Canada: Unchartered Waters: Constitutional Challenge To Putting Students First Act Appears Inevitable, Its Outcome Unpredictable

On September 11, 2012, the Ontario legislature passed into law its most controversial bill in recent history. The Putting Students First Act, 2012, (the "PSFA") is remarkable for a number of reasons:

  • The minority Liberal government recalled the Legislature two weeks early in order to enact the PSFA with the support of unlikely allies, the Conservatives.
  • ThePSFA effectively imposes collective agreements on much of the education sector.
  • Even before the PSFA was enacted, three unions had already vowed to challenge its constitutionality under the Canadian Charter of Rights and Freedoms (the "Charter") and had staged a rally at Queen's Park to protest against the legislation.
  • The Canadian Civil Liberties Association has indicated that, if there is a Charter challenge, it will seek to intervene on the side of the unions.

As a result, with the PSFA barely a week old, a court battle over its validity already seems inevitable. The outcome of that battle is difficult to predict.

ORIGINS OF THE PSFA

How did a government led by the self-described "Education Premier" end up facing a challenge to the constitutionality of its reforms to the Education Act? The die may have been cast as early as July 5, 2012. It was on that date that the Ministry of Education entered into a Memorandum of Understanding with the Ontario English Catholic Teachers' Association (the "OECTA MOU"). The strategy adopted by the Education Minister (the "Minister") appears to have been to negotiate an agreement with one union, and then use that agreement as a template for negotiations with the others. Significantly, the Ontario Catholic School Trustees' Association, which represents the Catholic school boards that employ OECTA's members, was not a party to the OECTA MOU.

Among other things, the OECTA MOU provides for a two-year freeze in salary increases for teachers at the top end of the salary grid and requires all teachers, vice-principals and principals to take three unpaid leave days on three scheduled professional activity days for the 2013/14 school year. Teachers not at the top end of the salary grid are frozen initially, but move up on the 97th day of each school year. The agreement also provides that teachers will be paid full salary for up to ten sick days per school year, but that sick days will not accumulate from year-to-year.

On July 30, 2012, the Ministry of Education also entered into a Memorandum of Understanding with the Association of Professional Student Services Personnel. Furthermore, on August 7, 2012, the Ministry entered into a Memorandum of Understanding with L'Association des enseignantes et des enseignants franco-ontariens. In addition, on August 31, 2012, the Ministry entered into a Memorandum of Understanding with four educational assistant associations.

WHAT THE PSFA DOES

The PSFA uses the OECTA MOU as a template for reforms affecting the entire education sector.

With respect to non-unionized employees, the PSFA:

  • Imposes a two-year freeze on compensation (including salary, benefits, perquisites and all forms of non-discretionary and discretionary payments), as of September 1, 2012. The freeze may be further extended by regulation.1
  • Provides that non-unionized employees will no longer be able to accumulate sick days or service credits after August 31, 2012. Sick days accumulated as of that date will remain and, if not used up by retirement, will be paid out at the employee's rate of pay as of August 31, 2012. Going forward, non-unionized employees are eligible for 10 days of sick leave at full salary (half the previous number), and a further 120 days at either 66.67% of their salary, or at 90% of their salary (if determined by an adjudicative process agreed to by the employee and the board).

With respect to unionized employees, the PSFA notionally preserves the right of unions and school boards to negotiate collective agreements, but requires that those collective agreements contain essentially the same provisions as the OECTA MOU. This approach is reminiscent of Henry Ford's famous pledge that, "Any customer can have a car painted any color that he wants so long as it is black": unions and school boards can negotiate any collective agreement they want to, as long as it is essentially the same as the OECTA MOU.

Specifically:

  • With respect to teachers, school boards must bargain for a collective agreement that includes and is not inconsistent with the terms of the OECTA MOU.
  • For non-teacher bargaining units, school boards must bargain terms and conditions that are substantially similar to the OECTA MOU or to a memorandum of understanding entered into between the bargaining agent and the Ministry prior to August 31, 2012, provided that the memorandum of understanding is substantially similar to the OECTA MOU.
  • Any term in any concluded collective agreement that is inconsistent with the OECTA MOU is inoperative during a two-year period beginning on September 1, 2012.
  • The terms of the OECTA MOU will also bind school boards until such time as they conclude new collective agreements.

To ensure that new collective agreements are consistent with the OECTA MOU, they must be submitted to the Minister before being declared to be in force. If the Minister finds that the collective agreement is not consistent with the OECTA MOU, the Lieutenant Governor in Counsel can, among other options, impose a collective agreement on the parties and prohibit a union from striking or a school board from locking out employees. The Lieutenant Governor is also given the power to make regulations to:

  • Impose terms and conditions in employment contracts or collective agreements, including with respect to the criteria and processes to be used in hiring teachers, and the use of diagnostic assessments of students.
  • Extend the period during which the OECTA MOU terms apply and the right to strike or lock out is suspended.

THE CHARTER CHALLENGE

The Liberal government, in drafting the PSFA, was clearly anticipating a challenge to the constitutionality of the legislation. Accordingly, the PSFA expressly provides that neither the Ontario Labour Relations Board nor any arbitrator may decide the constitutional validity of the PSFA. The Act also protects the Government from civil actions with respect to the enactment of the PSFA or any regulations made pursuant to it. The legislation stops short, however, of preventing a constitutional challenge in the Superior Court. While the Legislature could have protected the legislation from such a challenge by invoking the Charter's "notwithstanding" clause (which allows the legislature to declare that legislation is to apply "notwithstanding" the fact that it may infringe certain Charter rights), the Liberal minority government clearly was not prepared to be seen to be insulating its legislation from constitutional review entirely.

Three unions, the Elementary Teachers' Federation of Ontario ("ETFO"), the Ontario Secondary School Teachers' Federation ("OSSTF") and the Canadian Union of Public Employees ("CUPE") have already indicated that they intend to challenge the PSFA under section 2(d) of the Charter, which protects freedom of association, and to take their case all the way to the Supreme Court of Canada, if necessary. The Canadian Civil Liberties Association has indicated that if there is a Charter challenge, they will seek to intervene and will take the position that the PSFA is unconstitutional.

The outcome of a Charter challenge to the PSFA is difficult to predict, because the law in this area is in a state of flux. Until comparatively recently Canadian courts had held that collective bargaining was not protected by the Charter. However, the Supreme Court of Canada reversed this earlier law five years ago with its landmark decision in Health Services and Support-Facilities Subsector Bargaining Association v. British Columbia ("Health Services"). The Court in that case held that collective bargaining is protected as an aspect of freedom of association. That decision caught many lawyers off guard and represented a dramatic change in the law. It also proved controversial. In the Supreme Court of Canada's most recent decision, Ontario (Attorney General) v. Fraser ("Fraser"), two judges of the Court held that Health Services was wrongly decided and declined to follow it. Nonetheless, the majority of the Court confirmed that legislation will violate the Charter right to freedom of association if it renders the process of collective bargaining "pointless". Since Fraser, Canadian courts have taken somewhat different approaches to section 2(d) of the Charter. Thus, while the Saskatchewan Court of Queen's Bench concluded earlier this year that any removal of the right to strike necessarily constitutes an infringement of the right to freedom of association, the Ontario Court of Appeal has taken a more restrained approach.

In Mounted Police Association of Ontario v. Canada (Attorney General), the Court interpreted the Health Services and Fraser decisions as establishing that " 'Collective bargaining' under s. 2(d) protects only the right to make collective representations and to have those collective representations considered in good faith", and not any particular collective bargaining model or outcome. Most recently, in Association of Justice Counsel v. Canada (Attorney General) ("Association of Justice Counsel") released on August 7, 2012, the Ontario Court of Appeal found that legislation limiting compensation increases for federal employees for a five year period did not breach section 2(d) of the Charter, because it was enacted only after a two-year period of collective bargaining. The Court found that by the time the legislation was enacted, the parties had had the opportunity for a meaningful process of collective bargaining and that the requirements of section 2(d) of the Charter had been satisfied.

In order to succeed in a Charter challenge, the unions first must prove that the PSFA infringes the right to freedom of association.

The Government will presumably rely upon the Association of Justice Counsel decision to argue that the PSFA does not infringe the unions rights because it is temporary in effect and was enacted only after attempts to negotiate new collective agreements failed.

Even if the unions are able to establish that the PSFA infringes the right to freedom of association, the court could still uphold its validity under section 1 of the Charter, if the Government can establish that it constitutes a "reasonable limit on that freedom." The real battle between the unions and the Government is likely to take place with respect to this section 1 test.

Presumably, the Government would rely upon the need for budgetary and financial austerity as justification for the PSFA. It will point to the $15 billion deficit in the provincial budget and the $2 billion that the PSFA is expected to save, and will present a variation of the argument that "desperate times call for desperate measures." The Government will also argue that it resorted to a legislative solution only after it was unable to negotiate agreements with the unions other than OECTA, the Association of Professional Services Personnel, L'Association des enseignantes et des enseignants franco-ontariens and four educational assistant associations. The Government will also point out that any interference with collective bargaining during the restraint period is for a time limited period of two years.

It is difficult to predict how a court will respond to this type of justification. In past cases, courts have wavered between two conflicting approaches. In some cases, they have expressed the need to extend a high degree of deference to legislatures engaged in weighing competing policy objectives and deciding how to allocate public funds. In other cases, courts have expressed scepticism at the suggestion that financial considerations could take precedence over Charter rights.

When faced with a budgetary justification for an infringement of rights, the court is faced with a difficult problem. One of the requirements for justifying an infringement under section 1 is that the legislation must represent the "least restrictive means" for achieving the Government's objective. When the only objective is to save money, there will always be alternative means available to the Government to achieve its objectives. For example, it could be argued that a wage freeze would not have been necessary if the Government chose instead to: (i) increase taxes; (ii) reduce spending in other areas; (iii) increase class sizes; or (iv) withdraw full day kindergarten. A court can be expected to demonstrate an understandable reluctance to question the Government's decision not to pursue any of these alternatives.

For their part, the unions will presumably argue that the Government intervened prematurely in collective bargaining between the unions and the district school boards and that, given that no union had threatened a strike, there was no justification for abrogating the right to strike. The unions will compare the PSFA to teacher wage restraint legislation that was struck down by British Columbia Supreme Court last year. The Ontario Government will seek to distinguish that case on the basis that the Government of British Columbia had not made a good faith attempt to negotiate a resolution before resorting to legislation.

It remains to be seen whether or not the unions' challenge to the PSFA will be successful, as the outcome of those challenges will depend largely upon the Government's ability to persuade a court that it exhausted all reasonable alternatives before resorting to the extraordinary and highly controversial piece of legislation that is the PSFA.

Footnotes

1 The compensation freeze does not apply to directors and superintendents earning more than $100,000, whose compensation has already been frozen pursuant to the terms of the Broader Public Sector Accountability Act, 2010.

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