School Board Update
The Proposed Protecting Public Services Act Would Significantly Change Terms and Conditions of Employment for Directors, Superintendants and Senior Board Officials
Date: October 1, 2012
On September 26, 2012, the Ontario Minister of Finance announced draft omnibus legislation, the Protecting Public Services Act, 2012 (the “Draft Bill”), that would, if enacted, implement new compensation restraint measures for the Broader Public Sector (“BPS”) and would impose a significant new provincially mandated collective bargaining regime.
At first glance, the Draft Bill may appear to have little practical importance for school boards. This is because the Draft Bill as currently written would not apply to unionized employees. Moreover, while the Draft Bill’s permanent compensation restraint mechanisms would apply to school board employees, they would only apply to non-union employees who earn in excess of two times the Premier’s annual salary (that is, roughly in excess of $418,000). These limitations would exclude most (if not all) of a school board’s employees.
In fact, however, if passed in its current form, the Draft Bill would likely have a significant impact upon the terms and conditions of employment of all Directors, Superintendents and other senior board officials, regardless of their annual salary. This FTR Now discusses the Draft Bill and its likely impact on these school board positions.
OVERVIEW OF DRAFT BILL
Schedule 1 of the Draft Bill would enact the Public Sector Compensation Restraint Act, 2012 (the “PSCRA“). If introduced and enacted, the PSCRA would, for most BPS employees, replace the current compensation restraints that were introduced through Bill 55 and are now found in Part II.1 of the Broader Public Sector Accountability Act, 2010 (“BPSAA“). That is, Part II.1 of the BPSAA would be repealed, and its “designated executive” and “performance pay envelope” regime would be replaced by the restraints described in the Draft Bill.
APPLICATION TO SCHOOL BOARDS
You will recall that the compensation freeze provisions of Bill 55 expressly applied to Directors of Education and Superintendents. They also applied to any employee who is “… a chief administrative officer, chief operating officer, chief financial officer or chief information officer of the designated employer or holds any other executive position or office with the designated employer, regardless of the title of the position or office.”
The BPSAA did not legislate any reductions to compensation or changes to terms and conditions of employment. Essentially, this legislation had the effect of freezing the total compensation (including benefits, perquisites and payments) of senior school board officials in accordance with the current employment contract applicable to each of them. Specifically, existing entitlements to sick leave and retirement gratuity payments were preserved for these employees.
By contrast, the Putting Students First Act (“PSFA“) did not simply freeze compensation packages. Rather, it has imposed significant new terms and conditions of employment on non-union employees, as well as imposing a new provincially mandated collective bargaining regime for unionized employees.
In particular, section 2 of the PFSA made the following major changes to the terms and conditions for non-union employees:
- a two-year compensation freeze;
- a freeze on the number of service credits and (subject to regulations under the Education Act) sick leave credits held by an employee as of August 31, 2012;
- limitations on the value of such vested service credits and sick leave credits for the purposes of any retiring gratuity;
- stipulation of ten (10) days of sick leave during a board’s fiscal year paid at a rate of pay equal to 100 per cent of the employee’s salary for the year; and
- stipulation of an additional 120 days of sick leave during a board’s fiscal year paid at a rate of pay equal to either 90% of salary (through adjudication) or 66.67% of salary otherwise.
Presently, subsection 2(7) of the PSFA expressly states that these provisions concerning service credits, sick days, retiring gratuities and sick leave do not apply to employees covered by Part II.1 of the BPSAA. In other words, subsection 2(7) insulates “Bill 55 employees” from section 2 of the PSFA. This is clearly a significant exemption for senior school board officials.
However, the Draft Bill, if enacted, would repeal subsection 2(7) of the PSFA, thereby eliminating this exemption. The retiring gratuities and sick leave plans of senior board officials would then be subject to section 2 of the PFSA.
This result is reinforced by subsection 3(3) of the proposed PSCRA, which expressly states that the temporary restraint measures in the PSCRA do not apply to employees of a board to whom section 2 of the PSFA applies. Rather, those employees (including, now, senior board officials) will be subject to all of the two-year compensation restraint provisions of section 2 of the PSFA. This would appear to reflect a policy decision by the Government to make senior board officials subject to the same restraint regime that has been established for all other non-union board employees.
Finally, it must be recalled that subsection 3(3) of the PSCRA would only exempt non-union board employees from the “temporary” restraint measures established under the PSCRA. The PSCRA’s permanent salary cap (set at two times the Premier’s salary for future hires and those who accept a new position within a board) would also apply where necessary. Based on the Premier’s current salary, the cap would initially be set at roughly $418,000, and would encompass salary, performance pay and bonuses.
Accordingly, the overall effect of the Draft Bill, if enacted in its present form, would be to remove the current PSFA exemption for senior school board officials and make them subject to the prescribed terms and conditions of employment in section 2 of the PSFA along with all other non-union board employees. There would also be the permanent salary cap described above.
It is important to emphasize that the Draft Bill has not yet been introduced in the Legislature. Rather, it has been released publicly for consultation purposes. At the time of writing, no formal consultation process has been announced, nor has the Government indicated how long it will hold open this consultation phase. For comparison purposes, the consultation period for the PFSA lasted eleven days this past August. However, the consultation period for the Draft Bill may not be that long. Therefore, in addition to reviewing the Draft Bill for its specific implications with respect to your organizations, school boards may wish to consider whether to contact their local Government representatives to provide feedback on it.
Hicks Morley will be carefully monitoring the development of the Draft Bill and will be reporting on any amendments of note. If you have any questions about the Draft Bill and its application to your school board, please do not hesitate to contact Dolores M. Barbini (416.864.7303), John-Paul Alexandrowicz (416.864.7292), Michael A. Hines (416.864.7248) or your regular Hicks Morley lawyer.
The articles in this Client Update provide general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©