Case In Point

Supreme Court of Canada Denies Leave to Appeal in Public Sector Wage Restraint Legislation Case

Case In Point

Supreme Court of Canada Denies Leave to Appeal in Public Sector Wage Restraint Legislation Case

Date: October 27, 2022

On October 27, 2022, the Supreme Court of Canada dismissed an application for leave to appeal Manitoba Federation of Labour et al v The Government of Manitoba. In that case, the Manitoba Court of Appeal (Court) upheld the constitutionality of the province’s public sector wage restraint legislation. The Court based its decision on the case law which holds that broad-based, time-limited wage restraint legislation does not substantially interfere with the collective bargaining process.

The legislation at issue was the Public Services Sustainability Act (PSSA). The PSSA, tabled by Manitoba’s provincial government, would have imposed a four-year “sustainability period” in which wages and “additional remuneration” are frozen during years one and two. This freeze period would have been followed by a 0.75% pay increase in the third year, and a 1% pay increase in the fourth year. The PSSA would have applied retroactively to invalidate past collective agreements or arbitral decisions that granted increases inconsistent with these limits. Upon proclamation, the PSSA would have impacted approximately 120,000 public sector workers in Manitoba.

The constitutional challenge of the PSSA was brought before the legislation came into effect. The PSSA was later repealed, in June 2022, by Bill 2, The Public Services Sustainability Repeal Act.

The Trial Decision

In June 2020, Justice McKelve of the Manitoba Court of Queen’s Bench deemed that the PSSA violated the plaintiff unions’ freedom of association rights guaranteed by section 2(d) of the Canadian Charter of Rights and Freedoms. Justice McKelve referred to the legislation as “draconian” and concluded that it substantially interfered with collective bargaining on monetary terms or benefits: “[t]he legislation circumvents and compresses the leverage or bargaining power available and inhibits the unions’ ability to trade off monetary benefits for non‑monetary enhancements.” Justice McKelve also noted that while the legislation had not yet been proclaimed, it was effectively in force as evidenced by the fact that 21 collective agreements that were settled since the introduction of the PSSA included wage rates reflective of the four year “sustainability period.” 

At the Appellate Level

The Court of Appeal considered the constitutional validity of the PSSA to be a question of law, and it therefore applied the standard of correctness to its review.

Specifically, the Court found the trial judge made multiple errors when she distinguished the instant case from Meredith v. Canada (Attorney General) (a decision of the Supreme Court of Canada in which it upheld comparable wage restraint legislation).

Relying on Meredith, the Court held that the PSSA did not substantially interfere with section 2(d) rights because the legislation was broad-based and time-limited, and did not preclude a meaningful consultation on other compensation-related issues.

The Court articulated the analytical framework of section 2(d) of the Charter in the workplace context. This legal test requires that a “substantial interference” with section 2(d) be shown in order to prove a Charter violation:

First, whether the measure substantially impacts the capacity of the union members to come together and pursue collective goals in concert; and second, whether the measure impacts on the collective right to good faith negotiation and consultation. [at para 26, quoting from the Supreme Court of Canada decision Health Services and Support — Facilities Subsector Bargaining Assn v British Columbia]

The provincial government conceded that the first inquiry was met, as wages were taken off the bargaining table.

The second criterion focused on good faith and asks if the government measure respects the fundamental precept of collective bargaining: the duty to consult and negotiate in good faith.

The Court held that the PSSA did not remove the ability of unions to engage in collective bargaining and consultation with the province over other compensation-related issues. In this regard, it listed a number of workplace issues which were untouched by the PSSA and which remained as important bargainable issues: health and safety issues; seniority and bumping procedures; disciplinary procedures; grievance procedures; reclassification issues; performance appraisals; recruitment and retention; contracting out; and job security, including no-layoff clauses.

Additionally, and in contrast to Justice McKelve, the Court used the fact that 21 collective agreements had been settled in light of the PSSA as evidence that the legislation did not eliminate the collective bargaining process. It stated that “[w]hile it must be noted that acceptance of the agreements was conditional on the PSSA being constitutional, the fact remains that bargaining continued for those unions wanting to participate in such a process.”

The Court took particular issue with the trial judge’s focus on the fact that the government tabled the PSSA without first trying to negotiate wage restraints. It noted that “[t]here is no legal prerequisite on governments to consult or negotiate prior to passing legislation.” The Court emphasized that the question at the centre of this issue is whether legislation that removes an important workplace issue like wages from the bargaining table infringes section 2(d) of the Charter.

Leave to Appeal to the Supreme Court Denied

The Supreme Court of Canada has dismissed the unions’ application for leave to appeal the Court of Appeal’s decision.

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