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Collective Bargaining News: Ontario Government Freezes Funding for Compensation in Broader Public Sector

Even if you are not an employer in the Broader Public Sector (“BPS”), you have probably heard of the Drummond Report:  a 668-page document produced by Don Drummond, chair of the commission on public-service reform for Ontario.  Following the release of the Drummond Report, Premier McGuinty’s Liberals released the 2012 Budget, which adopted only a small number of the 362 cost-cutting recommendations advanced by the Drummond Report.  However, even though the depth and breadth of the cost-cutting recommended by the Drummond Report was vastly diluted, the 2012 Budget served notice of significant reductions in spending in the BPS.

Now, following on the heels of the Ontario Legislature’s passing the 2012 Budget in June, Minister of Finance Dwight Duncan has recently issued a letter to all BPS employers, communicating “the government’s clear expectations around the management of compensation in the broader public sector in Ontario.”  Premier McGuinty had a similar goal in 2010, when the provincial government passed the Public Sector Compensation Restraint to Protect Public Services Act, 2010.  With that Act, the Legislature sought to curb compensation increases by mandating a zero-increase approach for non-unionized employees in government within the BPS.  At the same time, the government issued a directive that called for no compensation increase through collective bargaining:  a directive that interest arbitrators later determined they could ignore as it did not have any legislative backing.

However, with his latest letter to BPS Employers, Finance Minister Duncan makes clear not only that the new government plan “…provides no funding for incremental compensation increases for new collective agreements,” but also indicates that where this goal cannot be met the government will be prepared to introduce the necessary administrative and legislative measures to ensure it is met.  While of course any legislation of that nature may be subject to a constitutional challenge, the message from the government is clear:  there will be no funding for any compensation increases in collective bargaining for BPS employers.

This obviously represents a challenge for BPS employers who are currently involved in collective bargaining.  However, it may not have the same effect for all employers who are currently engaged in bargaining, depending on the stage of negotiations.  For instance, CCP is aware of at least one BPS employer that had concluded an agreement, but not yet ratified, to whom the government directive was not applicable.

We know that various BPS employer associations are in discussion with the government to obtain further clarity, and CCP will continue to monitor the outcomes of BPS collective agreement negotiations to determine the actual effect of this latest government directive.  In the interim, if you are a BPS employer currently involved in, or heading into, your next round of collective bargaining, we encourage you to speak with us about your options and obligations.

Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.