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Nurses and their supporters protest against Ontario's Bill 124 in front of the constituency office of PC MPP for Ottawa West-Nepean Jeremy Roberts in Ottawa, on March 4.Justin Tang/CP

An Ontario court has struck down the province’s wage cap law, ruling it in violation of collective bargaining rights under the Charter of Rights and Freedoms and opening the door for unions to seek billions of dollars in back pay to make up for lost wages.

Bill 124, passed by Premier Doug Ford’s Progressive Conservative government in 2019, temporarily limits wage increases for hundreds of thousands of public-sector workers to 1 per cent annually for a three-year contract term. The legislation was introduced as a cost-saving measure and faced increasing criticism during the COVID-19 pandemic as front-line health care workers in overwhelmed hospitals and long-term care homes were subject to the cap.

In a written decision released Tuesday, Ontario Superior Court Justice Markus Koehnen declared Bill 124 to be void and of no effect, ruling it strips workers of their constitutional right to collective bargaining. Ontario’s Attorney-General Doug Downey is reviewing the decision and intends to appeal, government spokesperson Andrew Kennedy said in a statement.

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Justice Koehnen found the government didn’t provide a rationale for needing the legislation to cut costs while at the same time was able to provide financial relief to the broader public more than 10 times larger than the forecast savings from Bill 124. Justice Koehnen cited the government’s decision to refund and eliminate licence plate sticker fees as one such initiative, costing the province $1-billion annually.

Ontario posted a surplus of $2.1-billion in 2021-22, its first since 2007-08, after initially projecting a deficit upward of $30-billion. Opposition parties and unions called out the government for limiting wages while bringing in more revenue than anticipated.

Justice Koehnen said this bill differed from wage cap legislation introduced by other governments because the financial situation wasn’t as severe.

“Ontario was not facing a situation in 2019 that justified an infringement of Charter rights,” he wrote in his decision. “Unlike other cases that have upheld wage restraint legislation, Bill 124 sets the wage cap at a rate below that which employees were obtaining in free collective bargaining negotiations.”

In its written submission for the court challenge, the provincial government argued the legislation didn’t violate the Charter because it was time-limited and allowed bargaining on other matters. The province said the bill was needed to rein in Ontario’s finances without cutting services, laying off workers or raising taxes.

Unions for nurses, teachers and other public-sector workers have long spoken out against the bill, arguing it has driven workers out of the province and is a main cause of the nursing shortage hitting hospitals across Ontario. The unions launched a court challenge calling for the legislation to be deemed unconstitutional, which was heard in September.

Both parties asked for remedies to be considered at a future hearing and the timing has yet to be determined. Steven Barrett, one of the lawyers from Goldblatt Partners LLP who represented the workers in the challenge, said the unions will be seeking compensation they believe should have been awarded had Bill 124 not been in place. Unions representing hospital and long-term care workers, who cannot strike, can return to arbitration to get a deal.

Mr. Barrett said the province’s plan to appeal shouldn’t prolong any compensation decisions by Justice Koehnen at the Superior Court level with the bill no longer in effect.

If awarded, these catch-up wage demands could cost the province billions.

Ontario’s Financial Accountability Officer Peter Weltman released a report in September projecting the province would owe $8.4-billion through 2026-27 to make up for the lost wage increases, including $2.1-billion retroactively this fiscal year. About 30 per cent of provincial employees had yet to negotiate a contract that would limit wage increases, including more than 100,000 hospital workers.

Mr. Weltman projected Ontario would save $9.7-billion in salaries with Bill 124 in place.

The government hasn’t said if it would consider using the Charter’s notwithstanding clause to restore the legislation if it lost in the courts.

Earlier this month, Mr. Ford’s government enacted the notwithstanding clause to impose a contract on a union representing education workers but then backed down after employees walked off the job for two days in protest with support from the broader labour movement.

Mr. Barrett, who also represented the union in that case, said he’s hopeful the government learned from its previous use of the notwithstanding clause to restrict bargaining rights and doesn’t do so again.

“I would hope that the government recognizes that trying to resort to the notwithstanding clause to try to override these fundamental rights is not really something that the public will accept,” he said in an interview. “Hopefully that lesson has been learned.”

The Ontario Nurses Association, whose members have already been subject to the wage cap, applauded the court decision and urged the government not to appeal. Interim provincial president Bernie Robinson said the union wants to return to the table to negotiate a fair deal.

“ONA and its members are celebrating this hard-fought win. This is a vindication of the rights of nurses and public-sector workers across the province,” Ms. Robinson said in a statement.

With a report from Jeff Gray

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