Ontario’s new Public Sector Transition Stability Act, 1997

The stated purpose of the legislation is to facilitate a timely, fair and orderly transition for the restructuring of public sector organizations. This Act contains two new Acts: the Public Sector Labour Relations Transition Act, 1997 (PSLRTA) and the Public Sector Dispute Resolution Act, 1997 (PSDRA). The Act also provides amendments to the Pay Equity Act and the Employment Standards Act.


  • creation of a commission called the Labour Relations Transition Committee (LRTC) with a mandate of four (4) years headed by a Chief Commissioner

  • objective of the LRTC is to resolve labour relations issues associated with public sector restructuring, including the structure of bargaining units, union representation and seniority when parties are unable to reach agreement with regard to such transitional issues

  • removal of jurisdiction of Ontario Labour Relations Board with respect to successorship issues involved in restructuring

  • authorization of LRTC to decide whether a de facto merger has taken place in the hospital sector


  • creation of the Dispute Resolution Commission (DRC) to govern the fire, police and hospital sectors: authorization of DRC to resolve disputes in the first post-amalgamation or merger contract negotiations of hospital, fire and police sectors

  • authorization of DRC to resolve disputes in other public sectors where parties so agree

  • elimination of existing interest arbitration procedures in the fire, police and hospital sectors and replacement with procedures to be recommended by DRC including Mediation Final-Offer Selection or Mediation-Arbitration

  • human resource plans negotiated by parties in the hospital sector to be respected by the DRC


Upon merger or amalgamation, makeup of bargaining units will be determined as follows:
  1. the parties may agree on the appropriate composition of bargaining units;

  2. either party may apply to the LRTC to make an order establishing the appropriate bargaining unit; and

  3. bargaining units agreed to by the parties or created by an LRTC order cannot include employees whose labour relations are governed by the Police Services Act (PSA), Fire Protection and Prevention Act (FPPA) or the Hospital Labour Disputes Arbitration Act (HLDAA) together with employees whose labour relations are not governed by the same Act.
  1. existing unions may agree among themselves;

  2. if the unions do not agree, the LRTC will order a vote;

  3. a vote is not required if:

    • where two unions involved, one union represents at least 75% of employees;
    • where three or more unions, one union represents at least 60% of employees; and

  4. if 40% of the employees in a bargaining unit are not unionized, employees can choose whether or not they wish to be represented by a union when the vote is taken.
After reorganization, a composite collective agreement made up of all previous collective agreements and individual contracts of employment temporarily applies. Terms and conditions of employment of each employee will not change as a result of the reorganization in the interim period. Next, the parties must either:
  1. agree to continue with the composite agreement for up to one (1) year;

  2. agree to a new collective agreement based on an existing collective agreement or an amended version thereof;

  3. jointly request the LRTC to choose one of the existing agreements; or

  4. begin the process of negotiating a new collective agreement by having one party give notice to bargain.
The seniority of non-unionized employees is protected and is dovetailed into existing seniority lists where bargaining units have been merged:
  1. parties may agree on how seniority lists will apply; or

  2. either party may apply to the LRTC to determine seniority in which case seniority will be dovetailed unless LRTC is convinced to do otherwise.
(l) Police, Fire and Hospital Sectors
  • where the parties cannot reach agreement through conciliation as provided in their respective governing statutes (Fire Protection and Prevention Act (FPPA), Hospital Labour Disputes Arbitration Act (HLDAA) and the Police Services Act (PSA)) the dispute shall be referred to the DRC unless the parties agree in writing to refer the dispute to an arbitrator or arbitration board and expressly waive the right to have the dispute resolved by the DRC

  • the Chief Commissioner of the DRC assigns a commissioner or panel of commissioners, designates a chair and makes an order specifying the method to be used to resolve the dispute

  • party representatives (nominees) may be assigned to the panel if the parties on each side so request

  • should the assigned panel be unsuccessful in mediating the dispute, it shall resolve the dispute by arbitration or final-offer selection as per the Chief Commissioner’s order

  • before the panel resolves the dispute, parties have the right to make submissions

  • before resolving the dispute, the parties may reach an agreement on some or all of the issues and the panel will limit its decision accordingly

  • when resolving a dispute, the panel shall consider such factors as the employer’s ability to pay, the extent to which services may have to be reduced, the economic environment and the employer’s ability to attract and retain employees

  • a decision of the panel is final and cannot be reviewed by a court

  • the PSA, FPPA and the HLDAA, have all been amended to provide that all future bargaining disputes are to be resolved in accordance with the PSDRA

  • proceedings before an arbitrator or arbitration board commenced under the FPPA, HLDAA or the PSA on or before June 3, 1997 or before the date the PSDRA comes into force are terminated and any decision is void unless the final decision was issued before June 3, 1997 or before the Public Sector Dispute Resolution Act, 1997 comes into force unless the parties agree otherwise

(II) All Other Sectors

  • either party may choose to have their first post-amalgamation or merger collective agreement resolved by the DRC process as outlined above for the police, fire and hospital sectors

  • parties do not have the option of using the DRC option for any collective agreement negotiations after the first post-amalgamation collective agreement has been entered into

  • parties who do not choose the DRC option can engage in a strike or lockout

(III) School Boards and Teachers

  • the Ministry of Education and Training will be tabling new legislation for collective bargaining between teachers and school boards


Application of Act to Crown Where the Crown transfers part of its business to another employer, any employees affected as a result are deemed to be terminated – severance becomes due as a result Where the Crown transfers a part of its business to another employer who employs an employee of the Crown, the employment of the employee shall not be terminated by the sale and the period of employment with the Crown shall be deemed to have been employment with the purchaser – severance pay is not payable until the employee is terminated by the purchaser
Severance Pay No provision at present Where an employer who sells a business purports to pay severance pay to an employee and the amount paid at least equals the amount of severance pay the employee would have been entitled, the amount paid is treated as severance pay – includes payments made before this section comes into force
Employee Wage Protection Plan An employee wage protection plan is in place which protects employees’ earned but unpaid wages and vacation pay where the employer has become insolvent The employee wage protection plan is discontinued and will only continue to apply with respect to wages that became due and owing before the plan was discontinued


Pay Equity Adjustments A new employer in an amalgamated or newly purchased organization is to develop a new pay equity plan if the previous plan is no longer appropriate.

The new employer is prohibited from reducing the amount of pay equity adjustments in order to bring amalgamated organizations in line

The new employer in an amalgamated or newly purchased organization is to develop a new pay equity plan if the previous plan is no longer appropriate.

There is no prohibition against reduction of the pay equity adjustments in order to bring the amalgamated or merged organizations in line

Retroactive Claims Pay equity adjustments for public sector employers have to be made back to January 1, 1990 There is no obligation imposed on an employer in the public sector to make a pay equity adjustment where there has been no posting of a pay equity plan prior to June 3, 1997, in respect of a period of time before the earliest of:

(1) the date on which a complaint was filed with the Commission

(2) the date on which a bargaining agent first attempted to negotiate a plan; or

(3) the date on which the employer posts a plan.

An order made under the Pay Equity Act on or after June 3 1997 but before this section comes into force will be amended accordingly.

A predecessor employer ceases to have any obligations under this Act on the changeover date as those obligations transfer to the successor employer


The PSTSA, 1997 may be applicable to OPS employees whose services are transferred to municipalities or other public sector organizations [the broader public sector (BPS)] including Schedule II and III Crown Agencies. It does not apply to situations of internal restructuring of the OPS or to services tendered to the private sector. For transferred services, the PSTSA may be applicable as follows:
  • if the new employer is already unionized, the former OPS employees may be hired into the existing bargaining unit depending on the nature of the work performed. Seniority of OPS employees may be recognized in the collective agreement of the new employer

  • when OPS employees are hired by a public sector employer currently involved in a merger or amalgamation under the PSTSA, OPS employees will be treated the same as employees who were not unionized prior to the amalgamation (ie. protection of seniority and right to vote re. union representation)

  • if the new employer is not unionized, OPS employees may be hired, subject to reasonable efforts, under terms and conditions as determined by the employer

  • employees who were not members of an OPS union would have their relevant OPS service recognised for seniority purposes if placed in a bargaining unit with the new employer

(See also “Red Tape Commission urges key amendments to Ontario employment statutes” on our Publications page.)

For more information on this subject, please contact Lynn Harnden at (613) 563-7660, Extension 226.

Related Articles

New Canada Labour Code Termination Entitlements to Come Into Effect on February 1, 2024

In 2018, as part of the federal government’s efforts to modernize its labour standards regime, the Budget Implementation Act, 2018,…

New Licensing Requirement for Temporary Help Agencies and Recruiters: Online Applications Now Open

In recent years, investigations by Ministry of Labour, Immigration, Training and Skills Development (the “Ministry”) officers have reportedly uncovered issues…

Arbitrator Determines that National Day for Truth and Reconciliation was “Proclaimed” a Holiday Under Collective Agreements

In a past focus alert, we discussed the implementation of a new statutory holiday. The National Day for Truth and…