Canada: Public Sector Compensation "Restraint Bill" Raises Questions

Last Updated: April 13 2010
Article by Robert W. Weir and Wendy Litner

Most Read Contributor in Canada, November 2017

On March 25, 2010, the Ontario government introduced the Public Sector Compensation Restraint to Protect Public Services Act, 2010 (the "Restraint Bill") as part of the 2010 provincial budget. The Restraint Bill contemplates salary freezes and spending restraints in the public sector to eliminate the current deficit by 2018 and to help "redirect up to $750 million toward sustaining schools, hospitals and other public services." This is not the first time in Ontario that a provincial government has sought by legislation to restrain public spending related to wages and other forms of compensation. The Restraint Bill is also not the only proposed piece of legislation dealing with wages in the public and quasi-public sector. The Ontario government recently announced an intention to link executive pay in hospitals to certain as yet undefined performance criteria. And perhaps most interestingly, Bill C-470, a private members bill, is currently before the House of Commons in Ottawa. Bill C-470 seeks to cap the pay of any employee employed by a registered charity at $250,000 and would give the Canada Revenue Agency the power to de-register charities who do not comply.

The Restraint Bill remains at first reading as of April 8, 2010. Accordingly, clients should be aware that further amendments may be forthcoming. As one would expect, the Restraint Bill has raised a number of questions amongst employers in the public sector, some of which we attempt to address here.

To Whom Does the Restraint Bill Apply?

The Restraint Bill seeks to freeze the compensation plans for employees who do not engage in collective bargaining in the broader public sector, including the Ontario Public Service and non-bargaining political staff, for two years as of March 24, 2010. Pursuant to section 3(1) of the Restraint Bill this includes:

  • every university and college of applied arts and technology and postsecondary institution in Ontario;
  • every hospital referred to in the list of hospitals and their grades and classifications maintained by the Minister of Health and Long-Term Care under the Public Hospitals Act; and
  • every school board as defined in the Education Act; and
  • an authority, board, commission, corporation, office or organization that received at least $1 million in funding from the provincial government in 2009, as determined for the purposes of the Public Sector Disclosure Restraint Bill, 1996, that does not carry on its activities for the purpose of gain or profit to its members or shareholders.

Municipalities are excluded from the proposed legislation.

Which Employee Groups Are Excluded?

The Restraint Bill excludes employees represented by trade unions and other employee organizations that engage in collective bargaining, including:

  • trade unions certified or voluntarily recognized under the Labour Relations Act, 1995;
  • an organization that represents employees under the Crown Employees Collective Bargaining Act, 1993;
  • an organization that represents employees under the Colleges Collective Bargaining Act, 2008;
  • an organization that has, before March 24, 2010, collectively bargaining with the employer terms and conditions of employment relating to compensation that were implemented by the employer; and
  • an organization that, before March 24, 2010, has an established framework for collective bargaining the terms and conditions of employment related to compensation with the employer.

For employees who bargain collectively, the government has provided assurances that it will respect all current collective agreements. When these agreements expire and new contracts are negotiated, however, the government will work with transfer payment partners and bargaining agents to seek agreements of at least two years' duration that do not include net compensation increases. According to Ontario Finance Minister Dwight Duncan, "[T]hese agreements should help manage spending pressures, protect public services that Ontarians rely on and provide no net increase in compensation." The Minister's sentiment of fiscal restraint is reflected in its current fiscal plan which provides for no funding for compensation increases for future collective agreements.

When Do the Wage Restraints Take Place?

Once adopted, the Restraint Bill will be retroactive to March 25, 2010.

How are Employees and Employers Affected?

The legislation requires the compensation plans of all affected employees to remain as they stood on March 24, 2010, up to and including March 31, 2012. "Compensation Plan" is defined by the Restraint Bill as the "provisions, however, established, for the determination and administration of a person's compensation." The Restraint Bill further defines "compensation" as "all forms of payment, benefits and prerequisites paid or provided, directly or indirectly, to or for the benefit of a person who performs duties and functions that entitle him or her to be paid, and includes discretionary payments." According to a FAQ document published by the government, this definition encompasses all aspects of an employee's compensation including base pay, merit pay, vacation and other time off, pension, health and other benefits. "In short," says the government, "there will be no across-the-board increases and salary ranges are limited to existing levels."

Are Any Compensation Increases Permitted?

Employers may increase the compensation of employees only within an existing pay range and only in respect of:

  1. an employee's length of time in his or her employment;
  2. an assessment of the employee's performance;
  3. an employee's successful completion of a program or course of professional or technical education.

Such increases are only permitted if they are authorized by the compensation plan that existed as of March 24, 2010.

Effectively, pay ranges for all affected employees and office holders are frozen on March 24, 2010. However, individual increases may be made within the range based on one or more of above three factors provided the compensation plan that existed on March 24, 2010 authorized such increases. Further, the renewal of an employee or office holder's contract cannot change the compensation plan, as it existed on March 24, 2010. The Restraint Bill will restrict retroactive increases after the wage restraint period expires.

Are There Reporting Requirements?

The Restraint Bill contemplates that affected employers will be required to provide the Minister of Finance with compliance reports for the purpose of demonstrating compliance with applicable restraint measures.


It is important to emphasize that the Restraint Bill is at first reading. It will not be law, nor will it have assumed its final form, prior to third reading, which will occur as part of the larger budget approval process in the House. Already, a number of issues have emerged. For example, many employers wonder whether some managerial employees, although not unionized, who nonetheless engage in or have a framework for collective bargaining are exempted from the wage restraints. At present, there is considerable uncertainty with respect to which employee groups are exempt.

Public education officials also wonder at the long-term impact of the Restraint Bill. As teachers' collective agreements do not expire until August 31, 2012 and contain healthy increases that will not be affected by the Restraint Bill, many school boards have noted that, if principals and vice-principals are included in the compensation restraints (and this is an open question at this time), some teachers could be earning more income than their vice-principals at the end of the two year freeze. School boards wonder how they will be able to recruit individuals into these important management positions in our publicly funded schools.

Hospitals and universities wonder about the impact of the Restraint Bill on their ability to attract and retain top-level scientists, researchers and professors in a wage freeze environment.

Many employers wonder about the fairness of a legislative freeze that impacts only employees who do not engage in collective bargaining. In fairness to the government, there may be constitutional reasons why the imposition of a unilateral wage freeze on existing and even future collective agreements is problematic. In 2007, the Supreme Court of Canada issued the B.C. Health Services decision. This decision afforded constitutional protection to certain procedural aspects of collective bargaining. The Court determined that government action that interferes with collective bargaining may interfere with the freedom of association rights under the Canadian Charter of Rights and Freedoms where the action is taken without meaningful consultation. The government's announcement that it intends to take a consultative approach with public-sector unions may, in part, be an effort to fulfill its Charter obligations in the even that unions will not agree to wage restraints. In such event, the government may seek to legislate restraints for unionized employees. Again, as with so much in the Restraint Bill, it is still too early to say.

Finally, broader public sector employers whose employees do not engage in collective bargaining are already reporting union organizing drives. The union exemption in the Restraint Bill could provide an incentive to unionization. If unions cannot promise potential members wage increases, they can at least promise that they will have the attention of the government.

About BLG

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions