On March 25, 2010, the Ontario Government tabled Bill 16, Creating the Foundation for Jobs and Growth Act, 2010.

This Act amends or repeals various statutes to give effect to the initiatives outlined in Ontario’s 2010 budget. Schedule 25 of the Bill enacts the Public Sector Compensation Restraint to Protect Public Services Act, 2010.
The Bill was referred to Standing Committee on Finance and Economic Affairs and has been amended. The Bill received Third Reading today.  
Public Sector Compensation and Municipal Governments:
This Act freezes the compensation structures of non-bargaining political and Legislative Assembly staff, as well as non-bargaining employees in the broader public sector, for a period of two years, between March 24, 2010 to March 31, 2012.
This Act DOES NOT apply to:
  • Municipalities;
  • Local boards, as defined under the Municipal Act, 2001, except for Boards of Health. (This was an amendment to the Act brought forward by the government at Standing Committee. See below for additional information);
  • Every authority, board, commission, corporation, office or organization of persons, some or all of whose members, directors or officers are appointed or chosen by or under the authority of the council of a municipality, except for those specifically listed in section 3(1) of the Act.
The Act also DOES NOT apply to public sector employers whose employees collectively bargain compensation. This includes:
  • Trade unions under the Labour Relations Act, 1995;
  • An association recognized under the Police Services Act;
  • The Association as defined in section 1 of the Ontario Provincial Police Collective Bargaining Act, 2006;
  • An association recognized under the Part IX of the Fire Protection and Prevention Act, 1997.
  • Employees represented by any organization that has collectively bargained with the employer terms and conditions of employment related to compensation that the employer has implemented, or employees who are represented by an organization that has established a framework to collectively bargain terms and conditions of employment related to compensation with an employer before March 25, 2010.
The Act as amended will impact all 36 Boards of Health: 
The second reading amendment brings the Act’s coverage into play for some of AMO members. In tabling the motion to amend the Bill, it was noted by a government member of the Committee that:
“The particular motion clarifies that the legislation applies to boards of health, which are 75% funded by the province. ...” 
Accordingly, Single and Upper-Tier Municipalities are strongly encouraged to undergo a review of the Act and the Health Protection and Promotion Act in order to carry out a local assessment of the implications associated with this proposed amendment.
If it is determined that some or all non-unionized public health employees are covered by the Act, the following should be considered in establishing a compliance plan:
  • The rate of pay of covered employees and the maximum amount of pay within a pay range cannot be increased before April 2012. Although an employee may continue to progress through a pay range, their wage grid cannot change.
  • Nothing in the Act reduces any rights under the Human Rights Code, the Employment Standards Act, 2000 or the Pay Equity Act.
  • The specific restraint measures are stated in sections 7 to 11 of the Act. Section 12 provides that the Act prevails over any provision of a compensation plan.
  • Section 13 requires employers to report on compliance with the restraint measures that apply to these employees. The Province has authority to prescribe the form and manner of the reporting.
What else a municipality needs to know:
Despite the broad based exemptions from the application of the Act for any public sector employers whose employees collectively bargain compensation, the Government stated in its 2010 Budget:
“Going forward, the fiscal plan provides no funding for incremental compensation increases for any future collective agreements.
All existing collective agreements in the public sector will be honoured. As agreements are renegotiated, the government will work with transfer payment partners and bargaining agents to seek agreements of at least two years’ duration. These agreements should help manage spending pressures, protect public services that Ontarians rely on and provide no net increase in compensation.”
The Government has also stated in its 2010 Ontario Budget FAQ (on Ministry of Finance website):
“All employers and employees are expected to do their part, regardless of when the applicable collective agreement expires.”
AMO is continuing to seek clarification on a number of matters, both as relates to the legislation itself and to the commentary about expectations within the broader public sector. For example, AMO is seeking guidance as to whether the province will support municipal governments if the municipal government seeks no net increases in compensation in a collective agreement, and the matter proceeds to interest arbitration.
The Province has not provided any other direction or guidance in respect of what it means by “working with Transfer Payment recipients and their bargaining agents”.
It is expected that employers in the “MUSH” sector will face a number of consequences arising out of this legislation, including increased union organizing efforts related to employees affected by the legislation and a potentially reduced ability to attract and retain employees.