act was not saved by s. 1 of the Charter.

(1) Application judge’s finding that the Act violates s. 2(d) of the Charter

[34] In concluding that the Act violates the respondents’ s. 2(d) rights, the application judge found that the Act substantially interferes with the respondents’ ability to enter into good faith negotiation and consultation. In reaching this conclusion, the application judge considered the following ten factors:

a. The financial impact of the wage cap: The Act interferes with the process of collective bargaining because it places significant limits on the ability of unions to negotiate higher wages or to use wages to negotiate other better work conditions.

b. The impact on trading salary against other issues: The Act inhibits the ability of unions to trade off wages for other issues.

c. The impact on staffing: The application judge accepted the respondents’ evidence that there was a “serious long-term recruitment and retention crisis” in the health care sector. He found that the Act prevents unions from negotiating solutions to this crisis.

d. The impact on wage parity between public and private sector employees: On this factor, the application judge focused on the long-term care sector, which consists of private for-profit homes, private non-profit homes and municipal homes, whose employees have typically bargained together. The application judge held that “[f]ragmenting bargaining units into public and private sector units interferes with the unions’ ability to choose who bargains together.”

e. The impact on employee self-government: The application judge held that the Act interferes with the respondent organizations’ ability to decide democratically how to prioritize their negotiating positions.

f. The impact on freely negotiated agreements: The government’s power under the Act to decide whether a collective agreement will or will not be exempted from the Act interferes with freely negotiated agreements.

g. The impact on the right to strike: The application judge held that the Act renders the right to strike “financially meaningless” because the best the unions can achieve is a wage increase of 1% or an increase of benefits equal to 1% of wages, a benefit he found would be exhausted after 2.6 days of striking.

h. The impact on interest arbitration: The Act affects bargaining units subject to interest arbitration, because one of the principles of interest arbitration is the replication of negotiated agreements.

i. The impact on the relationship between unions and their members: The application judge relied, by way of example, on negative responses from ONA’s members to their 1% wage increase as evidence that the Act will cause discord within unions.

j. The impact on the power balance between employer and employees: The application judge stated that the “shadow of the legislator” would loom over negotiations and disrupt the power balance between employees and employers achieved through meaningful collective bargaining.

[35] The application judge then considered whether the process of consultation prior to the introduction of Bill 124 amounted to a meaningful process of collective bargaining. He stated that the government did not have an obligation to consult with the respondents on its legislation. However, relying on prior jurisprudence, he stated that, in appropriate circumstances, meaningful consultation before the passage of legislation can nevertheless take the place of collective bargaining. In this case, he found that there was no meaningful consultation.

[36] The application judge also reviewed prior decisions dealing with wage restraint legislation where no breach of s. 2(d) of the Charter was found. He distinguished those cases on the basis of the evidence in this case and differences between the Act and the legislation in those cases.

(2) Application judge’s finding that s. 1 of the Charter does not save the Act

[37] The application judge found that the Act was not saved by s. 1 of the Charter.

[38] In his s. 1 analysis, the application judge started by rejecting Ontario’s definition of the Act’s pressing and substantial objective. Ontario had submitted that the Act’s objective was fiscal responsibility and moderating the growth rate of public sector compensation. The application judge rejected this objective because the moderation of public service wages was the means by which the objective of fiscal responsibility was to be achieved. It was not an objective in and of itself. On this basis, the application judge redefined the objective as “the responsible management of Ontario’s finances and the protection of sustainable public services.”

[39] The application judge then found that Ontario did not establish that this was a pressing and substantial objective. In doing so, he considered case law from the Supreme Court of Canada which suggests that budgetary considerations cannot be a freestanding pressing and substantial objective, except in the context of a financial crisis. The application judge found that, in this case, Ontario’s evidence, including a report from its expert, Dr. David Dodge, did not establish that the province was in a financial crisis.

[40] Despite his finding that Ontario had not established a pressing and substantial objective, the application judge went on to consider the other aspects of the s. 1 Charter analysis.

[41] On the issue of a rational connection, the application judge found that, because compensation represents approximately one half of provincial government expenditures, moderating the rate of compensation increase is logically related to the responsible management of the province’s finances and protecting the sustainability of public services. However, he found that the rational connection did not exist for two categories of broader public sector workers because the province was not responsible for paying wages in these sectors: 1) the employees in the electricity sector working for OPG, OEB and IESO, and 2) the Carleton University academic staff, and by extension academic staff at other universities. Further, and relatedly, he concluded that the rational connection for workers in the long-term care sector was “at best remote.”

[42] On the issue of whether the Act minimally impairs the respondents’ s. 2(d) Charter rights, the application judge found that Ontario failed to explain why the province could not pursue “voluntary wage restraint”, as it had in the past, rather than imposing a wage cap through legislation. In addition, specifically with respect to the university sector, he found that the Act interferes with the governance of universities and that Ontario failed to provide an explanation for this interference.

[43] Finally, the application judge found that the salutary effects of the Act did not outweigh its deleterious effects. Amongst his reasons for this finding, he held that Ontario’s argument that the province wanted to bring public sector wages in line with private sector wages was not supported by the evidence regarding the wage gap. He further found that the lack of “present or imminent fiscal urgency” weighed against the Act.

(3) Remedy

[44] Based on his conclusion that that the Act violated s. 2(d) and was not saved by s. 1 of the Charter, the application judge declared the entire Act void and of no effect. In doing so, he stated that there was no purpose in going through the Act section by section.

[45] In addition, the application judge deferred the issue of any further remedies to a later hearing.

E. Issues on appeal

[46] Ontario raises the following issues on appeal:

a. The application judge erred in treating s. 2(d) as a substantive right to a specific outcome rather than as a right to a fair collective bargaining process;

b. The application judge erred in failing to follow existing case law dealing with the constitutional validity of wage restraint legislation;

c. The application judge erred in his s. 1 Charter analysis; and

d. Even if the Act is invalid as it relates to represented employees in the broader public sector, the application judge erred in declaring the Act void and of no effect vis-à-vis employees who are not represented by a bargaining organization and who do not bargain collectively.

F. The standard of review

[47] The constitutional validity of the Act is a question of law to be decided on a standard of correctness. However, this court owes deference to the application judge’s findings of fact, including findings based on social and legislative evidence. As the Supreme Court held in Canada (Attorney General) v. Bedford, 2013 SCC 72, [2013] 3 S.C.R. 1101, at para. 49, a judge’s factual findings, including findings on social and legislative facts, are entitled to deference on appeal:

When social and legislative evidence is put before a judge of first instance, the judge’s duty is to evaluate and weigh that evidence in order to arrive at the conclusions of fact necessary to decide the case. The trial judge is charged with the responsibility of establishing the record on which subsequent appeals are founded. Absent reviewable error in the trial judge’s appreciation of the evidence, a court of appeal should not interfere with the trial judge’s conclusions on social and legislative facts. This division of labour is basic to our court system. The first instance judge determines the facts; appeal courts review the decision for correctness in law or palpable and overriding error in fact. This applies to social and legislative facts as much as to findings of fact as to what happened in a particular case. [Emphasis added.]

See also Carter v. Canada (Attorney General), 2015 SCC 5, [2015] 1 S.C.R. 331, at para. 109.

[48] This is especially important in a case such as this one where, as discussed in the next section of these reasons, the Supreme Court has expressly stated that the issue of whether legislation substantially interferes with s. 2(d) rights, and specifically collective bargaining rights, is a “contextual and fact-specific” inquiry: Health Services and Support – Facilities Subsector Bargaining Assn. v. British Columbia, 2007 SCC 27, [2007] 2 S.C.R. 391, at para. 92.

[49] As held by Donald J.A., in dissent, in British Columbia Teachers’ Federation v. British Columbia, 2015 BCCA 184, 71 B.C.L.R. (5th) 223, at para. 326, rev’d 2016 SCC 49, [2016] 2 S.C.R. 407 (substantially for the dissenting reasons of Donald J.A.), factual findings underlying a trial judge’s conclusion that a government substantially interfered with freedom of association are subject to the palpable and overriding error standard.

[50] Similarly, in Manitoba Federation of Labour et al. v. The Government of Manitoba, 2021 MBCA 85, 463 D.L.R. (4th) 509, at para. 46, leave to appeal refused, [2021] S.C.C.A. No. 437, the Court of Appeal of Manitoba described the applicable standard of review in deciding on whether wage restraint legislation contravenes s. 2(d) of the Charter as follows:

Whether legislation is constitutional is a quintessential question of law. Therefore, the applicable standard of review is correctness. However, to the extent that the section 2(d) inquiry is premised on an assessment of relevant facts, any relevant factual finding will be owed deference and will be reviewed on the palpable and overriding error standard (see Consolidated Fastfrate at para 26). The appellate court will then take a last look at the accepted relevant factual foundation and decide the ultimate issue (whether the legislation is constitutional) on the correctness standard.

[51] Accordingly, the questions of whether the Act violates s. 2(d) of the Charter and, if so, whether it is saved by s. 1 of the Charter are to be reviewed on a standard of correctness. This inquiry includes consideration of what factors are relevant to deciding these issues. However, the trial judge’s findings of fact relevant to this assessment are to be reviewed on the palpable and overriding error standard of review.

G. Does the Act infringe s. 2(d) of the Charter?

[52] In this section, I start with a review of the general principles that apply to s. 2(d) of the Charter, followed by a review of other appellate decisions dealing with wage restraint legislation. I then address whether the Act violates s. 2(d) of the Charter.

(1) General principles regarding protection of collective bargaining under s. 2(d) of the Charter

[53] Section 2(d) of the Charter provides that everyone has the freedom of association, which is a fundamental freedom.

[54] In a series of decisions, starting in 2007 with Health Services, the Supreme Court has recognized that, in the labour context, s. 2(d) of the Charter protects the right to collective bargaining.

[55] In Health Services, the Supreme Court established that the s. 2(d) right to freedom of association protects collective bargaining, which the court described as “the right of employees to associate for the purpose of advancing workplace goals through a process of collective bargaining”: at para. 87. The court stated that recognizing the right to engage in collective bargaining is consistent with Charter values because it affirms the “values of dignity, personal autonomy, equality and democracy that are inherent in the Charter”: Health Services, at para. 86.

[56] The Supreme Court reaffirmed that s. 2(d) of the Charter protects the right to engage in collective bargaining in Ontario (Attorney General) v. Fraser, 2011 SCC 20, [2011] 2 S.C.R. 3, and again in a 2015 trilogy of decisions: Mounted Police Association of Ontario v. Canada (Attorney General), 2015 SCC 1, [2015] 1 S.C.R. 3, Meredith. v. Canada (Attorney General), 2015 SCC 2, [2015] 1 S.C.R. 125, and Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC 4, [2015] 1 S.C.R. 245. In Mounted Police, at para. 5, the court emphasized that the purpose of s. 2(d) is to protect “a meaningful process of collective bargaining that provides employees with a degree of choice and independence sufficient to enable them to determine and pursue their collective interests.” In Saskatchewan Federation, the Supreme Court also confirmed that the right to strike forms part of collective bargaining rights protected by s. 2(d): at para. 75.

[57] In these cases, the Supreme Court has consistently stated that s. 2(d) does not guarantee specific outcomes, but rather protects the right to a collective bargaining process: Health Services, at paras. 89, 91; Fraser, at para. 45; and Mounted Police, at para. 67. Similarly, the court has stated that s. 2(d) does not protect a specific model of labour relations or bargaining method, but rather the right is to a general process of collective bargaining: Health Services, at para. 91; Fraser, at para. 42; and Mounted Police, at para. 93.

[58] Further, the Supreme Court has emphasized that s. 2(d) “does not protect all aspects of the associational activity of collective bargaining”; rather, it only protects against “substantial interference” with associational activity: Health Services, at para. 90. As described in Health Services, to constitute substantial interference with the right to collective bargaining, “the intent or effect must seriously undercut or undermine the activity of workers joining together to pursue the common goals of negotiating workplace conditions and terms of employment with their employer”: at para. 92. Similarly, in Mounted Police, the court stated that a “process that substantially interferes with a meaningful process of collective bargaining by reducing employees’ negotiating power is … inconsistent with the guarantee of freedom of association enshrined in s. 2(d)”: at para. 71.

[59] In Health Services, at para. 93, the court established that there are two parts to the “substantial interference” inquiry:

a. First, the court must assess “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.”

b. Second, the court must assess “the manner in which the measure impacts on the collective right to good faith negotiation and consultation.”

[60] In Health Services, the court further emphasized that “[b]oth inquiries are necessary”: at para. 94. There will be no violation if the matter impacted does not substantially affect the process of collective bargaining. Similarly, even if the matter at issue substantially touches on collective bargaining, it will not violate s. 2(d) of the Charter if it preserves a “process of consultation and good faith negotiation”: at para. 94.

[61] In Fraser and the 2015 trilogy, the Supreme Court did not specifically refer to or apply the two-part substantial interference inquiry. However, in Meredith, at para. 24, the court explicitly stated that the test to determine whether state action “substantially impair[s] … employees’ collective pursuit of workplace goals” is “[t]he test … set out in Health Services.” In addition, in Gordon v. Canada (Attorney General), 2016 ONCA 625, 404 D.L.R. (4th) 590, at para. 47, leave to appeal refused, [2016] S.C.C.A. No. 444 (Professional Institute of the Public Service of Canada), and [2016] S.C.C.A. No. 445 (Gordon), upon reviewing the Supreme Court decisions that followed Health Services, this court confirmed that the two-part inquiry still applies.

[62] Before moving on to a review of the wage restraint legislation cases, it is helpful to describe each of the two inquiries further.

[63] With respect to the first part of the inquiry, namely the importance of the matter to the process of collective bargaining, “the essential question is whether the subject matter of a particular instance of collective bargaining is such that interfering with bargaining over that issue will affect the ability of unions to pursue common goals collectively…. The more important the matter, the more likely that there is substantial interference”: Health Services, at para. 95.

[64] In Gordon, at para. 53, this court explained that “while protection is not afforded to the ‘fruits’ of bargaining, but only to the process by which they are to be negotiated, employer actions unilaterally undermining the ability of unions to bargain about significant matters are constitutionally suspect.” The court further explained, at paras. 53 and 54, that legislation affecting certain matters and employer actions which restrict those matters are by their nature “constitutionally suspect”. The matters of concern include salary, hours of work, job security and seniority, equitable and humane working conditions, and health and safety protections: Gordon, at para. 53. The employer actions that are “constitutionally suspect” for the purpose of s. 2(d) of the Charter include taking important matters off the table or restricting the matters that may be discussed, imposing “arbitrary outcomes”, unilaterally nullifying negotiated terms, removing the right to strike, and imposing limits on future bargaining: Gordon, at para. 54.

[65] With respect to the second part of the inquiry, as described above, the court must inquire into the impact of the measure on the collective right to good faith negotiation and consultation. In assessing the impact of a measure, the Supreme Court has emphasized that the duty to bargain in good faith requires the parties to engage in meaningful dialogue and to be willing to explain their positions: Health Services, at para. 101. However, the duty to bargain in good faith does not impose an obligation to reach an agreement or to accept any contractual provision: Health Services, at para. 103. Similarly, it does not require the parties to bargain indefinitely or preclude the parties from engaging in hard bargaining: Health Services, at paras. 102-3.

[66] Further, the circumstances under which an impugned law was adopted can be relevant to assessing the impact of the law on the process of good faith negotiations. For example, a law that is adopted after a period of meaningful negotiation and consultation is less likely to be seen as interfering with the process of collective bargaining: see Health Services, at para. 92; Association of Justice Counsel v. Canada (Attorney General), 2012 ONCA 530, 117 O.R. (3d) 532, at para. 41, leave to appeal refused, [2012] S.C.C.A. No. 430; and British Columbia Teachers’ Federation, at para. 82, per Bauman C.J.B.C. and Harris J.A., and at paras. 287-91, per Donald J.A. (dissenting). However, “[s]ituations of exigency and urgency” may be relevant and “[d]ifferent situations may demand different processes and timelines”: Health Services, at para. 107.

[67] In Health Services, at para. 109, the Supreme Court summarized the two-part inquiry by emphasizing that both the matter at issue and the effect on good faith collective bargaining must be substantial. The court also emphasized that this is a contextual and fact-specific inquiry:

In summary, s. 2(d) may be breached by government legislation or conduct that substantially interferes with the collective bargaining process. Substantial interference must be determined contextually, on the facts of the case, having regard to the importance of the matter affected to the collective activity, and to the manner in which the government measure is accomplished. Important changes effected through a process of good faith negotiation may not violate s. 2(d). Conversely, less central matters may be changed more summarily, without violating s. 2(d). Only where the matter is both important to the process of collective bargaining, and has been imposed in violation of the duty of good faith negotiation, will s. 2(d) be breached. [Emphasis added.]

(2) Previous wage restraint decisions

[68] The Supreme Court, this court and other appellate courts in Canada have had the opportunity to consider the constitutional validity of other wage restraint legislation: Meredith; Gordon; Canada (Procureur général) c. Syndicat canadien de la function publique section 675, 2016 QCCA 163, leave to appeal refused, [2016] S.C.C.A. No. 117; Federal Government Dockyard Trades and Labour Council v. Canada (Attorney General), 2016 BCCA 156, 84 B.C.L.R. (5th) 341; and Manitoba Federation. In addition, the decision in Reference re Bill 148, An Act Respecting the Sustainability of Public Services, 2022 NSCA 39, 471 D.L.R. (4th) 547, is also relevant because, while the court declined to decide the issue on a reference, it nevertheless addressed some of the applicable principles in such cases.

[69] In all the decisions referred to above where the courts considered the constitutional validity of wage restraint legislation, the courts found that the legislation did not substantially interfere with the right to collective bargaining protected by s. 2(d) of the Charter. Ontario relies on these decisions in support of its position that the Act at issue in this case does not contravene s. 2(d). Ontario argues that the legislation in those cases is similar or more restrictive than the Act and that the application judge erred in failing to follow those decisions.

[70] I disagree with Ontario’s proposed approach to the other wage restraint legislation decisions. The issue of whether the Act infringes the respondents’ s. 2(d) rights does not simply require a review and comparison of the provisions in the Act and the other wage restraint legislation. Rather, in accordance with the direction of the Supreme Court in Health Services and the 2015 trilogy, this determination requires a contextual and factual analysis of the circumstances and context in which the Act was passed and its impact on collective bargaining. While the decisions at issue found that other wage restraint legislation did not infringe s. 2(d), none of these decisions suggests that wage restraint legislation is compliant with s. 2(d) per se if it has specified characteristics. Rather, the courts look at the circumstances under which the legislation was passed, the content of the legislation and the impact of the legislation on collective bargaining in the particular circumstances of the case to determine whether the legislation constitutes a substantial interference.

[71] Therefore, in order to assess the relevance of the prior appellate wage restraint legislation decisions, it is helpful to review those decisions in some detail to distill the relevant factors that led to each respective court’s determination that the legislation in the corresponding case did not infringe the s. 2(d) rights of the represented employees in those cases. Below, I start with a review of the four decisions that dealt with challenges to the federal Expenditure Restraint Act, S.C. 2009, c. 2, s. 393 (“ERA”), followed by review of the Manitoba Federation decision, which dealt with wage restraint legislation enacted by the Manitoba government.

(a) Decisions challenging the Expenditure Restraint Act

[72] The decisions in Meredith, Gordon, Dockyard and Procureur général all dealt with challenges to the ERA. The legislation was enacted in response to the 2008 worldwide financial crisis. The ERA applied to over 400,000 unionized and non-unionized employees who worked for the federal Crown and approximately 48,000 employees who worked for federal Crown corporations. The ERA limited wage increases by specified percentages over a five-year period as follows: a) 2.5% for the 2006-2007 fiscal year, b) 2.3% for the 2007-2008 fiscal year, c) 1.5% for the 2008-2009 fiscal year, d) 1.5% for the 2009-2010 fiscal year, and e) 1.5% for the 2010-2011 fiscal year. The legislation was enacted after multiple collective agreements had already been negotiated. In some cases, where collective agreements that were subject to the ERA had already been negotiated, the legislation had the effect of rolling back negotiated wage increases.

[73] In Meredith, the parties challenging the ERA were members of the Royal Canadian Mounted Police (“RCMP”). In Mounted Police, which was decided at the same time as Meredith, the Supreme Court had found that the existing labour relations regime imposed by legislation for RCMP officers infringed s. 2(d) of the Charter. It was in that context that the Supreme Court reviewed the general principles from Health Services and Fraser applicable to determining whether legislation substantially interferes with collective bargaining rights. In Meredith, despite having found that the labour relations regime for RCMP officers violated s. 2(d) of Charter, the court nevertheless considered the constitutional validity of the ERA as it applied to RCMP officers.

[74] The majority of the court held that the ERA did not violate the affected employees’ s. 2(d) rights. In reaching this conclusion, the court did not engage in a detailed analysis of the circumstances under which wage restraint legislation may or may not constitute a violation of s. 2(d). Rather, in its reasoning at paras. 28-29, the court focused on the circumstances of the case, including that the relevant wage increases were similar to wage increases achieved by other employees who engaged in the collective bargaining process in the public sector and that the affected RCMP employees were nevertheless able to negotiate other improvements to their compensation:

[T]he level at which ERA capped wage increases for members of the RCMP was consistent with the going rate reached in agreements concluded with other bargaining agents inside and outside of the core public administration and so reflected an outcome consistent with actual bargaining processes. The process followed to impose the wage restraints thus did not disregard the substance of the former procedure. And the ERA did not preclude consultation on other compensation-related issues, either in the past or the future.

Furthermore, the ERA did not prevent the consultation process from moving forward. Most significantly in the case of RCMP members, s. 62 permitted the negotiation of additional allowances as part of “transformation[al] initiatives” within the RCMP. The record indicates that RCMP members were able to obtain significant benefits as a result of subsequent proposals brought forward through the existing Pay Council process. Service pay was increased from 1% to 1.5% for every five years of service – representing a 50% increase – and extended for the first time to certain civilian members. A new and more generous policy for stand-by pay was also approved. Actual outcomes are not determinative of a s. 2(d) analysis, but, in this case, the evidence of outcomes supports a conclusion that the enactment of the ERA had a minor impact on the appellants’ associational activity. [Emphasis added.]

[75] In Gordon, two unions representing employees in the federal public service challenged the ERA on the basis that it infringed their collective bargaining rights under s. 2(d) of the Charter. The evidence on the application was that most of the bargaining units represented by the unions had reached collective bargaining agreements with the federal government before the ERA was enacted. Many did not challenge the legislation. Furthermore, the evidence was that, as had been found in Meredith, the wage caps in the ERA, for the most part, were equivalent or higher than negotiated wage increases.

[76] In the circumstances, this court found that the ERA did not breach the union members’ s. 2(d) rights. In reaching that conclusion, the court accepted that the first part of the “substantial interference” inquiry was met because “[b]argaining over wages is ordinarily a significant matter in free collective bargaining” and because the evidence in that case showed that wages were an important issue for most bargaining units: at para. 122. However, the court was not satisfied that the ERA amounted to a substantial interference with good faith negotiation and consultation. In reaching this conclusion, the court relied on the evidence that the caps on wage increases in the ERA were equivalent or higher than those in most collective agreements reached around that time. The court reasoned, at paras. 127-28, that:

The ERA’s imposition of the wage increase caps therefore was consistent with the results of free collective bargaining that were the most favourable to the unions, having been negotiated by the largest union.

From a process perspective, it is difficult to imagine that continuation of an unfettered bargaining process for the remaining minority of units would have produced significantly different outcomes, given that the settlement with the majority of the public service drove the determination of the wage increase caps.

[77] The court recognized that, as held in Meredith, outcomes are not determinative, but they can support a conclusion that the ERA had a minor impact on the unions’ associational activities: Meredith, at para. 29; Gordon, at para. 130. The court concluded that “viewing the matter in context, union members were not discouraged from the collective pursuit of common goals as a result of the upper limits placed on wage increases for the restraint period”: Gordon, at para. 131.

[78] Ultimately, at para. 176, this court concluded that the ERA did not infringe the appellant unions’ s. 2(d) rights on the following basis:

The Government engaged in permissible hard bargaining during a period of economic crisis and government austerity. And by enacting the ERA, the Government capped wage increases for a limited period. The ERA did not completely prohibit any wage increases, the cap was in place for a limited period of time, and the limit imposed was in line with the wage increases obtained through free collective bargaining. Moreover, the appellant unions were able to make progress on matters of interest to some of the bargaining units they represented. They were still able to participate in a process of consultation and good faith negotiations. As such, neither the ERA nor the Government’s conduct before or after the enactment of ERA limited the appellants’ s. 2(d) rights.

[79] In Procureur général, the Court of Appeal of Québec dealt with a challenge to the ERA brought on behalf of two groups of employees of the Société Radio-Canada in the province of Québec and Moncton. Prior to the passage of the ERA, one of the bargaining units had negotiated wage increases of 3.5% as of October 1, 2007, followed by four annual increases beginning in December 2007 of 3%, 2.5%, 2.5% and 2.5%. The other bargaining unit had negotiated annual wage increases of 2.6% in 2007, 2.5% in 2008 and 2.5% in 2009. In that case, the evidence was that, at the time the ERA was tabled, the unions representing the affected employees did not realize that the wage caps in the ERA would apply to their collective agreements.

[80] In that context, the Court of Appeal of Québec, at para. 43, held that there was no question that the issue of wage increases was a matter of central importance to workers involved in collective bargaining: “[t]hese issues are central to the exercise of this freedom in a workplace and are ordinarily one of the crucial points of discussion during collective bargaining” [translation].

[81] Despite finding that there was interference, the court found on the second branch of the Health Services analysis that the ERA did not substantially interfere with the collective bargaining process because it preserved a process of consultation and good faith negotiation: at para. 59. In reaching this conclusion, the court relied on the following contextual factors and characteristics of the ERA:

a. The ERA did not freeze or reduce salaries, but rather restricted the scope for wage increases for what the court described as a non-negligible period of time: at para. 48.

b. As the Supreme Court found in Meredith, and as subsequently found in Gordon, the wage increase caps in the ERA were comparable to wage increases that had been freely negotiated within the federal public sector: at paras. 50-51.

c. Once the wage restraint measures concluded, the parties would be free to negotiate agreements that mitigated the lost increases over time: at para. 52.

d. Section 8 of the ERA permitted the reopening of already negotiated collective agreements to enhance non-monetary aspects of the collective agreements, such as hours or work, vacation, leaves, employment security, staffing assignments and transfers. This provision was consistent with Meredith in allowing for consultation on other compensation-related issues: at paras. 53-56.

[82] The court concluded, at para. 100, that the ERA did not substantially interfere with freedom of association because the legislation did not deprive the employees and associations representing them of the possibility of having meaningful collective negotiations on workplace matters, the right to actual collective bargaining processes, or the ability to engage in collective bargaining.

[83] Finally, in Dockyard, before the introduction of the ERA, a bargaining agent for the members of its constituent trade unions had obtained a 5.2% wage increase through arbitration as of October 2006, as well as wage increases within the limits of the ERA from 2006 to 2009. The effect of the ERA was to nullify the 5.2% wage increase. The court found that the rollback did not substantially interfere with the process of collective bargaining for a number of reasons, including the lengthy negotiations and the warning, before pressing ahead with the arbitration, that there may be a rollback.

[84] There are four common threads between the decisions dealing with the constitutional validity of the ERA: 1) the measures were imposed in the context of the 2008 global economic crisis; 2) multiple bargaining units had reached agreements about wage increases similar to those that were legislated before the ERA was enacted; 3) the legislation was imposed after a relatively long period of negotiation; and, 4) in some cases, following the enactment of the ERA, bargaining units were nevertheless able to reopen their collective agreements to negotiate for wage increases (Meredith) or other matters of interest, including matters related to compensation (Procureur général).

[85] The Supreme Court denied leave to appeal on Gordon, Procureur général and Dockyard.

(b) Manitoba wage restraint legislation decision

[86] The only other appellate decision in Canada raised by the parties deciding the constitutional validity of wage restraint legislation is the decision of the Court of Appeal of Manitoba in Manitoba Federation. Ontario relies heavily on this decision as the basis for its position that the application judge erred in finding that the Act infringes the respondents’ s. 2(d) rights. Specifically, Ontario argues that the Act and the legislation at issue in Manitoba Federation are very similar and, in fact, that the Manitoba legislation imposed more draconian caps on wage increases in comparison to the Act.

[87] Manitoba Federation involved a challenge to The Public Services Sustainability Act, S.M. 2017, c. 24 (the “PSSA”). The PSSA was passed in 2017. It imposed wage caps of 0%, 0%, 0.75% and 1% over a four-year period. The PSSA applied to represented and non-represented employees in Manitoba’s public service, which covered nearly 20% of the province’s workforce.

[88] The trial judge had found that the PSSA infringed the s. 2(d) rights of the represented employees who were subject to the legislation, and that it was not saved by s. 1 of the Charter.

[89] The Court of Appeal of Manitoba allowed the appeal on this issue, finding that the PSSA did not infringe the s. 2(d) rights of represented employees affected by the statute. The court found that the trial judge made several errors in her analysis.

[90] First, while the court noted that the government of Manitoba had not engaged in any pre-legislation consultation before enacting the PSSA, it was an error for the trial judge to find that this consideration was relevant because the government had no obligation to consult with the unions before passing legislation: at para. 81. (I will have more to say below about how the court dealt with this issue.)

[91] Second, the court found that the trial judge had improperly compared private sector wages to public sector wages in determining that the results achieved through collective bargaining were higher than the wage increases in the PSSA: at paras. 84-85. The court held that, when comparing the PSSA wage increase caps to other public sector negotiated collective agreements to which the PSSA did not apply, the wage increases were comparable to those in the PSSA: at para. 86.

[92] Having found that the trial judge erred in her s. 2(d) analysis, the court conducted its own fresh analysis. In doing so, the court considered a number of factors. First, the court found that the relevant provisions of the PSSA are functionally equivalent to those in the ERA, which were found to be constitutional. Second, the court found that, despite the passage of the PSSA, bargaining units were able to negotiate over various workplace conditions other than wages. Third, the court noted that, unlike the ERA, the PSSA included a clause permitting exemption from the statute. In making this finding, the court pointed out that s. 7(4) of the PSSA gave the Manitoba government the ability to grant an exemption from the PSSA, and that the unions could strike for the purpose of pressuring the government into granting an exemption: at para. 123.

[93] The court accepted, as conceded by Manitoba, that “taking wages off the bargaining table” met the first inquiry in the test established by Health Services: at para. 128. However, the court found that the second branch was not met because, based on the factors referred to above, the PSSA preserves a process of consultation and good faith negotiation. In reaching this conclusion, at para. 128, the court stated that “the case law establishes that that type of legislative interference does not amount to ‘substantial interference’ when it is broad-based and for a limited period of time.”

[94] As with the decisions that considered the ERA, the Supreme Court denied leave to appeal from the Manitoba Federation decision.

(c) General principles that arise from prior wage restraint legislation decisions

[95] As mentioned above, one of the arguments made by Ontario is that the application judge erred in failing to follow previous appellate wage restraint legislation decisions. In making this argument, Ontario points to the similarities between the legislation in these other cases and the Act, especially the Manitoba legislation.

[96] However, this argument fails to have regard to the fact-specific and contextual analysis mandated by the Supreme Court in deciding whether legislation substantially interferes with the right to collective bargaining.

[97] One of the challenges in understanding the wage restraint cases is that there is an inherent tension between the protection of a right to a process of collective bargaining but not of the right to a specific outcome. By imposing specific limitations on compensation increases, wage restraint legislation places limitations on the potential outcomes of collective bargaining, which on its own is not a violation of s. 2(d). However, imposing limits on potential outcomes, such as wages, does interfere with good faith negotiation and consultation because it limits the potential areas and scope for negotiation and consultation. As held by the Court of Appeal of Québec in Procureur général, at para. 97, the question becomes one of degree and intensity, and the degree to which legislation imposing a wage cap interferes with the ability of organizations to bargain collectively.

[98] Based on my review of the case law above, there is no formula for assessing whether the degree of interference reaches the level of substantial interference. Rather, the courts have looked at a set of factors to assess the degree of interference, and whether the measures imposed nevertheless leave room for a meaningful process of good faith negotiation and consultation.

[99] These indicia include consideration of the circumstances and process leading to the passage of the legislation. Significant collective bargaining prior to the passage of the legislation or meaningful consultation on the legislation diminish the finding of interference, because such processes mean that there was negotiation or consultation before the imposition of the wage restraint measure, and that not much more could have been gained through further negotiation or consultation. On this issue, with respect, I do not agree with the Court of Appeal of Manitoba’s finding that it was an error for the trial judge to consider the fact that the Manitoba government did not consult with the unions before passing the PSSA. Negotiation of collective agreements and consultation on legislation are different. However, as acknowledged in the decisions dealing with the constitutionality of the ERA, they can both play a role in determining whether legislation limiting the areas of negotiation violate s. 2(d). Good faith collective bargaining prior to the enactment of legislation can form the basis for a finding that there has been no substantial interference with the process of collective bargaining. Similarly, while consultation on legislation is not required, meaningful consultation can also serve as evidence that there has not been significant interference with the collective bargaining process.

[100] Another indication that wage cap legislation does not substantially interfere with the process of good faith negotiation and consultation is where the legislation leaves room for meaningful negotiation and consultation on issues other than wages. This is because, in such circumstances, the legislation still allows workers to come together in an effort to achieve workplace goals.

[101] Similarly, where the wage restraint legislation allows for a process of exemption, over which organizations can negotiate or even strike, there is an attenuated interference with the ability to negotiate and bargain in good faith.

[102] Finally, where the terms of the wage restraint legislation replicate the terms of collective bargaining agreements freely negotiated in the public sector, this serves as an indication that there has not been substantial interference because it suggests that a free process of collective bargaining would not have led to a better outcome if the unions had participated or continued to participate in negotiations.

[103] Before turning to an analysis of the Act and the circumstances under which it was enacted, I pause to comment on two additional factors the Court of Appeal of Manitoba suggested are also relevant.

[104] First, as mentioned above, the court stated, at para. 128 and elsewhere, that one relevant consideration is whether the legislation is “broad[ ]based”, applying to represented and non-represented employees. With respect, this cannot be a relevant consideration. The s. 2(d) analysis requires consideration of whether legislation substantially interferes with the process of collective bargaining. The fact that legislation may also apply to non-represented employees does not assist in this inquiry. The issue is not whether the legislation targets represented employees, but rather the impact the legislation has on represented employees’ collective bargaining rights.

[105] Second, in Manitoba Federation, the Court of Appeal of Manitoba also suggested that other wage restraint legislation cases had established that time-limited wage restraint legislation does not substantially interfere with the process of collective bargaining. Again, I do not agree with this characterization of the other decisions. The focus of the ERA decisions was on whether, despite the legislated wage cap, a process remained for the unionized employees to come together and engage in good faith negotiation and consultation over working conditions. The fact that a measure is not permanent may be relevant to assessing whether it constitutes a substantial interference. However, it is still appropriate to measure the degree of interference within the relevant collective bargaining period. It is hard to imagine that legislation that halted all collective bargaining, even for a period of one year, would sustain s. 2(d) scrutiny. In other words, time limits may be relevant but they should not be overemphasized when looking at the impact of the legislation on collective bargaining in the context and circumstances of a particular case. In this respect, I agree with the comment made by the Nova Scotia Court of Appeal in Reference re Bill 148, An Act Respecting the Sustainability of Public Services, 2022 NSCA 39, at para. 49:

In my view, Manitoba Federation does not add any new principles to the jurisprudence with respect to s. 2(d) of the Charter. The Attorney General relies heavily on this decision because of the similarities between the legislation under consideration and the PSSA. He argues it stands for the proposition time limited wage restraint legislation is always constitutional. If the suggestion is this conclusion can be reached without the need to consider the surrounding context, this runs contrary to the clear advice of the Supreme Court of Canada in Health Services, Meredith and British Columbia Teachers’ Federation. I would not adopt such an interpretation of Manitoba Federation. [Emphasis added.]

[106] Ultimately, while I take issue with the Court of Appeal of Manitoba’s treatment of pre-legislation consultation, the application of legislation to represented and non-represented employees and the time-limited nature of the legislation, I note that this does not detract from the fact that the PSSA has several of the characteristics I referred to above as indicia of constitutionality. Notably, the court found that the PSSA left room to negotiate matters of importance, including an exemption clause that maintained a right to strike over wages, and it replicated wage increases in other public sector collective agreements.

[107] As reviewed below, in contrast with the ERA and PSSA decisions, the circumstances leading up to the passage of the Act and the terms of the Act, including a comparison of those terms to other public sector negotiated agreements, all support a finding that the Act substantially interfered with the ability of the respondents to enter into good faith negotiation and consultation with their employers. I now turn to a review of these indicia as they apply to the circumstances leading up to the passage of the Act and the provisions of the Act itself.

(3) Application of s. 2(d) jurisprudence to this case

[108] As set out above, the Supreme Court has established a two-part process for determining if a law substantially interferes with the right to collective bargaining. First, the court must assess the importance of the matter to the process of collective bargaining. Second, the court looks at the manner and extent to which the measure impacts on the collective right to good faith bargaining and consultation.

[109] In this case, as uncontested by Ontario, and consistent with the prior wage restraint legislation decisions, there is no doubt that wages and compensation are matters of central importance to collective bargaining. Besides the fact that this has been recognized as a self-evident proposition in other cases, the respondents all put forward evidence supporting a finding that wages and compensation were central to their collective bargaining goals and interests.

[110] Therefore, the key issue in this case, as in the other wage restraint legislation decisions, is the second part of the Health Services analysis, namely whether the Act preserves a meaningful “process of consultation and good faith negotiation”: Health Services, at para. 94.

[111] Before turning to my analysis on this issue, I want to deal briefly with the application judge’s s. 2(d) analysis. As discussed above in the section addressing the standard of review, this court does not owe deference to the application judge’s finding that the Act violates s. 2(d). This includes the ten factors he considered as part of his determination that the Act did not preserve a process of consultation and good faith negotiation that are relevant to the inquiry.

[112] Based on my review of the case law above and the indicia of potential substantial interference they identify, the application judge may have considered some factors that were not necessary or germane to the inquiry. For example, I am not persuaded that the application judge’s reliance on evidence from ONA that some of its members expressed a lack of confidence in their association rises to the level of supporting a finding that the Act substantially eroded a process of good faith negotiation and consultation; there will likely always be some union members who are dissatisfied with their association’s inability to influence government policy or with the terms of a negotiated collective agreement.

[113] However, given the standard of review, I do no need to consider each of the ten factors the application judge relied on in any detail. For this exercise, the primary relevance of those factors is that they include some findings of fact that are relevant to the analysis below. As indicated above, this court owes deference to those findings of fact.

[114] I now turn to a review of the indicia of interference identified above as they apply in this case.

(a) The government did not engage in a significant process of collective bargaining or consultation before passing the Act

[115] As reviewed above, when wage restraint legislation comes after a significant period of collective bargaining or after meaningful consultation with collective bargaining organizations over the terms of the legislation, the impact of the legislation on collective bargaining is attenuated. In this case, the evidence does not support a finding of significant collective bargaining or meaningful consultation over the Act.

(i) The status of collective bargaining at the time of Bill 124’s introduction

[116] With respect to collective bargaining prior to the passage of the Act, the Act applies to over 2,500 bargaining units, so it is not possible to assess the state of collective bargaining with each of those bargaining units at the time Bill 124 was introduced. However, at least two factors make clear that, unlike the ERA, the Act was not introduced after a period of significant collective bargaining with the respondents. In other words, in this case, unlike in Gordon, the evidence does not support a finding that little more could be achieved with further collective bargaining: see Gordon, at paras. 100-1, 128.

[117] First, as reviewed above, the 1% cap on wage and compensation increases was to come into effect as collective agreements came to an end starting on June 5, 2019. This means that, in many cases, if not most cases, no collective bargaining would have started before the Act was enacted.

[118] Second, there is evidence that the Act was introduced in anticipation of the beginning of collective bargaining in the education sector. As the application judge observed, Jay Porter, the Director of the Broader Public Sector Labour Relations Initiatives Branch at the Treasury Board Secretariat and Ontario’s chief affiant in this proceeding, conceded that the commencement of education sector bargaining was a key consideration with respect to the timing of the Act. This consideration is supported by the course of events leading up to the introduction of Bill 124. With collective bargaining set to take place in 2019 for many working in the education sector, the government announced it was launching a consultation process on compensation growth with public sector bargaining agents and employers in April 2019. Many of the bargaining agents representing teachers and other education workers served notices to bargain in the weeks before Bill 124’s introduction and passage. For example, OECTA served its notice to bargain on May 21, 2019, just 15 days before the government introduced Bill 124. Similarly, OSSTF served its notice to bargain on April 29, 2019, the earliest possible date under the legislation governing collective bargaining in the education sector. Notably, the president of OSSTF testified before a legislative committee that he learned of Bill 124’s introduction on June 5, 2019, while sitting at the bargaining table.

[119] Again, the government was not precluded from introducing Bill 124 before the beginning of collective bargaining in the education sector and other sectors. However, this timing makes clear that it was not introduced after a period of meaningful bargaining and negotiation, which could have attenuated the impact of the Act on the respondents’ collective bargaining rights.

(ii) Consultation on Bill 124

[120] Similarly, there is no requirement for governments to consult unions and their members before passing wage restraint legislation or any other legislation that may affect work conditions. Consultation on legislation is not the same as collective bargaining. However, where there is meaningful consultation on legislation, this can reduce the impact of the unilateral imposition of legislation on the collective bargaining process. In this case, as found by the application judge, there was no meaningful consultation with the respondents before the passage of the Act.

[121] As identified by the application judge, the government engaged in consultations over a four-week period beginning in April 2019 before introducing Bill 124, but this did not amount to meaningful consultation with the respondents. The application judge noted in particular the following:

a. The government circulated no consultation paper to the respondents before the consultations, but instead provided them with a series of questions about managing compensation costs and legislated compensation caps. The questions did not set out any proposed caps, even though the President of the Treasury Board had directed staff to explore caps of 1% to 2% as early as February 2019. Internal government timelines and documents did not provide for further consultations following receipt of answers to the questions, but instead contemplated the introduction of legislation, if necessary, soon after the end of the scheduled consultations.

b. The consultations were led by an external lawyer hired by the government, not government officials from the Treasury Board Secretariat or any other relevant ministry with whom the unions could bargain. During the consultations, counsel read from a prepared script and provided non-responsive answers to questions. For example, when asked about the sort of wage caps in the government’s contemplation, counsel did not provide information about the range of proposed caps but instead directed unions to the 2019 budget and a series of broad-based financial figures.

c. Mr. Porter, Ontario’s chief affiant in the proceedings, conceded in cross-examination that the consultation process was not intended to replicate or replace collective bargaining. This was evident in the consultations that occurred. For example, the Society of United Professionals was invited along with four other bargaining agents to a 60-minute consultation, allowing each of the five bargaining agents 12 minutes of consultation. During that consultation, counsel could not explain how compensation at OPG, IESO and OEB (which are self-funded) contributed to the province’s debt.

d. The consultations took a very different route from past consultations on labour relations issues. For example, the government previously engaged in a four-month consultation with OSSTF on hiring practices. As part of those consultations, it provided a detailed consultation paper setting out the issues and sub-issues the government was considering, the status of those issues and the proposed changes. Here, in contrast, the consultations were not preceded by any consultation paper and the duration of the consultations was shorter, even though they concerned a much broader sector of the public sector.

[122] Shortly after these limited consultations occurred, Bill 124 was introduced on June 5, 2019. On June 6, 2019, government officials sent a mass email to stakeholders announcing the legislation and inviting them “to provide feedback on this proposed approach” to a generic email address. As the application judge observed, however, the email was not an offer to meet and discuss issues with any of the respondents.

[123] Again, there is no requirement that the government consult with the respondents over its intended legislation. However, a process of meaningful consultation could have significantly attenuated the impact of the Act on collective bargaining given that it could have served as a substitute for negotiation. Here, there was no such process.

(b) The Act removes the ability to negotiate over significant matters

[124] One of the issues considered by the courts in the other wage cap legislation cases was that, despite the limit imposed on wage increases, the unions were still able to negotiate over other substantial matters. For example, in Meredith, a provision in the legislation that applied to compensation for RCMP officers permitted for negotiation of additional allowances. The court found that this resulted in “significant” benefits following the passage of the ERA: at para. 29. Similarly, in Procureur général, the Court of Appeal of Québec found that the bargaining units at issue could still bargain over matters such as hours or work, vacation, leaves, assignments and transfers: at para. 55.

[125] In this case, the broad definition of “compensation” in the Act significantly limits the areas that remain available for negotiation. As reviewed above, the cap does not just apply to salaries; it also applies to any kind of benefit or compensation that can be monetized, such as sick days, vacation days and other benefits. The ERA and Manitoba’s PSSA did not impose such broad limitations on the areas affected by the caps in those statutes.

[126] The impact of the broad limitations in this case is twofold. First, it significantly limits the scope for negotiations over all areas of compensation. Second, it impedes the respondent organizations from using wages and other compensation as a bargaining chip to achieve gains in other areas. The application judge made findings of fact that support both concerns.

[127] On the first point, the application judge noted the significant limits on areas of negotiation and gave the following example:

Moreover, the ability to negotiate “nonmonetary” issues is somewhat overstated given that even nonmonetary issues may be quantified for purposes of the Act. By way of example, a union that negotiated an additional vacation day for employees would be told that a one-day benefit amounts to .38% of annual compensation. The additional vacation day would therefore swallow a good part of the 1% pay increase the Act permits.

[128] On the second point, the application judge also provided examples of the impact on collective bargaining in other areas of interest to the respondents:

A large number of the applicants’ affiants have sworn affidavits attesting to the way in which the Act limited collective bargaining. By way of example, the applicant OFL filed 23 affidavits from union members. Ontario cross-examined eight of those but not on their evidence about their collective bargaining experience under the Act.

By way of further example, in 2019 – 2020, the [ONA] had identified two collective bargaining priorities as being the adjustment of full-time and part-time staffing ratios in line with longstanding expert recommendations and changes to language surrounding job security. The representative employer group, the Ontario Hospital Association declined to accommodate those wishes taking the position that with only 1% available, nothing could be negotiated or traded.

The Act also limited Unifor’s ability to bargain terms to address long-term staffing, recruitment and retention issues in not-for-profit long-term care homes that were subject to the Act. The government’s own 2020 Long-Term Care Staffing Study found that “staffing in the long-term care sector is in crisis and needs to be urgently addressed.” It identified as “priority areas for action” increasing staffing, improving workload and working conditions for Personal Service Workers (PSWs), increasing wages, improving benefits, and maximizing opportunities for full-time hours. The Act prevents Unifor from bargaining about these issues even as understaffing was exacerbated during the Covid 19 pandemic. [Footnotes omitted.]

[129] Removing wages and compensation as an item from negotiation is not an impediment to good faith negotiation and consultation per se if there is room left for meaningful bargaining on other matters. This is because s. 2(d) of the Charter does not guarantee a specific outcome, but only a right to a meaningful process. However, in this case, the scope of the items removed from negotiations and the impact of removing those items on the ability to bargain over other items did evidently interfere with the respondents’ ability to participate in good faith negotiation and consultation.

(c) The Act does not provide a meaningful process for exemption

[130] One of the other considerations in some of the other wage restraint legislation is the availability of a process for seeking exemptions from the wage increase cap. For example, as mentioned above, in Meredith, at paras. 29 and 42, the Supreme Court relied on the RCMP members’ ability to seek compensation above the caps imposed by the ERA based on a statutory provision that allowed them to do so. In Manitoba Federation, at para. 123, the Court of Appeal of Manitoba pointed to a provision in its legislation that allowed the unions in years three and four of the wage restraint timeframe to negotiate savings and increase employee compensation. In addition, the PSSA gave the Treasury Board the ability to exempt “any person or class of persons” from the statute’s application: PSSA, s. 7(4). Further, the court reasoned that a union could exercise its right to strike for the purpose of seeking an exemption under that provision.

[131] In this case, Ontario relies on the exemption in s. 27 of the Act in support of its position that the Act does not substantially interfere with the process of collective bargaining. In taking this position, Ontario suggests that the respondents could strike for the purpose of seeking an exemption.

[132] I do not accept this argument.

[133] Unlike in Manitoba Federation, in this case there is significant evidence that supports a finding that the possibility of an exemption is illusory rather than a meaningful avenue of negotiation. While s. 27 provides for exemptions, the Minister has only granted one exemption despite multiple requests. Notably, the majority of such requests have gone unanswered. At the time of the hearing before the application judge, he made the following findings on the use of the exemption:

There has been one exemption granted under the Act. The evidence does not disclose the details of that exemption aside from a one-page letter granting it. All other exemptions have been rejected even when they were joint submissions from employer and union and even when the employer required the exemption to discourage staff from leaving for better paying positions in the private sector.

The exemption process has also entailed lengthy delays. Unifor notes that it has filed a request for an exemption that has remained unanswered after two years.

[134] Further, there is no evidence of a process or any criteria used by the Minister to consider such requests.

[135] Therefore, while in theory s. 27 suggests that the respondents may have an avenue for seeking an exemption from the application of the Act, there is in fact no evidence that this is a meaningful channel for negotiation or collective bargaining.

[136] In so far as Ontario suggests that the respondents could engage in a strike to obtain an exemption, this position is not supported by the reality of how lawful strikes take place in Ontario. First, for many of the employees affected by the Act, their employer is not the provincial government. In those cases, a strike would not place meaningful pressure on the government to grant an exemption. Second, the right to strike in Ontario arises after the parties engage in a series of required steps, and, once those steps are completed, the union and its members can only strike over matters which the employer can compromise. As such, I accept the respondents’ position that Ontario is suggesting that they could engage in strikes that are unlawful. Third, many of the bargaining units represented by the respondents are essential workers who do not have a right to strike; instead, they are subject to binding arbitration. In the circumstances, there is simply no basis for Ontario’s blunt assertion that the respondents could strike for the purpose of being exempted from the Act.

[137] While the ability to obtain or negotiate an exemption from wage restraint legislation can be relevant to assessing the degree of interference of such legislation with the process of collective bargaining, the hypothetical possibility of an exemption is of no moment in this case. Accordingly, s. 27 of the Act does not attenuate the interference of the Act with the respondents’ ability to engage in good faith negotiation and consultation because it does not offer a meaningful avenue for negotiation and consultation.

(d) The Act does not match other collective agreements negotiated in the public sector in the same time period

[138] As mentioned above, one of the considerations in all wage restraint legislation decisions is whether the restrictions imposed by the legislation are similar to terms freely negotiated in other public sector agreements during the relevant timeframe.

[139] In Meredith, at para. 28, the Supreme Court found that the level at which the ERA capped wage increases for members of the RCMP was consistent with the rates reached in collective agreements negotiated in the core and broader public sector. In Gordon, at para. 127, this court similarly found that the “ERA’s imposition of the wage increase caps was consistent with the results of free collective bargaining that were the most favourable to the unions.” As reviewed above, the courts made similar findings in Procureur général and Manitoba Federation.

[140] As noted in these previous cases, this factor is not determinative, but it can serve as an indication that the wage restraint legislation did not impede the ability to engage in good faith negotiation and consultation. If the outcome achieved by other public sector organizations is consistent with or lower than the wage cap imposed by legislation, this is an indication that the wage cap had a minimal impact on the collective bargaining process because it is unlikely that a better outcome could have been achieved through collective bargaining.

[141] In this case, the application judge made a finding of fact regarding other freely negotiated collective agreements in the public sector before and after the passage of the Act:

When Bill 124 was introduced, collective bargaining negotiations in the broader public sector resulted in overall salary increases of approximately 1.6%. After the Act was introduced, public[-]sector wages that were not affected by the Act resulted in wage increases well above 1%.

By way of example, the York Regional Police Association, which was excluded from the Act as a municipal police force, negotiated an annual wage increase of 2.12% over a five-year term after its collective agreement expired on December 31, 2019. Other freely negotiated wage settlements fell in a range of 1.37%-2.26% for 2019, 0.93% to 2.21% for 2020, and between 1.5% to 4% for 2021. [Footnote omitted.]

[142] The application judge also rejected the comparators proposed by Ontario on the basis that this small subsection of collective agreements providing for wage increases of 1% or lower represented only 1.05% of public sector collective agreements and were therefore not representative of what was generally available in collective bargaining.

[143] Notably, in this case, as reviewed above, the 1% cap in the Act does not only apply to wages, but also to all forms of compensation that can be quantified in monetary values such as sick days and vacation days. Accordingly, while the application judge found that collective bargaining negotiations in the broader public sector at the time Bill 124 was introduced resulted in overall salary increases of approximately 1.6%, the 1.6% figure does not account for all forms of compensation increases. Presumably, taking account of the monetary value of other changes in compensation negotiated in comparable collective agreements would lead to a bigger difference between the 1% cap imposed by the Act and results achieved in other negotiated collective agreements.

[144] Again, this factor is not determinative. However, unlike in previous wage restraint legislation decisions, the difference between the 1% cap in the Act and the terms of negotiated agreements does not support a finding that the Act had little impact on the respondents’ ability to come together and negotiate with their employers in pursuit of their collective interests.

(4) Conclusion on s. 2(d) interference

[145] I agree with the application judge’s conclusion that the Act substantially interferes with the respondents’ collective bargaining rights. First, it affects a matter of central importance to collective bargaining, namely wages. Second, the circumstances leading up to the passage of Bill 124 and the characteristics of the Act substantially impact the respondents’ ability to participate in good faith collective bargaining and consultation. The Act did not come after a significant or meaningful process of collective bargaining. While this could have been attenuated by meaningful consultation over Bill 124 itself, no meaningful consultation took place. Further, the broad definition of compensation significantly limits the areas of potential negotiation left on the table for collective bargaining. Moreover, the Act does not provide a meaningful avenue for negotiating or seeking potential exemptions from the 1% cap in appropriate circumstances. Finally, the 1% cap on salary and compensation increases does not replicate collective agreements reached in other public sector bargaining. In combination, these factors persuade me that the Act substantially interferes with the respondents’ ability to participate in good faith negotiation and consultation with their employers.

H. Is the Act saved by s. 1 of the Charter?

[146] Section 1 of the Charter provides that the Charter “guarantees the rights and freedoms set out in it subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.”

[147] Once a law has been found to violate a Charter right, the government bears the onus of establishing that the law is a reasonable limit on that right. This must be shown on a balance of probabilities: Health Services, at paras. 138-39.

[148] The test in R. v. Oakes, 1986 CanLII 46 (SCC), [1986] 1 S.C.R. 103, applies to deciding whether a law is saved by s. 1 of the Charter. The government must first establish that the impugned law pursues a pressing and substantial objective. Next, the government must establish that the objective of the law is proportional to the means chosen to achieve the objective. This aspect of the test has three components. First, there must be a rational connection between the pressing and substantial objective and the means chosen to achieve the objective. Second, the law must be minimally impairing. Third, the salutary effects of the law must be proportional to its deleterious effects. Further, “the Oakes test must be applied flexibly, having regard to the factual and social context of each case”: RJR-MacDonald Inc. v. Canada (Attorney General), 1995 CanLII 64 (SCC), [1995] 3 S.C.R. 199, at para. 132.

[149] In Health Services, at para. 108, the Supreme Court explained that, in the context of a law infringing the right to collective bargaining under s. 2(d) of the Charter:

[Section 1] may permit interference with the collective bargaining process on an exceptional and typically temporary basis, in situations, for example, involving essential services, vital state administration, clear deadlocks and national crisis.

[150] As discussed below, I find that the Act is not saved by s. 1 of the Charter. I accept that Ontario has established that the Act has a pressing and substantial objective. However, while I find that the objective is generally rationally connected to the Act, I do not find that the objective is rationally connected in its application to workers in the electricity sector, namely the members of the Society of United Professionals and PWU, or to the members of the Carleton University Academic Staff Association and academic staff at other universities. In addition, I am not persuaded that the Act minimally impairs the respondents’ collective bargaining rights or that its salutary effects are proportional to its deleterious effects. I address each of these issues below.

[151] Before doing so, however, I note that, in Meredith, the Supreme Court did not conduct a s. 1 analysis. In contrast, in Gordon and Procureur général, despite the courts’ findings that the legislation in those cases did not violate s. 2(d), the courts nevertheless conducted s. 1 analyses, finding in each case that, even if the ERA did violate s. 2(d), it would have been saved by s. 1 of the Charter. Accordingly, in addressing each of the parts of the s. 1 analysis, I will address and distinguish those cases as appropriate.

(1) Pressing and substantial objective

[152] The application judge did not accept that Ontario established a pressing and substantial objective for two primary reasons. First, he did not accept that Ontario put forward a workable definition of a pressing and substantial objective. On that basis, he redefined the objective. Second, he found that Ontario had not established that the province was in a financial crisis such that Ontario’s objective was pressing and substantial.

[153] In my view, having regard to the jurisprudence in this area and the evidence, the application judge failed to give sufficient deference to the government’s ability to pursue its priorities in financial and budgeting matters. I start with a discussion of the definition of the objective, followed by a discussion of whether Ontario established that the objective is pressing and substantial.

(a) Definition of objective

[154] At the hearing below, as described by the application judge, Ontario submitted that the objective of the Act was “to moderate the rate of growth of compensation increases for public sector employees so as to manage the Province’s finances in a responsible manner and to protect the sustainability of public services.” The application judge found that this objective “conflate[d]” the means of achieving the objective with the objective itself. He explained that:

The responsible management of Ontario’s finances and the protection of sustainable public services is an objective which may be capable of meeting the pressing and substantial need test. The moderation of public-sector wages strikes me more as a means to achieve responsible financial management than as an objective in itself. To determine whether moderating wages amounts to a pressing and substantial need, one must understand why the wage increases are being moderated.

[155] On this basis, the application judge redefined the objective as “the responsible management of Ontario’s finances and the protection of sustainable public services.”

[156] Before this court, Ontario again submitted that the objective of the Act was “to moderate the rate of growth of compensation increases for public sector employees so as to manage the Province’s finances in a responsible manner and to protect the sustainability of public services.” During argument, Ontario submitted that the responsible management of the province’s finances and sustainability of public services is the Act’s main objective, and that the moderation of the rate of growth of compensation increases for public sector employees is its sub-objective. Ontario submits that the application judge erred in redefining the objective.

[157] I agree with the application judge. His redefinition of the Act’s objective was consistent with the case law and with the preamble to the Act.

[158] The Supreme Court has explained that the objective of a law must not be stated in too general terms because, otherwise, “it will provide no meaningful check on the means employed to achieve it: almost any challenged provision will likely be rationally connected to a very broadly stated purpose”: R. v. Moriarity, 2015 SCC 55, [2015] S.C.R. 485, at para. 28; see also Frank v. Canada (Attorney General), 2019 SCC 1, [2019] 1 S.C.R. 3, at para. 46. On the other hand, an articulation that is too narrow “may merely reiterate the means chosen to achieve it”: Frank, at para. 46. On this basis, the Supreme Court has stated that a law’s purpose should be “both precise and succinct” and distinguished from the means chosen to implement it: Moriarity, at para. 29; see also Thomson Newspapers Co. v. Canada (Attorney General), 1998 CanLII 829 (SCC), [1998] 1 S.C.R. 877, at para. 23.

[159] In this case, I agree with the application judge’s articulation of the objective as the responsible management of the province’s finances and the protection of sustainable public services. The moderation of public service wages is a means to that end; it is not a valid objective on its own.

[160] This is evident from the wording of the preamble of the Act and the Act’s purpose, which emphasize that its goals are responsible fiscal management and sustainability of public services, and that the means to achieving this goal is the moderation of public sector employee wages. For the purpose of highlighting this point, portions of the preamble are reproduced below, with emphasis on the stated goals of fiscal responsibility and preservation of public sector services:

The Government is committed to restoring the Province’s fiscal health by putting Ontario on a path to balance the budget in a responsible manner. As outlined in the Government’s 2019 Budget, the Government inherited a very substantial deficit. Ontario’s accumulated debt is among the largest subnational debts in the world, and the Province’s net debt to Gross Domestic Product ratio exceeds 40 per cent. Interest on debt payments is the fourth largest line item in the 2019 Budget after health care, education and social services.

Restoring sustainability to the Province’s finances is in the public interest and is needed to maintain important public services that matter to the people of Ontario. The Government seeks to ensure the sustainability of public services by restoring fiscal balance and lowering Ontario’s debt burden as a percentage of Gross Domestic Product. The Government also seeks to protect front-line services and the jobs of the people who deliver them.

A substantial proportion of government program expenses is applied to public sector compensation, whether paid directly by the Province to Ontario Public Service employees or provided indirectly to employees in the Broader Public Sector. Given the fiscal challenge the Province is facing, the growth in compensation costs must be moderated to ensure the continued sustainability of public services for the future.

This Act contains fiscally responsible measures to address compensation in the Ontario Public Service and for specified Broader Public Sector employers. These measures would allow for modest, reasonable and sustainable compensation growth for public sector employees. For public sector employees who collectively bargain, these measures respect the collective bargaining process, encourage responsible bargaining, and ensure that future bargained and arbitrated outcomes are consistent with the responsible management of expenditures and the sustainability of public services. [Emphasis added.]

[161] Similarly, s. 1 of the Act states that its purpose is “to ensure that increases in public sector compensation reflect the fiscal situation of the Province, are consistent with the principles of responsible fiscal management and protect the sustainability of public services” (emphasis added).

[162] As structured and worded, the preamble and purpose of the Act emphasize that its objective is to address the province’s fiscal situation and to sustain public services, and that the means to those ends is the moderation of public service wages.

[163] Before concluding on this issue, it is worth reviewing the objectives of the ERA. In Gordon, at para. 192, and Procureur général, at para. 67, the courts described the three objectives of the ERA as follows:

• Display leadership through diligent management of public funds in periods of economic difficulty;

• Ensure management of costs associated with public sector compensation that is predictable and that sustainably contributes to the solidity of the government’s financial position; and

• Reduce undue upward pressure on private sector salaries.

[164] Notably, unlike Ontario’s proposed sub-objective in this case, these stated objectives are not the reduction or moderation of public sector wages per se, but are rather focused on the management of public funds in a time of crisis and establishing leadership vis-à-vis private sector wages.

[165] In oral argument, Ontario relied on the decision in Health Services to argue that it is appropriate to have a main objective with sub-objectives. Ontario submitted that, in this case, fiscal responsibility and the maintenance of public services is the main objective, while moderation of public sector wages is the sub-objective. There is no doubt, in accordance with Health Services, that it may be appropriate to have a main objective and sub-objectives. However, in this case, unlike in Health Services, Ontario’s proposed sub-objective of moderating public sector wages is the means of achieving the main objective and not a sub-objective.

[166] Accordingly, I agree with the application judge’s re-characterization of the objective of the Act as the responsible management of the province’s finances and the protection of sustainable public services.

(b) The objective is pressing and substantial

[167] While I agree with the application judge’s characterization of the Act’s objective, I do not agree with his finding that Ontario did not establish that the objective as restated was pressing and substantial. In my view, the application judge’s decision shows insufficient deference to the legislature’s ability to identify policy priorities, especially on fiscal and labour matters.

(i) General principles

[168] As a general principle, Ontario must establish that the Act’s objective is “of sufficient importance to warrant overriding a constitutionally protected right or freedom”: R. v. Big M Drug Mart Ltd., 1985 CanLII 69 (SCC), [1985] 1 S.C.R. 295, at p. 352. This ensures that “objectives which are trivial or discordant with the principles integral to a free and democratic society do not gain s. 1 protection”: Oakes, at p. 138.

[169] As this court stated in Gordon, “[t]his stage … is not usually an evidentiary contest. Rather, ‘the proper question at this stage of the analysis is whether the Attorney General has asserted a pressing and substantial objective’ and a ‘theoretical objective asserted as pressing and substantial is sufficient for purposes of the s. 1 justification analysis’”: at para. 196 (emphasis in original), citing Harper v. Canada (Attorney General), 2004 SCC 33, [2004] 1 S.C.R. 827, at paras. 25-26. The court also noted, at para. 199, that “[m]ost s. 1 Charter cases move quickly past the first stage of determining whether a government’s objectives were pressing and substantial.”

[170] In Gordon, at para. 224, this court further emphasized the deference courts owe governments in setting their policy objectives, specifically in the context of labour legislation:

Courts conducting full-scale Oakes assessments in relation to labour legislation are obliged to delve deeply into government fiscal policy and its determination in highly sensitive areas. Judicial probing will lead inevitably into real tensions about the respective roles of Parliament and the judiciary in governing Canada, since s. 1 of the Charter places courts in the role of final arbiter of constitutional rights. Courts have recognized, through a series of limiting principles, that judicial deference to government policy determinations is prudent as a matter of institutional capacity and the constitutional legitimacy of judicial review. In general terms, judges ought not to see themselves as finance ministers.

[171] The court went on to list the limiting principles as: 1) the separation of powers between legislatures, the courts and the executive; 2) the recognition of the respective institutional capacities of each branch; and 3) the core competencies of each branch, including the government’s core competency in determining economic policy, budgeting decisions, the proper distribution of resources in society, labour relations regulation and how best to respond to situations of crisis. Regarding these core competencies, the court observed, at para. 234, that “most importantly, it is a core function of government to provide leadership in times of crisis, when something must be done to protect the common good.” Further, when complex policy issues are at stake, the court should refrain from second-guessing, in hindsight, the legislatures’ policy decisions: Gordon, at para. 293.

[172] Despite the direction to defer to legislatures’ policy decisions, especially in matters involving decisions related to their core competencies, this court in Gordon nevertheless noted that “deference never amounts to submission, since that would abrogate the court’s constitutional responsibility…. ‘The role of the judiciary in such situations lies primarily in ensuring that the selected legislative strategy is fairly implemented with as little interference as is reasonably possible with the rights and freedoms guaranteed by the Charter’”: at para. 236, citing PSAC v. Canada, 1987 CanLII 89 (SCC), [1987] 1 S.C.R. 424, at p. 442, per Dickson C.J. (dissenting in part).

[173] In addition, as discussed more fully below, the Supreme Court has consistently stated that concerns over managing a limited budget cannot normally serve as a free-standing pressing and substantial objective and that attempts to justify Charter right infringements based on budgetary constraints will be approached with strong skepticism: Nova Scotia (Workers’ Compensation Board) v. Martin, 2003 SCC 54, [2003] 2 S.C.R. 504, at para. 109; Newfoundland (Treasury Board) v. N.A.P.E., 2004 SCC 66, [2004] 3 S.C.R. 381, at para. 72; Health Services, at para. 147; and Conseil scolaire francophone de la Colombie-Britannique v. British Columbia, 2020 SCC 13, [2020] 1 S.C.R. 678, at para. 153.

(ii) The application judge’s decision

[174] The application judge started his analysis of this issue by reviewing s. 1 decisions that involved the invocation of budgetary concerns as the basis for a pressing and substantial government objective. He noted the line of cases referred to above in which courts have stated that budgetary concerns should be treated as “suspect”. He further noted that cases in which budgetary concerns were accepted as pressing and substantial objectives involved situations of financial emergency, including the 2008 financial crisis leading to the ERA, and the substantial cut in transfer payments which caused a downgrade in Newfoundland’s debt and higher interest payments in N.A.P.E. Based on this review of the jurisprudence, the application judge concluded that for an objective based on budgetary considerations to be pressing and substantial, there must be “some level of urgency”, which, consistent with Conseil scolaire, he described as requiring something “more than the day-to-day business of government.”

[175] On this basis, the application judge went on to review the evidence available in this case and determined that the Act was not passed in the context of a crisis or an emergency. In doing so, he reviewed the evidence Ontario relied on in support of the Act’s objective.

[176] First, he noted that, after the 2018 election, the Ontario government appointed an Independent Financial Commission of Inquiry. The Commission delivered a report in August 2018 that stated a deficit of $3.7 billion for 2017-2018 and projected a deficit of $15 billion for 2018-2019.

[177] Second, Ontario relied on the expert evidence of Dr. David Dodge, a professor of economics, which the application judge summarized as follows:

Dr. Dodge points to the following challenges in Ontario’s fiscal situation in 2019: Its economic growth would be lower than the growth for government services. Without adjustments this would lead to continuing, growing deficits which may reduce the scope of available fiscal stimulus to respond to changes in the business cycle when needed. A higher debt to GDP ratio also results in higher borrowing costs and further limits the government’s scope of fiscal intervention when needed. Unless controlled, the situation would at some point become unsustainable.

In 2018-19 Ontario’s net debt to GDP ratio was projected to be 40.7%. In Dr. Dodge’s view it should be brought below 40% and remain there.

Dr. Dodge also warns of the possibility of rising interest rates increasing Ontario’s debt service cost to revenue ratio. The Supreme Court of Canada has recognized that governments can act in the present with a view to prevent future deterioration to justify infringing measures under s. 1. In Dr. Dodge’s view, the ratio of debt service costs to revenues “should be significantly less than 10%.” In 2019 that ratio was 8%. Ontario’s projections had it rising to 9% in 2027. The most recent evidence before the court is that the debt cost to revenue ratio is 7.4% for the year 2020-21 with projections for subsequent years through to 2025 varying between 7.5% and 7.6%.

Dr. Dodge’s report also describes ensuring fiscal sustainability as a “herculean challenge for the Ontario government” and that “compensation restraint constituted a critical element of any fiscal consolidation strategy.” [Footnotes omitted.]

[178] The application judge went on to note that Ontario did not claim that the province faced a severe financial crisis. Rather, Dr. Dodge’s evidence was that the cost of debt would potentially rise “at some future unspecified point.” The application judge stated that this called for prudent fiscal management, but it did not justify a Charter breach.

[179] In this context, the application judge noted various other government policies which he found belied any sense of urgency or crisis. For example, he noted that, in 2019, the government introduced tax cuts that had the effect of reducing revenues in an amount far beyond the savings to be achieved by the Act. As a further example, in 2022, the government eliminated revenue from license plate stickers, which again reduced revenue by an amount that far exceeded the savings to be achieved by the Act.

[180] Ultimately, the application judge concluded as follows:

This brings me back to the point that although managing public resources in a way to sustain public services can amount to a pressing and substantial objective in appropriate circumstances, Ontario has not, on my view of the evidence, demonstrated that the economic conditions in 2019 were of a sufficiently critical nature to warrant infringing on the constitutionally protected right to collective bargaining.

(iii) The Act’s objective is pressing and substantial

[181] In my view, the application judge erred in his approach to the analysis of whether Ontario had posited a pressing and substantial objective because he failed to give sufficient deference to the legislature’s policy objectives. This is not a case in which the government’s only rationale for the policy was a desire to better manage its finances. Rather, based on various information about its deficit and economic forecasts, the government concluded that any interest rate increase could lead to financial difficulties and therefore sought to proactively avert a potential fiscal crisis. Indeed, as Dr. Dodge explained, the province was facing a growing gap between its spending and revenues, resulting in increasing debt and debt service charges. Borrowing to finance the ongoing deficit threatened the province’s fiscal sustainability by reducing the scope of traditional fiscal stimulus to respond to changes in the business cycle, increasing the risk premium on the province’s debt, and forcing the province to spend more of its revenue on the interest costs of the debt. Managing these fiscal and budgetary concerns is one of government’s core responsibilities. As held in Gordon, the court should defer to these types of policy objectives.

[182] While I appreciate that the Supreme Court has warned that courts should treat fiscal rationales as constitutionally suspect, these are ultimately matters of degree. Fiscal prudence on its own may be constitutionally suspect. However, where fiscal prudence arises from the government’s determination that it faces a real potential for fiscal crisis, the court should not engage in an overly technical analysis of the economic evidence and should refrain from analyzing subsequent savings or spending policies to assess the credibility of the government’s stated objective. Governments are entitled to set policy objectives and one of their core areas of policy-making is fiscal and budgetary. If the government can state a pressing and substantial objective that is rooted in its evidence, the court should defer to that policy choice. As held in Gordon, at para. 242, “the court should generally accept Parliament’s objectives at face value, unless there is an attack on the good faith of the assertion of those objectives or on their patent irrationality”. This does not mean that the other branches of the Oakes test will be met, but governments should be granted a generous margin for determining when and how to address and avoid a potential fiscal crisis.

[183] Accordingly, contrary to the application judge’s finding, I accept that Ontario has put forward a pressing and substantial objective in support of the Act.

[184] However, this does not end the inquiry. I now turn to the proportionality assessment, starting with the rational connection analysis.

(2) Rational connection

[185] I agree with the application judge that the Act is, for the most part, rationally connected to the government’s objectives. However, as found by the application judge, I see no rational connection between the Act’s objectives and its application to workers in the electricity sector or the university sector.

(i) General principles

[186] On this branch of the Oakes test, the question is whether the impugned measure is rationally connected to the pressing and substantial objective: Health Services, at para. 148; Mounted Police, at para. 143. It is sufficient for the government to show that it is reasonable to suppose that the measure may further the objective – not that it will actually do so: Alberta v. Hutterian Brethren of Wilson Colony, 2009 SCC 37, [2009] 2 S.C.R. 567, at para. 48. Nevertheless, the measure must not be arbitrary, unfair or based on irrational considerations: Canada v. Taylor, 1990 CanLII 26 (SCC), [1990] 3 S.C.R. 892, at p. 921.

[187] The evidentiary burden at this stage is “not particularly onerous”: Health Services, at para. 148, citing Little Sisters Book and Art Emporium v. Canada (Minister of Justice), 2000 SCC 69, [2000] 2 S.C.R. 1120, at para. 228, per Iacobucci J. (dissenting). Direct proof of a causal relationship between the measure and the objective is not required: Thomson Newspapers Co., at para. 39.

(ii) The application judge’s decision

[188] The application judge accepted that, for those wages that the government pays directly, there is a rational connection between the Act’s objective and moderating compensation increases:

Compensation represents roughly half of the Province’s expenditures. Moderating the rate [of] compensation increases is therefore logically related to the responsible management of the Province’s finances and the protection of the sustainability of public services insofar as it concerns wages that Ontario pays for directly. [Footnote omitted.]

[189] However, the application judge did not accept that there was a rational connection in the context of the electricity sector and the Carleton University Academic Staff Association. He also held that any rational connection in the long-term care sector was “at best remote.”

[190] With respect to the electricity sector, the application judge found that OPG, OEB and IESO are self-funded, and that they do not receive any funds from the Ontario government to pay employee salaries. In addition, he found that, while some of the profits generated from electricity may be redirected to the province’s consolidated revenue fund, this redirection is not automatic; extra profits may be used to credit consumers with future rate adjustments. The application judge also rejected an argument by Ontario that moderating wage increases for employees in the electricity sector would lower or moderate the cost of electricity because this does not fall within the stated purposes of the Act. The application judge ultimately concluded that “[g]iven that Ontario does not fund compensation of employees at OPG, the OEB or the IESO, there is no rational connection between their inclusion in the Act and the responsible management of Ontario’s finances or the sustainability of its public services.”

[191] With respect to the Carleton University Academic Staff Association, the application judge found no rational connection based on his finding that, while the province provides some funding to Carleton University, moderating the wages of the Association’s members would have no impact on the amount the province is obligated to provide to the University. The application judge found that the province generally provides funding that covers 30 to 35% of the University’s budget. The rest of its funding comes from tuition fees, donations, grants and other sources. As described by the application judge, the province provides funding to the University pursuant to a Strategic Mandate Agreement (“SMA”), which sets the maximum amount of funding the province will provide the University each year (the province has similar SMAs with other universities in Ontario). The specific funding the province provides to the University depends on various metrics, which do not include the salaries the University negotiates with the Association’s members. Under the circumstances, including the fact that funding for the University was “locked in” under the current SMA until 2025, the application judge concluded that it is difficult to find a rational connection between the Act’s objectives and the salaries paid to the Association’s members.

[192] With respect to the long-term care sector, the application judge found that any rational connection between the Act’s objective and moderating compensation for workers in long-term care homes was at best remote because long-term care workers are not paid directly by the province. The application judge explained that long-term care homes receive a fee per patient based on the level of care each patient requires. Accordingly, the province would only bear indirect responsibility for any increased wages if those increases led long-term care homes to demand higher daily fees for patients under their care. Further, the application judge noted that only 24% of the province’s long-term care homes are covered by the Act. If higher wages in the remaining 76% of long-term care homes led to demands for increases in the daily patient fee, the Act would do nothing to limit those demands.

(iii) The Act is rationally connected to its objective, except in the energy sector and the university sector

[193] I agree with the application judge that, generally, the objective of the Act is rationally connected to wage moderation. As a matter of logic and common sense, moderating compensation increases will help achieve the government’s goals of responsible management of its finances and the protection of sustainable public services.

[194] I also agree with the application judge that this logic does not apply to the electricity sector. Given that OPG, OEB and IESO are self-funded, imposing a cap on compensation that can be paid to their employees cannot logically lead to a decrease in the province’s expenses. While Ontario speculates that moderating wage increases would allow OPG to generate more profits that could lead to an increase in the province’s revenue from electricity, this is, at best, remote and speculative given that OPG is already earning above the permitted rate of return and no revenue flows from OEB and IESO to the province. More importantly, the goals of the Act are not to increase the province’s revenues but to manage its spending and maintain public services.

[195] Similarly, I agree with the application judge that there is no rational connection between the Act’s objectives and imposing caps on compensation for members of the Carleton University Academic Staff Association or, by extension, academic staff at other universities. As the application judge explained, there is no direct relationship between the funding the province provides to Carleton University (and other universities) and the compensation it pays to its employees. The province has agreed to pay a fixed amount to the University until 2025. The University receives multiple sources of funding, and can negotiate over compensation increases without any impact on the amount the province is obligated to pay under the SMA.

[196] I do not agree with the application judge’s finding with respect to the long-term care sector. As the application judge correctly noted, the province does not pay long-term care workers directly, but rather provides long-term care homes a daily fee for each patient based on the level of care that patient requires. The fact that the province does not pay long-term care workers directly, however, is not determinative. The application judge found that increased wages for long-term care workers could lead homes to demand higher daily fees for the patients under their care. While the relationship is somewhat tenuous, based on this finding, I accept that there is a rational connection between the Act’s objective and moderating compensation increases in the long-term care sector.

[197] Accordingly, with the exception of members of the unions representing employees discussed above who work in the electricity and university sectors, I am satisfied that the measures in the Act are rationally connected to its objectives.

(3) Minimal impairment

[198] I agree with the application judge that the Act did not minimally impair the respondents’ right to collective bargaining under s. 2(d) of the Charter.

(i) General principles

[199] In Carter, at para. 102, the Supreme Court explained this stage of the Oakes analysis as follows:

At this stage of the analysis, the question is whether the limit on the right is reasonably tailored to the objective. The inquiry into minimal impairment asks “whether there are less harmful means of achieving the legislative goal” (Hutterian Brethren, at para. 53). The burden is on the government to show the absence of less drastic means of achieving the objective “in a real and substantial manner” (ibid., at para. 55). The analysis at this stage is meant to ensure that the deprivation of Charter rights is confined to what is reasonably necessary to achieve the state’s object.

[200] In Libman v. Quebec (Attorney General), 1997 CanLII 326 (SCC), [1997] 3 S.C.R. 569, the Supreme Court emphasized that “the law must be carefully tailored so that rights are impaired no more than necessary”: at para. 58, citing RJR-MacDonald Inc., at para. 134. While the court accords deference to the legislature’s choices, deference does not insulate the government from having to demonstrate that an impugned measure is minimally impairing and justified under s. 1: U.F.C.W., Local 1518 v. KMart Canada Ltd., 1999 CanLII 650 (SCC), [1999] 2 S.C.R. 1083, at paras. 62-64. At the same time, however, legislators are not held to a level of perfection; the court should not find a law minimally impairing because it can “conceive of an alternative which might better tailor the objective to infringement”: Libman, at para. 58; see also Martin, at para. 112.

(ii) The application judge’s decision

[201] The application judge found that Ontario did not demonstrate that the Act was minimally impairing because it “failed to explain why it could not have pursued voluntary wage restraint. In any collective bargaining negotiation with public sector employees, Ontario could have taken the position that it was not able to pay more than a 1% wage increase.”

[202] In reaching this conclusion, the application judge noted the evidence of Professor Christopher Riddell, an expert put forward by Ontario, who “gave many examples throughout his report of negative wage settlements that had been voluntarily agreed to in the public sector.” Professor Riddell identified groups of workers who agreed to 0% wage increases at various points in time. For example, nurses in the hospital sector agreed to wage freezes in 2011 and 2012, and secondary school teachers agreed to a wage freeze in 2014.

[203] The application judge observed that the province could have taken this approach with its direct employees and that it could have also used various tools to control wage increases in the broader public sector through other means of influencing collective bargaining. For example, while the province does not employ teachers, it nevertheless participates in central bargaining with the teachers’ unions over wages and other compensation matters. As another example, in the long-term care sector, the province could control its expenditures by freezing the daily patient fees it pays.

[204] Finally, the application judge stated that Ontario had not demonstrated why the Act was minimally impairing with respect to the electricity sector and university sector because, as discussed in the rational connection section, there was no evidence that a 1% cap on compensation increases would have any impact on government expenditures in those sectors.

(iii) The Act is not minimally impairing

[205] I agree with the application judge that the Act is not minimally impairing essentially for the reasons he provided.

[206] Ontario provided no evidence that the province could not achieve the same goals through collective bargaining with the employees under its direct employment and by capping the funding it provides to broader public sector employers thereby limiting the money those employers would have available for collective bargaining with their employees.

[207] As discussed above, the province had not tried to negotiate collective agreements with the respondents in which it put forward the position that it would not agree to increases in compensation above 1% per year. There was no evidence that further negotiation would be futile. As noted by the application judge and as discussed above, there were several examples in the record of agreements in prior years where wage increases were capped at 0%, not even allowing for increases that accounted for inflation. In addition, while I accept that Ontario’s objective is pressing and substantial, there is no evidence of urgency or of an imminent need to impose a cap on compensation increases, such that there was no time to achieve the desired cost savings through negotiations.

[208] As also discussed above, the right to collective bargaining protected by s. 2(d) is not a right to an outcome but a right to a process of collective bargaining. In my view, Ontario has failed to explain why, in this case, the right to such a process should be infringed without first attempting to engage in a process of good faith bargaining.

[209] Ultimately, the only potential rationale for obviating the process of collective bargaining is expediency. However, in the absence of any evidence showing a need for expediency, imposing broad-based legislation of this nature is not minimally impairing.

[210] Ontario argues that at the minimal impairment stage of the analysis, the court is only permitted to look at whether different legislative provisions could have been implemented that would be less impairing and that it was improper for the application judge to consider voluntary wage restraint as an alternative because this was not a legislative alternative. I reject this argument. Ontario has provided no authority for this position. More importantly, in the context of a s. 2(d) analysis, it is logically relevant to consider whether the government’s goals can be achieved without impeding the process of collective bargaining through legislation.

[211] Even if one were to accept Ontario’s argument that the only appropriate comparator on a minimal impairment analysis must be legislative, Ontario has failed to demonstrate that the Act is minimally impairing of the respondents’ collective bargain rights. Notably, as discussed above, the government’s failure to implement a meaningful process that would allow for exemptions demonstrates that the Act is not minimally impairing. I accept that a meaningful exemption process could provide evidence that legislation is carefully tailored to meet its objective by providing a mechanism to alleviate against a law’s potential disproportionate impact in a particular case. In this case, however, for the reasons discussed above, there is no evidence that the exemption process in s. 27 of the Act has provided such a mechanism. Ontario has not advanced evidence to establish that, as implemented, the exemption process affords a meaningful channel for negotiation and collective bargaining.

[212] Accordingly, I find that Ontario has not demonstrated that the Act is minimally impairing.

(4) Proportionality

[213] Having found that the Act is not minimally impairing, it is technically not necessary to consider whether its salutary effects are proportional to its detrimental effects: Carter, at para. 122.

[214] Nevertheless, dealing with this issue briefly, I note that many of the same considerations that lead me to conclude that the Act is not minimally impairing lead to the conclusion that its detrimental effects outweigh its salutary effects.

(i) General principles

[215] This last branch of the s. 1 analysis asks whether there is proportionality between the overall effects of the Charter-infringing measure and the legislative objective: Hutterian Brethren, at paras. 72-73. The court must turn its mind to the effects of the measure to determine, on a normative basis, whether the infringement of the right in question can be justified in a free and democratic society: Frank, at para. 76. This requires a balancing between the measure’s salutary and deleterious effects: Hutterian Brethren, at para. 100. In R. v. K.R.J., 2016 SCC 31, [2016] 1 S.C.R. 906, at para. 79, the Supreme Court explained the court’s task in the following terms:

It is only at this final stage that courts can transcend the law’s purpose and engage in a robust examination of the law’s impact on Canada’s free and democratic society “in direct and explicit terms”…. In other words, this final step allows courts to stand back to determine on a normative basis whether a rights infringement is justified in a free and democratic society. Although this examination entails difficult value judgments, it is preferable to make these judgments explicit, as doing so enhances the transparency and intelligibility of the ultimate decision. Further, as mentioned, proceeding to this final stage permits appropriate deference to Parliament’s choice of means, as well as its full legislative objective.

(ii) The application judge’s decision

[216] The application judge was not satisfied that the Act’s infringement on collective bargaining rights was justified. His conclusion on this issue rested heavily on his finding, which I have not accepted, that Ontario did not put forward a pressing and substantial objective.

[217] First, he rejected Ontario’s argument, which drew on evidence from Professor Riddell, that bringing public sector wages in line with private sector wages was a valuable and proportionate social goal, reasoning that the argument was premised on dated evidence, ignored large sectors of the public service where there is no wage gap, and overlooked Professor Riddell’s acknowledgment that any gap was attributable at least in part to unionization. In the application judge’s view, any attempt to eliminate an alleged wage gap was therefore an attempt to reverse the benefits of collective bargaining.

[218] Second, the application judge observed that some of the same issues that appeared in his pressing and substantial objective analysis were relevant to balancing the Act’s salutary and deleterious effects. Drawing on the stated objective of the Act, he reasoned that it was a “day-to-day government duty” to moderate compensation to responsibly manage government expenditures and that such a duty only warrants a breach of Charter rights in unusual circumstances.

[219] Third, the application judge opined that the question of wage restraint could have been resolved as part of the collective bargaining process. Instead, the government took a “key tool” away from unions and, in doing so, not only interfered with collective bargaining but also “hampered the development of public consensus on the issue.”

[220] Finally, the application judge stated that even if the government wanted to avoid the risk of strikes, it did not explain why the tax cuts it implemented could not have been smaller to maintain the respondents’ Charter rights.

(iii) The Act’s salutary effects are not proportional to its deleterious effects

[221] I agree with the application judge that the Act’s salutary effects are not proportional to its deleterious effects, although I arrive at this conclusion through somewhat different reasoning.

[222] The government is responsible for ensuring responsible fiscal management and the delivery of public services to Ontarians. These are core government functions. Ontario put forward some evidence that it would be most prudent to manage potential financial challenges by decreasing the province’s debt load and reducing its spending. Public sector wages are a significant proportion of government spending. The Act would no doubt assist the government in reaching these goals.

[223] However, I cannot accept that the circumstances surrounding the government’s decision to enact the legislation justify its infringement of the Charter. Ontario has not been able to explain why wage restraint could not have been achieved through good faith bargaining. While I accept that Ontario has stated a pressing and substantial objective, in the proportionality analysis, the degree to which the objective is pressing becomes relevant: Oakes, at p. 140. In the absence of evidence establishing a need to proceed with expediency, it is difficult to see how the Act’s benefits outweigh its substantial impact on the respondents’ collective bargaining rights.

[224] Ontario’s argument that s. 2(d) of the Charter is meant to protect the process of collective bargaining and not specific outcomes becomes relevant again. There is no dispute that the government can seek to keep compensation increases to 1% per year or less. The issue becomes the process through which the government arrived at this outcome. In the absence of any evidence for the need for expediency or that the same goal cannot be achieved through collective bargaining, it is hard to understand on what basis the Act’s salutary effects outweigh its deleterious effects.

[225] In contrast, because of the Act, organized public sector workers, many of whom are women, racialized and/or low-income earners, have lost the ability to negotiate for better compensation or even better work conditions that do not have a monetary value. Considering these impacts against the Act’s purported benefits leads me to conclude that, on balance, the Act’s infringement cannot be justified. By imposing a cap on all compensation increases with no workable mechanism for seeking exemptions, the deleterious effects of the Act outweigh its salutary effects.

(5) Conclusion on s. 1 of the Charter

[226] Accordingly, in my view, the Act is not saved by s. 1 of the Charter. While I accept that the Act pursues a pressing and substantial objective and that the means it uses are generally rationally connected to its goals, it is not minimally impairing and its salutary effects are outweighed by its detrimental effects.

I. Remedy

[227] Having found that the Act violates s. 2(d) of the Charter and that it is not saved by s. 1, the application judge struck the whole statute. This was an error.

[228] The Act applies to represented and non-represented employees. The rights protected by s. 2(d) of the Charter do not apply in the same way to non-represented employees and accordingly the Act is only unconstitutional in so far as it applies to the represented employees covered by the Act.

[229] At the hearing of the appeal, one of the respondents’ counsel suggested that the application judge’s order should stand because non-represented employees may wish to organize for the purpose of bargaining collectively in the future. This may well be the case. However, as long as they remain non-represented, the Act is not unconstitutional in so far as it applies to non-represented employees.

J. Conclusion and disposition

[230] Accordingly, I would grant the appeal, but only to the extent of varying the disposition to declare that the Act is invalid in so far as it applies to represented employees.

[231] If the parties are unable to agree on costs, they are to make submissions in writing. The respondents, as the more successful parties, are to make submissions not exceeding 3 pages, exclusive of their bills of costs, to be submitted to the court within 14 days of the release of this judgment. Ontario is to make responding submissions not exceeding 15 pages, exclusive of its bill of costs, within 14 days thereafter.

[232] In accordance with the orders granting leave to intervene to the interveners, no costs are awarded to or against the interveners.

“L. Favreau J.A.”

“I agree. Doherty J.A.”

Hourigan J.A. (dissenting):

A. Introduction

[233] On occasion, courts must engage with principles that lie at the heart of our judicial system. This is such a case. The principle put in play by the reasons of my colleagues and the application judge is the separation of powers between the legislature and the courts. As will be discussed, when judges second guess a government’s policy decisions in the course of their Charter of Rights and Freedoms analysis, they are touching the third rail of judicial reasoning. Such conduct imperils the legitimacy of constitutional judicial review.

[234] The analysis of the application judge and my colleagues on the issue of whether s. 2(d) of the Charter has been violated demonstrates an incautious approach about wading into matters that have always been within the exclusive remit of the legislative branch. In addition, my colleagues offer unconvincing grounds to distinguish a series of binding authorities from the Supreme Court, effectively avoiding what is settled precedent.

[235] I conclude that there has been no violation of s. 2(d), as Bill 124, the Protecting a Sustainable Public Sector for Future Generations Act, 2019, S.O. 2019, c. 12 (“Bill 124” or the “Act”), has not substantially interfered with associational rights guaranteed under that section.

[236] In his s. 1 analysis, the application judge eschewed the law at every stage of the Oakes test, offered his own gratuitous views on policy making, and declined to meaningfully engage with the evidence, creating a nearly impossible burden for Ontario (or the “Province”) to meet. That analysis is built on legal errors and palpable and overriding factual errors and must be set aside. My colleagues have not endorsed the application judge’s reasoning in its entirety. Still, they have repeated many of the same errors in law in their rational connection, minimal impairment, and proportionality analyses.

[237] I conclude, in the alternative, that if Bill 124 breached s. 2(d), it is a reasonable limit prescribed by law and is demonstrably justified in a free and democratic society.

[238] In these reasons, I will first briefly review the separation of powers between the judiciary and the legislature and then consider jurisprudence regarding s. 2(d) and collective bargaining. Next, I will consider, in the alternative, the issue of whether Bill 124 is justified under s. 1 of the Charter and whether the application judge erred in striking the law down in its entirety. In my view, the appeals should be allowed, the order of the application judge set aside, the applications dismissed, and Ontario should be awarded its costs of the applications below and in this court.

B. Analysis

(1) Separation of Powers

[239] The Charter is the supreme law of the land and for it to be effective courts must engage in rigorous constitutional review of government actions. However, courts must be careful not to exercise their review power in a manner that second guesses policy decisions because doing so undermines the separation of powers between the legislature and the judiciary. The fundamental importance of the separation of the judiciary and legislatures has been described as “a characteristic feature of democracies”: Director of Public Prosecutions of Jamaica v. Mollison, [2003] UKPC 6; [2003] 2 A.C. 411, and R. (Anderson) v. Secretary of State for the Home Department [2002] 3 WLR 1800, at 1821-1822, paragraph 50.

[240] As recognized by the Supreme Court in Newfoundland (Treasury Board) v. N.A.P.E., 2004 SCC 66, [2004] 3 S.C.R. 381, at para. 104, “[O]ur system works best when constitutional actors respect the role and mandate of other constitutional actors.” There are certain areas that the courts have recognized as purely political and immune from judicial interference. For example, courts have found that allocating public resources is a political decision: Anderson v. Alberta, 2022 SCC 6, at para. 22; Ontario v. Criminal Lawyers’ Association of Ontario, 2013 SCC 43, [2013] 3 S.C.R. 3 (“CLA”). This makes sense because courts do not understand competing demands for the government’s limited resources. Courts are instead necessarily focused on individual cases and do not appreciate how overturning a resource allocation decision impacts other competing funding priorities.

[241] Closely related to the issue of the allocation of resources is the area of core policy decisions. Such decisions involve “weighing competing economic, social, and political factors and conducting contextualized analyses of information. These decisions are not based only on objective considerations but require value judgments — reasonable people can and do legitimately disagree”: Nelson (City) v. Marchi, 2021 SCC 41, at para. 44. Courts have recognized that they are institutionally incapable of making core policy decisions because they are “ill equipped to make polycentric choices or to evaluate the wide-ranging consequences that flow from policy implementation … courts possess neither the expertise nor the resources to undertake public administration”: Doucet-Boudreau v. Nova Scotia (Minister of Education), 2003 SCC 62, [2003] 3 S.C.R. 3, at para. 120, per LeBel and Deschamps JJ. (dissenting) (see also para. 34 of the majority reasons, per Iacobucci and Arbour JJ.).

[242] Courts are public policy amateurs who lack the expertise, experience, and resources to understand where a policy fits in the bigger picture. Thus, it is not the role of judges to second guess the policy choices made by governments because this is a role they are wholly unqualified to undertake. As Justices Moldaver and Brown stated in R. v. Chouhan, 2021 SCC 26, 459 D.L.R. (4th) 193, at para. 84:

The role of the courts in the Charter analysis “is to protect against incursions on fundamental values, not to second guess policy decisions”, because when “struggling with questions of social policy and attempting to deal with conflicting (social) pressures, ‘a legislature must be given reasonable room to manoeuvre’” [Citations omitted.]

[243] Developing the type of economic policies at issue in Bill 124 is the essence of what governments do in terms of macroeconomic management. These issues inherently involve policy choices; a government has to choose what it considers to be the best course of action for the management of the economy among many options. Governments must be granted the freedom to make and implement policy, and courts must not misuse their power of judicial review to second guess a government’s policy choices.

[244] This is not just a matter of expertise; the separation of the legislative and judicial branches respects the accountability that underlies a democratic system of government. Fundamentally, courts are not accountable to the people for their policy choices, while elected representatives are accountable at the ballot box. For example, in the case of Bill 124, the government campaigned on a platform of fiscal restraint, and the legislation was consistent with its policy platform. When courts impermissibly interfere with government policy making, their actions undermine our democratic form of government. They arrogate to themselves authority that belongs to democratically elected representatives and undermine the legitimacy of constitutional judicial review.

(2) Section 2(d)

(i) Association Rights and Collective Bargaining

[245] The text of s. 2(d) places no limits on the freedom of association. This contrasts, for example, with the right in s. 8 to be secure from unreasonable search and seizure. There are no such qualifiers in the text of s. 2(d). However, courts have, in the context of the field of collective bargaining, added definitional qualifiers that clearly limit the scope of this right. These limitations were succinctly summarized by Chief Justice Chartier in Manitoba Federation of Labour et al. v. The Government of Manitoba, 2021 MBCA 85, 463 D.L.R. (4th) 509, at paras. 22-23:

Section 2(d) guarantees “freedom of association.” It is often referred to as an “associational right” (see, for example, Health Services and Support — Facilities Subsector Bargaining Assn v British Columbia, 2007 SCC 27 at paras 90, 97, 112, 128-29; and, more recently, Mounted Police Association of Ontario v Canada (Attorney General), 2015 SCC 1 at paras 62, 131, 147). In the workplace context, the s. 2(d) right that is guaranteed is the right of employees “to associate in a process of collective action” (Health Services at para 19) in order “to engage in a meaningful process of collective bargaining” (Saskatchewan Federation of Labour v Saskatchewan, 2015 SCC 4 at para 1 (SFL)).

The Supreme Court of Canada describes s. 2(d) as “a limited right” (Health Services at para 91) in that it is restricted in the three following ways:

a) It is a procedural right: It guarantees the right to a process, not a certain substantive or economic outcome. This includes a right to a fair and meaningful process of collective bargaining, which incorporates a) the right of employees “to join together to pursue workplace goals”; b) the right “to make collective representations to the employer, and to have those representations considered in good faith”; and c) “a means of recourse should the employer not bargain in good faith” (SFL at paras 1, 29).

b) It is general in nature: The associational right does not protect “all aspects of ‘collective bargaining’” (Health Services at para 19). It guarantees the right to a general process of collective bargaining, not to a particular model of labour relations, nor to a specific bargaining method (see Mounted Police at para 67).

c) It is limited to “substantial interference”: The associational right does not protect against all interference with the procedural right to bargain collectively, only against “substantial interference” with the associational activity (Health Services at para 90). [Emphasis in original.]

[246] It is important to emphasize that the right to collective bargaining provides protection only against substantial interference in the collective bargaining process, as the Supreme Court explained in Health Services and Support - Facilities Subsector Bargaining Assn. v. British Columbia, 2007 SCC 27, [2007] 2 S.C.R. 391, at paras. 92-94, as follows:

To constitute substantial interference with freedom of association, the intent or effect must seriously undercut or undermine the activity of workers joining together to pursue the common goals of negotiating workplace conditions and terms of employment with their employer that we call collective bargaining. Laws or actions that can be characterized as “union breaking” clearly meet this requirement. But less dramatic interference with the collective process may also suffice. In Dunmore v. Ontario (Attorney General), 2001 SCC 94, denying the union access to the labour laws of Ontario designed to support and give a voice to unions was enough. Acts of bad faith, or unilateral nullification of negotiated terms, without any process of meaningful discussion and consultation may also significantly undermine the process of collective bargaining. The inquiry in every case is contextual and fact-specific. The question in every case is whether the process of voluntary, good faith collective bargaining between employees and the employer has been, or is likely to be, significantly and adversely impacted.

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.

Both inquiries are necessary. If the matters affected do not substantially impact on the process of collective bargaining, the measure does not violate s. 2(d) and, indeed, the employer may be under no duty to discuss and consult. There will be no need to consider process issues. If, on the other hand, the changes substantially touch on collective bargaining, they will still not violate s. 2(d) if they preserve a process of consultation and good faith negotiation.

[247] Based on the foregoing, the jurisprudence is relatively straightforward. In contrast to, for example, freedom of expression rights, where virtually any violation requires a s. 1 analysis, s. 2(d) rights in the labour relation field are qualified. They are only engaged where there has been substantial interference. Thus, the notion of substantiality serves as a gatekeeper in determining whether a s. 2(d) right may have been impaired, and consequently, whether a s. 1 analysis is required. That qualified right is qualified further as s. 2(d) does not protect a particular result. Instead, it is restricted to the protection of a fair collective bargaining process.

[248] The Supreme Court’s case law provides guidance regarding the onus the respondents were obliged to meet in establishing a breach of their s. 2(d) rights. The test of substantial interference has remained consistent since Dunmore v. Ontario (Attorney General), 2001 SCC 94, [2001] 3 S.C.R. 1016, through Health Services, and Ontario (Attorney General) v. Fraser, 2011 SCC 20, [2011] 2 S.C.R. 3, and into the 2015 labour trilogy of Mounted Police Association of Ontario v. Canada (Attorney General), 2015 SCC 1, [2015] 1 S.C.R. 3; Meredith v. Canada (Attorney General), 2015 SCC 2, [2015] 1 S.C.R. 125; and Saskatchewan Federation of Labour v. Saskatchewan, 2015 SCC 4, [2015] 1 S.C.R. 245. To establish a breach of s. 2(d) of the Charter, the respondents had to prove on a balance of probabilities that Bill 124 “substantially interferes with a meaningful process of collective bargaining”: Mounted Police, paras. 72-74.

[249] To be clear, s. 2(d) “does not protect all aspects of the associational activity of collective bargaining” and “the interference with collective bargaining must compromise the essential integrity of the process of collective bargaining protected by s. 2(d)”: Health Services, at paras. 90, 92. It also does not protect against all interferences with collective bargaining or collective agreements: Fraser, at para. 76. Instead, the jurisprudence requires substantial interference with the process of collective bargaining to ensure that the contents of collective agreements and the right to an outcome in bargaining do not “take on a sort of immutable constitutional status through the effect of s. 2(d)”: Canada (Procureur général) c. Syndicat canadien de la fonction publique, section locale 675, 2016 QCCA 163, at paras. 30-31.

[250] There is no debate in the cases at bar that compensation is of central importance to collective bargaining. The real issue is the manner in which Bill 124 impacts the collective right to good faith negotiation and consultation.

(ii) Distinguishing Factors

[251] The precedents from the Supreme Court are clear in their application of these principles. The Court has never found that temporary wage restraint legislation violates s. 2(d) of the Charter. In distinguishing other wage restraint legislation cases, namely those that dealt with the Expenditure Restraint Act, S.C. 2009, c. 2, s. 393 (“ERA”), my colleagues find that:

[t]here are four common threads between the decisions dealing with the constitutional validity of the ERA: (1) the measures were imposed in the context of the 2008 global economic crisis; (2) multiple bargaining units had reached agreements about wage increases similar to those that were legislated before the ERA was enacted; (3) the legislation was imposed after a relatively long period of negotiation; and, (4) in some cases, following the enactment of the ERA, bargaining units were nevertheless able to reopen their collective agreements to negotiate for wage increases (Meredith) or other matters of interest, including matters related to compensation (Procureur général).

Implicit in this statement is the notion that unless these factors are present, Bill 124 violates s. 2(d). Each of these factors is reviewed below.

(a) Economic Crisis

[252] Regarding the first factor, the affidavits from Dr. Dodge, former Governor of the Bank of Canada, make clear that action had to be taken to protect the sustainability of public services and the government’s fiscal health. As in the situation in Health Services, the Province’s determination to come to grips with spiralling costs was fuelled by the laudable desire to preserve and protect quality public services: Health Services, at para. 134.

[253] My colleagues ignore that evidence and rely on the severity of the economic crisis in 2008 as a factor that distinguishes Bill 124 from the ERA. On what basis do they differentiate the severity of the economic challenges? There is no analysis undertaken to explain the distinction between the two situations. This factor is nothing short of an invitation to courts to second-guess policy choices made by a democratically elected government without engaging in an analysis of the challenges facing the Province at the time of the enactment of Bill 124. As discussed, this is a function that courts do not have the institutional capacity to undertake.

(b) Bargaining Outcomes

[254] The second distinguishing factor my colleagues relied on raises the question of the extent to which bargaining outcomes can be considered in a breach analysis. Given that the Supreme Court has made clear that the associational right under s. 2(d) does not protect outcomes, one might be tempted to find that outcomes are irrelevant. Indeed, that is Ontario’s position. It submits that the economic outcomes dictated by Bill 124 do not matter because there is a clear separation between process and outcomes, and only the former counts in determining whether there has been substantial interference.

[255] Despite the above, the Supreme Court’s analysis in Meredith left open the door for considering outcomes in determining whether a breach of s. 2(d) has had a substantial impact. Similarly, in the leading Ontario case on wage restraint legislation, Gordon v. Canada (Attorney General), 2016 ONCA 625, 404 D.L.R. (4th) 590, at para. 55, citing Meredith, at para. 29, this court relied on comparative bargaining outcomes to determine that the legislation did not breach s. 2(d): “Actual outcomes are not determinative of a s. 2(d) analysis, but, in this case, the evidence of outcomes supports a conclusion that the enactment of the ERA had a minor impact on the appellants’ associational activity”.

[256] My colleagues conclude that because compensation increases capped at 1.0 percent under Bill 124 are less than the average 1.6 percent increases in compensation obtained through collective bargaining at the time of the introduction of Bill 124, this is an important