Wage freeze up for negotiation

Arbitrator rules legislation needed to enforce Ontario’s pledge
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 11/01/2010

Despite the Ontario government’s call for a two-year wage freeze in the public sector, arbitrators seem to be moving the other way by granting wage increases to several unions.

It’s sort of a good news/bad news type of situation, said John Saunders, a partner at the law firm Hicks Morley in Toronto. The bad news is it looks like arbitrators are not prepared to follow the government’s directive, which does not help employers attempting to comply.

“We’re starting to have some arbitrated decisions which are coming down and the arbitrators are not following the request by the government to have two years of zero and zero,” he said.

On the other hand, the actual increases appear to be in line with what’s happening in the private sector, he said.

In March 2010, as part of the Ontario government’s budget, legislation was enacted to freeze wages and benefits of non-union employees until 2012. In addition, when new contracts are negotiated for unionized workers, the government wants “no net increase in compensation.”

There have been examples of employers in the broader public sector successfully negotiating zeroes, said Saunders, such as an April 2010 agreement between the Municipal Property Assessment Corporation (MPAC) and 1,600 members of the Ontario Public Services Employee Union (OPSEU). When MPAC withdrew its offer after the government announcement, the union said it was bargaining in bad faith. But the labour board disagreed and, in the end, there were zero increases.

However, a recent decision involving several nursing homes in Ontario and 20,000 members of the Service Employees International Union (SEIU) Local 1 Canada went the other way.

The union’s proposal for a four-per-cent increase was denied but the compensation should not be frozen, said the arbitrator, “particularly as there has been no legislation by the government requiring such a freeze.”

The government agreed to honour all collective agreement wages negotiated before March 2010 so many health-care employees will receive wage increases, he said. As a result, a two-per-cent increase was allowed.

The government does not have control over the independent decision-making of an arbitrator, said Chris Bosch, director of research and education at the Christian Labour Association of Canada.

“We don’t think the government actually had thought out ‘What does it mean when an arbitrator, not the parties at the table, when a third party is asked to make a decision about whether they’re going to follow through on the government policy statement of no wage increases?’”

The president of SEIU Local 1 Canada said she was pleased with the ruling.

“We were hopeful that the arbitrator would focus on his mandate and his authority, within the (Hospital) Labour Disputes (Arbitration) Act,” said Sharleen Stewart.

“You can’t expect the lowest paid in the province to sacrifice a wage freeze when people making 20 times what they make are not doing anything to help the economy.”

However, executives at Windsor Regional Hospital in Windsor, Ont., have had their salaries frozen for two years and CEO David Musyj said he has had his frozen since 2007.

The hospital was recently in arbitration with 400 members of OPSEU when it cited the government’s compensation restraint plan and the hospital’s dire financial situation. But the arbitrator said the wage increases should be the same as those for others at the hospital and granted a 5.75-per-cent increase over two years.

“It really calls for the need for legislation to be implemented in Ontario for unionized employees the same way it was implemented for non-unions,” said Musyj.

“Without legislation saying wages should be frozen or they can’t award an increase or they can’t award an increase above X per cent, arbitrators are free to do what they want.”

Legislating the wage freeze would not be wise, said Stewart, citing a 2007 Supreme Court of Canada decision stating the Charter of Rights and Freedoms guarantees a limited right of collective bargaining.

But the Ontario government could legislate a wage freeze if it has done consultations, said Saunders, adding the B.C. case involved the overriding of existing collective agreements, not renewals.

“They can create a fact situation which would distinguish their legislation from B.C. Health Services, which would increase the likelihood it would survive a charter challenge,” he said.

The Ontario government held consultations in August, so “you would think they’re moving (toward legislation) but they have to do it sooner rather than later because we’re running out of time,” said Musyj.

Two other decisions further illustrate the trend. A July 2010 arbitration decision for the University of Toronto and its faculty awarded six per cent over two years. The arbitrator said if he recognized the wage-freeze policy statement, it would compromise his independence and make him “a minion of government.”

The other involved SEIU Local 2 and Sunnybrook Health Sciences Centre in Toronto, where the union attempted to accept Sunnybrook’s proposals after the budget announcement but the centre retracted its proposals. The arbitrator ruled in favour of the union, stating “it is by no means clear what the budget statement really means, in practice, let alone what it means for collective bargaining or for this particular group of unionized employees or for this particular collective agreement.”

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