Ontario has to pay public sector workers $6B and counting in Bill 124 compensation

TORONTO — Ontario is so far on the hook for more than $6 billion in payments to broader public sector workers as a result of the provincial government’s wage restraint legislation being found unconstitutional.

Bill 124 capped salary increases for broader public sector workers at one per cent a year for three years, but after the Court of Appeal for Ontario ruled it unconstitutional the government repealed it.

Since a lower court first found the law unconstitutional in 2022, unions with so-called reopener clauses in their contracts have been seeking retroactive pay increases above the one per cent a year and in most cases have been awarded considerably larger amounts.

Senior government officials not authorized to speak publicly about the costs confirm to The Canadian Press that those awards so far add up to $6,000,800,000.

The province’s financial accountability officer highlighted in a report earlier this month that compensation — largely in the health and education sectors — for the law known as Bill 124 caused the government to spend billions more than it planned this year.

The confirmation of the cost of the reopener payments so far comes as Finance Minister Peter Bethlenfalvy is set to introduce next year’s budget in less than two weeks.

In the minister’s last fiscal update ahead of the budget, the release of the third quarter finances last month, he projected that Ontario would end this year with a $4.5 billion deficit, which is larger than the $1.3 billion he forecasted in last year’s spring budget.

The province has used what the FAO has highlighted as an unusually large contingency fund to offset some of the increased compensation costs, with $3.3 billion left in the fund at the time of the third-quarter finances report.

The FAO has said pay increases to compensate public sector workers for Bill 124 could end up costing the government more than $13 billion. 

Since the law was first found unconstitutional by a lower court, arbitrators have awarded additional retroactive pay to several groups of public employees, including teachers, nurses, other hospital workers, public servants, Public Health Ontario employees ORNGE air ambulance paramedics, and college faculty.

Employees of the Liquor Control Board of Ontario are among the most recent to be awarded back pay. An arbitrator awarded them an additional 6.5 per cent over the three years of their last contract, the Ontario Public Service Employees Union announced this week.

This report by The Canadian Press was first published March 15, 2024.

Allison Jones, The Canadian Press