The Effect of Bill 124 on Wage Parity Between Hospitals and Municipal Homes for the Aged

As municipal employers know, Bill 124, the Protecting a Sustainable Public Sector for Future Generations Act (“Bill 124”), came into force on November 8, 2019.  Bill 124 operates to limit compensation increases for employees of Ontario’s public service and the broader public sector, including hospitals and not-for-profit long-term care homes.

Bill 124 does not apply to municipalities, including municipal homes for the aged.  However, where Registered Nurse (“RN”) employees in municipal homes for the aged are represented by the Ontario Nurses’ Association (“ONA”), those homes tend to use the ONA Central Collective Agreement with Participating Hospitals (the “Central Agreement”) as a benchmark for certain terms and conditions, including wages. 

Municipal employers may therefore wonder how the Central Agreement (expiring March 31, 2023), which has been impacted by Bill 124, affects wages in municipal homes for the aged where there has typically been parity with the Central Agreement.

This issue was addressed by Arbitrator Kaplan in Regional Municipality of Niagara Homes for the Aged v. ONA, issued on November 2, 2020.  One of the issues that remained in dispute before the interest arbitration board was the wage increase for 2020 and 2021.

The municipality took the position that there was an established pattern of following the Central Agreement, such that 1% increases in each of the two years in dispute would be appropriate, notwithstanding that the increases were limited by statute.  Among other arguments, the employer suggested that it was inappropriate for the union to get to “pick and choose” when parity with the Central Agreement was appropriate.

The Kaplan Board declined to award the Bill 124-mandated 1.0% for 2020 and 1.0% for 2021, instead awarding 1.75% in 2020 and 1.75% in 2021 (with the employer nominee dissenting). Arbitrator Kaplan noted that this was the minimum amount that the Stout Board of Arbitration had stated, in a June 2020 award between ONA and the Participating Hospitals, that it would have awarded but for the application of Bill 124.  

Arbitrator Kaplan acknowledged the historical wage parity between RNs working for municipal homes for the aged and RNs governed by the Central Agreement and stated that the Board would have normally awarded the Central Agreement outcome.  However, the Board concluded that, given that the mandate of an interest arbitration board is to attempt to reflect free collective bargaining, the imposition of a wage cap contained in legislation that does not apply to the parties would be inappropriate.

Arbitrator Kaplan concluded the Board’s decision by noting that, while the decision is not binding on other boards of arbitration, “requests to follow central outcomes in the future may not be appropriate if doing so is opportunistic and not principled.”

Similar reasoning was seen in a March 23, 2022 award in Homewood Health Centre v. Ontario Nurses’ Association.  The employer, a private, for-profit mental health centre exempt from Bill 124, sought wages consistent with the ONA Central Agreement on the basis of longstanding wage parity.  ONA, on the other hand, argued that such an approach would not constitute replication of free collective bargaining.  ONA further argued that the legislature had decided to exempt privately-owned, for-profit facilities such as Homewood Health Centre from the application of Bill 124 and that such a decision should be respected.

The Mitchnick Board looked at other awards, including that of the Stout Board and of Arbitrator Kaplan, discussed above.  The Mitchnick Board (with the employer nominee dissenting) found that the legislature had made a specific distinction in terms of which enterprises were provided with short-term wage protection under Bill 124 and which were not, and that distinction should be respected by interest arbitrators.  The Board noted that the gap in wages “will be open to correction over time.”

As such, the Mitchnick Board looked to the sector’s other professional group, the “paramedical” employees represented by the Ontario Public Service Employees Union, and awarded 1.75% in in 2020 and 1.75% in 2021. 

In the April 29, 2022 award in Corporation of the Municipality of Chatham-Kent (Riverview Gardens) v. Ontario Nurses’ Association, the Wilson Board awarded 1.75% for each of 2020, 2021, and 2022.  The Board did not discuss the issue of Bill 124 and the home’s typical parity with the ONA Central Agreement.  However, the employer nominee dissented on that basis, noting that interest arbitration is intended to replicate free collective bargaining, and it was unlikely that the employer would have agreed to wage rates that were different from the ONA Central Agreement, given its historical parity with the Central Agreement since 2008.  In the employer nominee’s view, the Board ought to have awarded wage increases of 1% per annum, consistent with the ONA Central Agreement.

The Wilson Board’s award in Corporation of the County of Grey (Grey Gables; Lee Manor & Rockwood Terrace) v. Ontario Nurses’ Association was released on May 13, 2022.  The collective agreement contained an article “which requires the parties to negotiate parity with hospital nurses,” whose wage increase was limited by Bill 124 to 1% in each year.  The parties indicated that meeting hospital parity was a common objective of the parties in the past and was to apply in the future.  The Board suspended the article requiring parity for the current round and awarded 1.75% in each year of a three-year term (2020-2022).  However, the Board indicated that “this does not preclude the parties from making proposals if parity has not been achieved in the next round of collective bargaining.”

On May 18, 2022, the Steinberg Board released its award in Manitoulin Centennial Manor Home for the Aged v. Ontario Nurses’ Association, which involved a not-for-profit municipal home for the aged.  The Board noted that in past rounds, the ONA Central Agreement was recognized by arbitrators as the appropriate comparator.  Additionally, the parties had also negotiated a settlement that included hospital wage increases. 

However, the Board found that “freely negotiated outcomes in the sector exceed the limits on compensation imposed by Bill 124.”  Citing Arbitrator Kaplan’s decision in Regional Municipality of Niagara Homes for the Aged, the Board determined (with the employer nominee dissenting) that “in order to replicate what the parties would have agreed to in free collective bargaining, we have looked to settlements reached in free collective bargaining rather than the statutorily constrained outcome in the hospitals.”  The Board awarded 1.75% in each year of a three-year term (2020-2022). 

What Does This Mean for Municipal Employers?

While it remains open to municipalities operating municipal homes for the aged to argue that the historical parity between their RNs and those covered by the Central Agreement should be honoured notwithstanding the application of Bill 124 to the hospital sector, municipalities can expect to see the cases discussed above to challenge this longstanding practice.

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