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Billions of dollars are at stake in a three-day hearing at Ontario’s highest court that got under way Tuesday over the province’s controversial wage-limiting law for public sector workers.

Last November, a judge with the Superior Court of Justice struck down Bill 124, Protecting a Sustainable Public Sector for Future Generations Act, ruling it unconstitutional.

The province appealed.

There are some 780,000 broader public sector workers in Ontario, including teachers, nurses and most employees of the province. Bill 124 became law in 2019, limiting their wages to a one per cent raise per year over a three-year period.

Hospital officials have said the wage restraint has contributed to the staffing shortages seen across the province, particularly for nurses.

The province’s fiscal watchdog says the province owes public sector workers about $8.4-billion over five years if the law remains overturned. Ontario has already paid about $1-billion to workers who’ve recently gone to arbitration to reopen their contracts following the ruling.

In its factum filed with the Court of Appeal, the province said Justice Markus Koehnen made “fundamental legal errors.”

The province says the law does not interfere with the collective rights to free and fair bargaining.

More than 10 groups fighting Bill 124 say that it does.

The province argues Justice Koehnen erred by incorrectly applying the section of the Canadian Charter of Rights and Freedoms that allows for the freedom of association. That law governs the rights of groups, such as unions.

“He concluded that Bill 124 substantially interfered with the associational rights of employees based on the incorrect conclusion that the inability to achieve particular substantive outcomes is by itself a substantial interference with collective bargaining,” provincial lawyers wrote.

“Accordingly, he failed to consider whether there was substantial interference with employees’ ability to associate to pursue workplace goals effectively, or to their ability to participate in meaningful, good faith consultation and negotiation.”

The province says the judge misinterpreted the bill as interfering with workers’ right to strike and points to strike actions taken after the law came into effect.

The province argues that Bill 124 only limits negotiations on the annual one per cent raise cap and that other monetary and non-monetary negotiations are still permitted.

The province argued it was in rough financial shape at the time it enacted the law and it was needed to help reduce the deficit.

More than 10 groups representing hundreds of thousands of public sector employees are part of the appeal process.

The judge who struck down Bill 124 delivered a “carefully reasoned decision,” the groups argued in their factums filed with court.

“The court found that the Crown failed to prove with evidence that Bill 124 was reasonable, proportionate, and justified in its violation of Charter rights,” wrote the Ontario English Catholic Teachers’ Association.

The bill “completely skewed the bargaining process” in favour of the government, the groups say.

“Bill 124 severely undermined the union’s bargaining power both by legislating the preferred outcome of the Crown and employer with respect to the fundamental term of employment [compensation] and by rendering strikes over compensation illegal,” the Catholic teachers wrote.

“Compensation was effectively removed from the table and could not be used to trade off against other working conditions in order to make gains in other areas.”

The groups also argue Ontario was not in a financial crisis at the time and, therefore, the legislation was unnecessary.

The province is seeking dismissal of the judge’s original decision while the public sector workers want the appeal to be dismissed.

On Tuesday, Premier Doug Ford said the intention of the bill was to “respect the taxpayers’ money.”

He said he’s going to sit down with the unions to negotiate their next deals.

“We’re going to get a fair deal for the front line workers, but always respecting the taxpayers, making sure that we’re prudent fiscal managers,” Mr. Ford said.

Before court began, union leaders protested the bill, saying it is an attack on workers’ rights.

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