On March 10, 2014 we reported on the Government of Ontario's
intention to introduce legislation to strengthen the accountability
and increase the transparency of the Broader Public Sector
("BPS"). In July the Ontario government did, indeed,
introduce Bill 8, entitled the Broader Public Sector Executive
Compensation Act, 2014 (the "Executive Compensation
If passed, this legislation will impose limits on executive
compensation for certain designated organizations in the broader
public sector, including school boards. Although the Executive
Compensation Act is similar in many ways to previous BPS wage
restraint legislation, there are a number of proposed measures that
warrant closer examination. Under the Executive Compensation
Act, the government will have the authority to establish
"compensation frameworks" governing compensation for
Directors of Education and Superintendents of Education who are
entitled to or could receive compensation in excess of $100,000 in
a calendar year (this is pro-rated for part-time designated
executives). Other employees could also be defined by regulation as
being designated executives.
The compensation frameworks may include "hard caps" on
a variety of executive compensation mechanisms including, but not
limited to, salaries, benefits, perquisites, bonuses, and severance
payments. The Executive Compensation Act provides that it
will prevail over any term of an affected executive compensation
plan that conflicts with its provisions. In the event of such a
conflict, the terms of the compensation plan will be rendered
inoperative to the extent of the conflict. Once a compensation
framework is in effect for a school board and/or the Director of
Education or Superintendents, the BPSAA will no longer
apply in that regard.
If a Director's or Superintendent's compensation just
prior to the effective date of a compensation framework is greater
than provided for in the framework, then the designated
executive's compensation can remain in effect. However, there
is an anti-avoidance measure in the legislation which prohibits an
employer from providing new or additional compensation to offset
any freeze on compensation.
The Executive Compensation Act also contains
enforcement measures to ensure that compensation limits are
respected. School boards could be required to comply with
directives to provide to the Management Board of Cabinet a broad
range of compensation information for Directors and
Superintendents. Any amounts paid to a designated executive which
exceed the limits set by a compensation framework under the
Executive Compensation Act are deemed to be overpayments.
If an overpayment is made, the school board is responsible for
remitting an amount equal to the overpayment to the Crown. The
executive who received the overpayment then becomes indebted to the
employer for that amount.
As with prior wage restraint legislation, this legislation
prevails over any compensation plan and no cause of action,
including for constructive dismissal, can arise from a school board
complying with the Executive Compensation Act.
In addition, Bill 8 extends the powers of the Ombudsman to
school boards. The purpose of the Ombudsman, as outlined in
legislation, is "to investigate any decision or
recommendation made or any act done or omitted in the course of the
administration of a governmental organization and affecting any
person or body of persons in his, her or its personal
capacity." The investigation may be initiated by a
complaint from a member of the public or by the Ombudsman himself.
The investigatory powers include the power to summon an individual
to give evidence under oath or to produce specific documents.
Following an investigation, the Ombudsman may make
recommendations to the school board, and those recommendations are
to be reported to the Ministry of Education. If there is a failure
to implement the recommendations made, the Ombudsman may provide a
copy of the report and recommendations to the Premier and make a
report to the Assembly.
Bill 8 has passed second reading in the Ontario Legislature and
has just completed a public consultation before the Standing
Committee on General Government. We will continue to monitor and
report on the progress of this legislation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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