The challenge of public finances and fiscal restraint has not
gone away since the last check in on this blog in August. A new,
rapidly developing twist is, of course, the rapid decline in the
price of oil. Naturally, this has had the most immediate impact in
Alberta. As January came to a close, Premier Jim Prentice announced
that the Alberta cabinet would have their salaries rolled back by
5%. It does not look like his Government will stop there as the
Premier mused about others having to play their part in fiscal
restraint – possibly all members of the Alberta legislature
and perhaps public sector workers. There would most certainly be
resistance from the public sector unions. Some have already raised
the alarm bells, with the teachers in Alberta noting that they have
already done their fair share with a three year wage freeze
effective in 2012. This week, the Premier, facing a potential $7
billion budget shortfall (and more deficits projected), announced a
9 percent cut in programmes. Does that inevitably mean reductions
in compensation and/or employees in the public and broader public
The Federal Government is also not immune to the impact of
oil's dramatic drop over the last several months. The impact
will mean that it will be much more difficult for the federal
budget to be balanced this fiscal year. The Parliamentary Budget
Officer has noted the difficulty, although appears to hold out hope
that the budget could still be balanced. Nonetheless, it presents a
challenge for the Federal Government to look for savings –
whether in public sector salaries or elsewhere.
Moving away from the oil patch, manufacturing in Ontario (and
other provinces) could be a beneficiary of the oil decline.
However, challenges are still pervasive and Ontario continues to
grapple with various pressures on the public purse. As part of its
offensive on this front, the Public Sector Accountability and
MPP Accountability and Transparency Act, 2014 received Royal
Assent in December (for more detail, see our
communiqué). Among other things, it included the
Broader Public Sector Executive Compensation Act which
empowers the Government to impose compensation frameworks for
designated executives of certain public sector employers such as
hospitals, school boards, and universities. The Government, in
other words, will be able to set the market for executive
compensation in the broader public sector by imposing maximum
limits on compensation (anyone with higher compensation will be
grandfathered for a maximum of three years before the compensation
framework would apply). This is still a watching brief to see how
the Government will implement this legislation. Given that the
Government is now projecting to be behind its budget forecast, it
is clear that the road from the current $12.5 billion budget
deficit to the goal of a balanced budget by 2016-17 is one that is
long, to say the least. This of course makes it more likely that
the Government will use tools such as compensation frameworks to
chip away at the deficit.
The fiscal challenge for governments, and taxpayers, is not an
easy one. In provinces like Ontario, other than targeting unionized
employees in the broader public sector (not an easy task in any
event on many levels), what else can a government do with wage
restraint that has not already been tried and that
can make a meaningful difference to a budget crunch? At what point
does wage restraint negatively affect the delivery of public
services? And is that a trade off that taxpayers are willing to
Regardless of which groundhog you believed last week (Wiarton
Willie vs. Shubenacadie Sam and Punxsutawney Phil), it is clear
that the winter, and seasons to come, will be long for governments
and taxpayers in Canada.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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