2016 QCCA 163, 2016 QCCA 163

Canada (Procureur général) c. Syndicat canadien de la fonction publique,

section locale 675 2016 QCCA 163 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-022922-124 (500-17-050958-092) (500-17-050329-096) DATE: FEBRUARY 2, 2016 CORAM: THE HONOURABLE NICOLE DUVAL HESLER, C.J.Q. YVES-MARIE MORISSETTE, J.A. MARIE-FRANCE BICH, J.A. 500-17-050958-092 ATTORNEY GENERAL OF CANADA APPELLANT – Defendant v. CANADIAN UNION OF PUBLIC EMPLOYEES, LOCAL 675 JACQUELINE TURGEON FRANCINE DUROCHER JACQUES GOBEIL RESPONDENTS – Plaintiffs and CANADIAN BROADCASTING CORPORATION IMPLEADED PARTY – Impleaded party 500-17-050329-096 ATTORNEY GENERAL OF CANADA APPELLANT – Defendant v.

ASSOCIATION DES RÉALISATEURS RESPONDENT – Plaintiff and CANADIAN BROADCASTING CORPORATION IMPLEADED PARTY – Impleaded party JUDGMENT - I - [ 1 ] On August 10, 2012, the appellant appealed from a judgment of the Superior Court, [1] District of Montreal (the Honourable Lise Matteau), which, on July 11, 2012, [2] had granted the respondents’ motions for declaratory judgment and declared certain provisions of the Expenditure Restraint Act [3] (the “ ERA ”) invalid because they violated s. 2(

d) of the Canadian Charter of Rights and Freedoms [4] (the “ Charter ”). On May 27, 2014, this Court allowed the appeal, overturned the judgment a quo , and dismissed the respondents’ two motions for declaratory judgment. [5] The respondents then turned to the Supreme Court of Canada and sought leave to appeal from that judgment. On January 29, 2015, the Supreme Court justices who heard the respondents’ applications for leave rendered

identical judgments referring to two important decisions dated January 16, 2015. These judgments read as follows: Pursuant to subsection 43(1.1) of the Supreme Court Act , the case forming the basis of the application for leave to appeal from the judgment of the Court of Appeal of Quebec (Montréal), Number 500-09-022922-124, 2014 QCCA 1068 , dated May 27, 2014, is remanded to the Court of Appeal of Quebec for disposition in accordance with Meredith v. Canada (Attorney General) , 2015 SCC 2 , and Mounted Police Association of Ontario v.

Canada (Attorney General) , 2015 SCC 1 . [ 2 ] Back before the Court of Appeal, all the parties were asked to file supplemental briefs to address, among other things, the judgments referred to by the Supreme Court. - II - [ 3 ] The case law now recognizes that an appellate court hearing a case remanded under s. 43(1.1) of the Supreme Court Act [6] must reconsider the merits of the impugned judgment as though it were a first appeal. [7] This does not, however, exclude the possibility of referring to the decision rendered before the Supreme Court remanded the case to the court of appeal. [8] In this case, it is of course appropriate to approach the appeal in light of Meredith v.

Canada (Attorney General) [9] (“ Meredith ”) and Mounted Police Association of Ontario v. Canada (Attorney General) [10] (“ MPAO ”). During oral arguments, the parties also referred to Saskatchewan Federation of Labour v. Saskatchewan [11] (“ SFL ”), which was rendered on January 30, 2015, the day after the Supreme Court judgments remanding the case to this Court. - III - [ 4 ] The appeal concerns the scope of freedom of association enshrined in s. 2(

d) of the Charter , and focuses primarily on whether the ERA complies with the Charter . [ 5 ] The circumstances giving rise to this case are known and, as recited by Dalphond, J.A. in May 2014, are undisputed between the parties. In this regard, it therefore appears appropriate to begin by quoting the reasons of Dalphond, J.A., with which Levesque and Savard, JJ.A., agreed: [ translation ] [8] The Canadian Union of Public Employees, Local 675, represents 625 members of the CBC administrative staff and administrative support staff in the province of Quebec and in Moncton.

It is affiliated with an organization that brings together 625,000 members in Canada who work primarily in public service. On October 1, 2007, the Union and the CBC concluded a collective agreement that took effect on that same date and expired on September 26, 2010.

Among other things, it provided for three annual wage increases of: 2.6% (October 1, 2007), 2.5% (September 29, 2008) and 2.5% (September 28, 2009). [9] On October 17, 2007, the Association des réalisateurs, which at the time represented 350 employees in the province of Quebec and in Moncton, reached a collective agreement with the CBC that took effect on October 1, 2007, and expired on December 11, 2011.

This agreement stipulated a wage increase of 3.5% as of October 1, 2007, followed by four annual increases of: 3% on December 10, 2007, 2.5% on December 15, 2008, 2.5% on December 14, 2009, and 2.5% on December 13, 2010. [10] Since August 2007, industrialized nations have been struck by a serious financial crisis. This has led to a most severe recession, the effects of which are still being felt today. In Canada, the crisis resulted in a drop in exports, a downturn in consumer spending, loss of investor confidence, job cuts, and bankruptcies.

The problem escalated in the fall of 2008, with negative growth forecast for the country in 2009 for the first time since 1991. [11] Naturally, the situation had an impact on government revenue.

It also required intervention to mitigate its social and economic impacts. [12] In a Speech from the Throne on November 19, 2008, followed by an Economic and Fiscal Statement filed on November 27, 2008, the federal government announced its response, which focused on “ensuring sound budgeting”, stimulating the economy by funding infrastructure work, regulating the financial sectors, and collaborating with international bodies. [13] By “ensuring sound budgeting”, the government hoped to slow the rising national deficit and to avoid tax hikes and other tax draws from businesses and individuals. [14] Because wages represented roughly 36% of the direct burden on federal programs, the government announced measures to ensure a reduced and predictable payroll for the entire public sector. [15] On November 17, 2008, Crown corporation executives, including those from the CBC, were invited to Ottawa where Treasury Board officials directly informed them of the government’s financial situation and its strategy in response to the crisis, including the issue of remuneration. [16] The following day, the Treasury Board made a final offer to the 177,650 unionized employees of the core public administration then engaged in collective bargaining, providing for wage increases limited to 2.5% for 2006-2007, 2.3% for 2007-2008, and 1.5% for the next three fiscal years.

The government representatives at the various bargaining tables were instructed accordingly. In the days that followed, agreements in line with this offer were signed with the representatives of 110,000 employees of the core federal administration. This was also the case for 13,300 unionized employees of other government bodies.

[17] In an economic statement delivered on November 27, the Minister of Finance announced the imminent tabling of a bill “to ensure that the pay for the public sector grows only in line with what taxpayers can afford as the economy slows”. [18] When tabling the 2009 budget on January 27, 2009, the Minister of Finance confirmed that significant measures to stimulate the economy would be adopted and that a law would be enacted to guarantee the predictability of federal public sector employee remuneration. [19] On February 6, 2009, Bill C-10, entitled the Budget Implementation Act, 2009 , was tabled for first reading in the House of Commons.

It was passed on March 12 and came into force that same day.

Part 10 of Bill C-10 is the ERA . [20] The ERA established a restraint period from April 1, 2006, to March 31, 2011 ( s. 2 ), limiting increases to 2.5% for the first year, 2.3% for the second year, and 1.5% for the following three years (s. 16). These limits apply retroactively to collective agreements entered into and arbitral awards made before December 8, 2008, regardless of the content of the arbitral awards or collective agreements then in force (s. 19).

The ERA also rendered inoperative any provision of a collective agreement exceeding the established limits (s. 56) and prohibited compensation of employees for amounts they did not receive as a result of the restraint measures in the Act (s. 57).

Finally, it created an obligation to reimburse where remuneration paid during the restraint period exceeded the established limits (s. 64). [21] The ERA applied to more than 400,000 individuals paid from federal funds, both unionized and non-unionized, including senators, members of Parliament, senior civil servants, directors of certain Crown corporations and public bodies, members of the Canadian Armed Forces and the RCMP, and Parliamentary appointees. It also applied to Crown corporations benefiting from the compensation reserve (s. 13(1)(

b) and

Schedule 1 ERA ), representing 48,000 employees in total, 10,000 of whom worked for the CBC, the second-largest employer among all federal Crown corporations. [22] The compensation reserve is a budgetary item administered by the Treasury Board and used to fund wage increases in accordance with parameters set by the Board. For Crown corporations whose budgets are voted on by Parliament, this fund is used to compensate for rising expenditures as a result of wage increases, but only to the extent determined by the Treasury Board.

If a Crown corporation awards wage increases exceeding the established parameters, it has to find other ways to pay for them. [23] The CBC (“impleaded party”) may rely on two sources of funding: credits voted annually by Parliament and own-source revenue (advertising, royalties, merchandise, etc.).

Since public funding represents approximately 60% of its operating budget, the CBC’s access to the compensation reserve is limited to that proportion of wage increases, the whole subject to the parameters set by the Treasury Board. [24] It was not until a few weeks after the ERA came into force that CBC executives and the respondents realized that the Act contemplated all employees of the Crown corporation, including those governed by collective agreements negotiated before the final government offers in the fall of 2008, everyone having assumed this group would not be affected.

However, merely reading the bill, made public when tabled on February 6, 2009, would have revealed that all CBC employees were covered by the ERA . Neither the CBC nor the respondents tried to influence Parliamentary debates by asking for the CBC to be removed from

Schedule 1 of the Bill. Moreover, s. 65 of the ERA permitted the Governor in Council, by order, to add or delete the name of any Crown corporation or public body from

Schedule 1 of the ERA . The government therefore could have exempted the CBC from the application of the ERA , if it had been persuaded that such a measure was appropriate. Neither the CBC nor the respondents, however, took any initiative in this respect. [25] In 2008-2009 and 2009-2010, a portion of the wage increases for CBC employees was funded by the compensation reserve. In 2010-2011, however, it was up to the CBC to cover the entire 1.5% wage increase permitted under the ERA from its own revenue, since it did not have access to the reserve.

Thus, the government applied the same policy decision to the CBC as it did to the government departments required to fund the 1.5% increase for the 2010-2011 fiscal year by reducing expenditures. [26] The effect of subjecting the CBC to the ERA had the following consequences on the members of the respondent organizations: - loss of the portion of agreed-upon wage increases that exceeded the limits set out in the ERA , retroactively to December 8, 2008; - obligation to reimburse amounts received in excess of the limits imposed by the ERA between December 8, 2008, and the date it was realized that the ERA applied to the CBC (recovery was staggered between August and October 2009); - application of the limits set out in the ERA for the rest of the restraint period, including during new negotiations. [27] In other words, for the members of the respondent organizations, the ERA resulted in annual incomes greater than those in force before the October 2007 collective agreements were signed, but roughly 1% lower than the amounts negotiated.

In the case of employees who retired during the restraint period or in subsequent periods, the pension payouts were lower than anticipated. Moreover, in the Union’s case, the Act apparently prevented it from insisting on an update to the job evaluation plan in the fall of 2010. [28] Being of the view that Parliament violated their right to freedom of association guaranteed under s. 2(

d) of the Charter by subjecting their agreements to the ERA without providing them the possibility of renegotiating the terms, the respondents turned to the courts. In separate actions brought before the Superior Court of Quebec in May and June 2009, the Union and the Association sought declarations of the inapplicability of various provisions of the ERA to their members and of the obligation of the CBC to comply with the agreements signed in October 2007.

Concurrently, they filed grievances against the CBC. - IV - [ 6 ] The trial judge first cited two important Supreme Court judgments, Health Services and Support – Facilities Subsector Bargaining Assn. v. British Columbia [12] (“ Health Services ”) and Ontario (Attorney General) v. Fraser [13] (“ Fraser ”).

She quoted a passage from Fraser discussing an infringement on freedom of association where it was “impossible to meaningfully exercise the right to associate due to substantial interference by ... government action”. [14] She rejected, however, the Attorney General of Canada’s argument before her which maintained that, since Fraser , the party impugning a statute or government action on the basis of s. 2 (

d) must

establish that these make [ translation ] “collective action to achieve workplace goals ‘impossible’”. [15] On this point, she quoted an excerpt from the judgment rendered by Heneghan, J. of the Federal Court, Trial Division, in Meredith : [16] [77] The word “impossible” must be taken in the context of other words such as “meaningfully” and “effectively”, and the phrase “good faith”. If legislation makes it possible for employees to make collective representations that are ineffective or not meaningful, or if representations are possible but government action demonstrates a lack of good faith, a breach of subsection 2(

d) of the Charter will still have occurred. [78] In my opinion, the Supreme Court’s use of the word of impossibility does not constitute a paramount consideration or a threshold. Rather, it is part of the overall test set out and applied in Fraser . [ 7 ] The trial judge went on to analyze the first two questions she identified in the case law and felt were relevant to deciding the motions before her: [ translation ] “Does [the ERA ] interfere with collective bargaining?

Is the interference critical to the point of constituting an infringement of freedom of association?” The following passage expresses the conclusion of her analysis on this first aspect of the dispute: [ translation ] [123] Not only does the [ ERA ] set aside clauses that were duly negotiated and agreed upon by the Association, the Union, and the CBC, it also prohibits and declares inoperative any provision of a collective agreement that is contrary to the parameters established therein. [ 8 ] She then considered the requirements of s. 1 of the Charter , first finding that the Attorney General had shown that the purpose of the ERA was pressing and substantial, given the economic situation at the time it was enacted.

However, she found that there was no rational connection between this objective and the statutory measure: she noted that the ERA had no restraining impact on the impleaded party’s expenditures because the applicable funding formula, prior to the ERA , had already permitted the government to reduce the amount earmarked for salaries without interfering with the collective bargaining process.

The judge also criticized the government for not respecting the principle of minimal impairment by failing to consult with the respondents and the impleaded party before enacting the ERA . [ 9 ] Finally, the judge declared that, among the remedies she considered appropriate, ss. 16, 19 and 26 of the ERA were inapplicable with respect to the respondent association, ss. 16, 19, 21, 23, 24, 26, 27, 29, 56 and 57 were inapplicable with respect to the respondent union, and the respondents’ collective agreements should be applied as though they had not been amended by the ERA . - V - [ 10 ] What new insight can be gained from Meredith and MPAO , the judgments referred to by the Supreme Court, in that order, in its judgment of January 29, 2015?

And what of SFL , an even more recent judgment? * * [ 11 ] A preliminary observation is in order. In Meredith , the parties challenged the constitutional validity of the ERA . But, considering the challenges brought there, the Supreme Court held that the statute was valid. MPAO , for its part, concerned a provision of the Public Service Labour Relations Act [17] (“ PSLRA ”) whereby Royal Canadian Mounted Police (“RCMP”) members and special constables were excluded from the collective labour relations scheme then in force in the public service. [18] The Supreme Court held that this exclusion was unconstitutional.

Thus, the ratio decidendi of Meredith appears to bear more directly on the matter in dispute here. [ 12 ] McLachlin, C.J. and LeBel, J. wrote the majority reasons for judgment in Meredith , with which Cromwell, Karakatsanis and Wagner, JJ. concurred. Rothstein, J. wrote separate reasons, concurring in the result. Abella, J. dissented. The Court had to decide whether the ERA violated s. 2(

d) of the Charter , and the majority held that reducing the planned wage increases for RCMP members without prior consultation did not infringe their constitutional right to collective bargaining. [ 13 ] The labour relations scheme applicable to RCMP members allowed for a type of employer-employee dialogue, led by a Pay Council. As we will see later on, MPAO established that this scheme did not meet the requirements of s. 2(

d) of the Charter . Nevertheless, the Court held that the process constituted a type of associational activity attracting Charter protection. Through this process, RCMP members, with the agreement of the Treasury Board, had obtained annual wage increases ranging between 2% and 3.5%. Under the ERA , these were reduced to 1.5% for 2008, 2009 and 2010.

The appellants relied on the Charter to challenge the ERA , characterizing the impact on their wage increases as an interference with their freedom of association. [ 14 ] Because they are relatively succinct, the majority reasons of the Court in Meredith supporting the ruling that there was no infringement of freedom of association may be reproduced here in their entirety. The Chief Justice and LeBel J. wrote: [28] The facts of Health Services should not be understood as a minimum threshold for finding a breach of s. 2 ( d ).

Nonetheless, the comparison between the impugned legislation in that case and the ERA is instructive. The Health and Social Services Delivery Improvement Act , S.B.C. 2002, c. 2,

Part 2, introduced radical changes to significant terms covered by collective agreements previously concluded. By contrast, the level at which the ERA capped wage increases for members of the RCMP was consistent with the going rate reached in agreements concluded with other bargaining agents inside and outside of the core public administration and so reflected an outcome consistent with actual bargaining processes. The process followed to impose the wage restraints thus did not disregard the substance of the former procedure.

And the ERA did not preclude consultation on other compensation-related issues, either in the past or the future. [29] Furthermore, the ERA did not prevent the consultation process from moving forward. Most significantly in the case of RCMP members, s. 62 permitted the negotiation of additional allowances as part of “transformation[al] initiatives” within the RCMP. The record indicates that RCMP members were able to obtain significant benefits as a result of subsequent proposals brought forward

through the existing Pay Council process. Service pay was increased from 1% to 1.5% for every five years of service — representing a 50% increase — and extended for the first time to certain civilian members. A new and more generous policy for stand-by pay was also approved. Actual outcomes are not determinative of a s. 2 (

d) analysis, but, in this case, the evidence of outcomes supports a conclusion that the enactment of the ERA had a minor impact on the appellants’ associational activity. [30] Simply put, the Pay Council continued to afford RCMP members a process for consultation on compensation-related issues within the constitutionally inadequate labour relations framework that was then in place. The ERA and the government’s course of conduct cannot be said to have substantially impaired the collective pursuit of the workplace goals of RCMP members.

This said, our conclusions, as they relate to the ERA ’s impact on the Pay Council process, should not be taken to endorse the constitutional validity of that process or of similar schemes. * * [ 15 ] In MPAO , the Chief Justice and LeBel, J. once again wrote the majority reasons, with Cromwell, Karakatsanis, Wagner, JJ. concurring, this time joined by Abella, J. Rothstein, J. was dissenting. [ 16 ] The issues in that appeal were of an entirely different order from those raised in Meredith : they also resulted in a reversal in the case law, as the Court set aside Delisle v.

Canada (Deputy Attorney General) [19] and put an end to a scheme whereby an entire group of employees (RCMP members and special constables) were wholly excluded from any form of collective bargaining. There was no similar or even vaguely analogous interference with the activities of the respondents in this case. Thus, it is rather with respect to general principles, reiterated or nuanced by the Supreme Court, that the MPAO decision provides useful insight. [ 17 ] The majority reasons in MPAO are essentially a synthesis and update of the considerations that should guide courts when ruling on the scope of s. 2 (

d) today. The judges begin by providing a history of the constitutional protection of freedom of association in Canadian law. [20] This period was marked by several shifts in the case law and the development of an approach or

interpretation that the judges characterize as “purposive, generous and contextual”. [21] This approach “confers prima facie protection on a broad range of associational activity, subject to limits justified pursuant to s. 1 of the Charter ”. [22] [ 18 ] The following elements, taken from the majority reasons, appear to lay important analytical groundwork: [67] ... This guarantee includes a right to collective bargaining.

However, that right is one that guarantees a process rather than an outcome or access to a particular model of labour relations. [68] Just as a ban on employee association impairs freedom of association, so does a labour relations process that substantially interferes with the possibility of having meaningful collective negotiations on workplace matters. … … [71] … A process that substantially interferes with a meaningful process of collective bargaining by reducing employees’ negotiating power is therefore inconsistent with the guarantee of freedom of association enshrined in s. 2( d ).

The Court then goes on to list several examples of measures likely to disrupt “the balance necessary to ensure the meaningful pursuit of workplace goals”. [23] They include measures that limit the subjects open to negotiation or that impose arbitrary outcomes without providing adequate countervailing protections, thus making the employees’ workplace goals impossible to achieve or establishing a process that the employees cannot control or influence.

Finally, the majority judges reiterate the test from Health Services , making it clear that it is to be applied in light of the preceding observations: [72] … Whatever the nature of the restriction, the ultimate question to be determined is whether the measures disrupt the balance between employees and employer that s. 2 (

d) seeks to achieve, so as to substantially interfere with meaningful collective bargaining: Health Services , at para. 90. [ 19 ] McLachlin, C.J. and LeBel, J. then consider the meaning of the expressions “effectively impossible” and “derivative right”, which are repeated several times in Health Services and Fraser .

In so doing, they affirm that the right to collective bargaining does not constitute a right “derivative” of the “essential” right to associate, thus rejecting the argument of the Attorney General of Canada whereby constitutional protection of collective bargaining (a right the former argues is “derivative” of freedom of association) comes into play only when state action – legislation, for example – renders association to settle work-related issues “effectively impossible”. This reading of the judgments in question incorrectly interprets what the Court actually decided.

Rather, the following should be inferred from those judgments: [24] [80] To recap, s. 2 (

d) protects against substantial interference with the right to a meaningful process of collective bargaining. Historically, workers have associated in order “to meet on more equal terms the power and strength of those with whom their interests interact and, perhaps, conflict”, namely, their employers: Alberta Reference , at p. 366. The guarantee entrenched in s. 2 (

d) of the Charter cannot be indifferent to power imbalances in the labour relations context. To sanction such indifference would be to ignore “the historical origins of the concepts enshrined” in s. 2 ( d ) : Big M Drug Mart , at p. 344.

It follows that the right to a meaningful process of collective bargaining will not be satisfied by a legislative scheme that strips employees of adequate protections in their interactions with management so as to substantially interfere with their ability to meaningfully engage in collective negotiations. * * [ 20 ] SFL considers a situation in some ways analogous to that in MPAO , as it concerns the impact of legal restrictions on collective action in the exercise of freedom of association.

Two statutes are contemplated in that case: the Public Service Essential Services Act [25] (“ PSESA ”) and the Trade Union Amendment Act [26] (“ TUAA ”). Enacted in May of 2008, the statutes target public sector employees. [27] Their primary purposes were, respectively, to limit the right to strike for employees providing essential services, and to modify the percentage of support required to obtain union accreditation or certification. It should be noted that the PSESA came into being in a

context where there was no legislative mechanism prior to its enactment for designating and overseeing essential services. The PSESAabolished the right to strike for public sector employees who provide essential services, established that the identification of essentialservices and the determination of the workforce to be assigned to them are subject to negotiation between employers and unions but thatthe employer had the last word on these issues, and conferred limited jurisdiction on the local labour relations board to rule on thenumber of employees affected by these measures.

Among other things, the TUAA increased the percentage of employees required tosupport a union in writing in order to hold a vote to determine its representativity, reduced the period to assess such support from sixmonths to 90 days, and lowered the percentage of employees required to initiate the decertification procedure. [21] The majority judges rallied behind the reasons of Abella, J., writing for the Chief Justice and LeBel, Cromwell, andKarakatsanis, JJ.

They held that the PSESA is unconstitutional but that the TUAA does not substantially interfere with the freedom ofworkers to form and belong to associations. Rothstein and Wagner, JJ. were dissenting. In their view, the two statutes wereconstitutionally compliant in that they did not violate freedom of association. [22] Inasmuch as SFL provided new insight, or at least insight that was less clear in earlier cases, the judgment recognized that thecapacity to engage in collective work stoppage is protected under freedom of association.

The majority of the Court, per Abella, J.,expressed this holding as follows:[28] [75] This historical, international, and jurisprudential landscape suggests compellingly to me that s. 2(

d) has arrived at the destinationsought by Dickson C.J. in the Alberta Reference, namely, the conclusion that a meaningful process of collective bargaining requires theability of employees to participate in the collective withdrawal of services for the purpose of pursuing the terms and conditions of theiremployment through a collective agreement. Where good faith negotiations break down, the ability to engage in the collectivewithdrawal of services is a necessary component of the process through which workers can continue to participate meaningfully in thepursuit of their collective workplace goals.

In this case, the suppression of the right to strike amounts to a substantial interference withthe right to a meaningful process of collective bargaining. [23] Referring to the now oft-repeated test from Health Services, Abella, J. continued:[29] “[t]he PSEA demonstrably meets thisthreshold because it prevents designated employees from engaging in any work stoppage as part of the bargaining process. It musttherefore be justified under s. 1 of the Charter” (italics in the original). [24] It therefore remained to be determined whether the PSESA could nevertheless pass the s. 1 test.

In the opinion of the majorityjudges, this question must be answered in the negative.

The limited jurisdiction of the Saskatchewan Labour Relations Board under thePSESA, the treatment of designated essential service employees determined by the employer and the lack of any dispute-settlementmechanism (such as arbitration) on these issues result in substantial interference that does not satisfy s. 1: [80] The determinative issue here, in my view, is whether the means chosen by the government are minimally impairing, that is,“carefully tailored so that rights are impaired no more than necessary” (RJR-MacDonald Inc. v.

Canada (Attorney General), (SCC), [1995] 3 S.C.R. 199, at para. 160). [81] The trial judge concluded that the provisions of the PSESA “go beyond what is reasonably required to ensure the uninterrupteddelivery of essential services during a strike”.

I agree. … - VI - [25] In light of the preceding, and bearing in mind the spirit of the test outlined by the Supreme Court, must we conclude that theERA violated the right to a meaningful process of collective bargaining while also depriving the respondents’ members of adequateprotection in their interactions with their employer, so as to substantially interfere with their capacity to carry on meaningful collectivebargaining? [26] A few preliminary marks are in order. [27] First, nothing in the respondents’ situation can be likened to that imposed by the PSLRA on the Mounted Police Association ofOntario (according to MPAO) or to that imposed by the PSESA on the Saskatchewan Federation of Labour (according to SFL).

In thosetwo cases, perhaps even more so than in the case involving the appellant unions in Health Services, a prohibition that may becharacterized as structural prevented access to the most widespread collective bargaining processes – i.e., negotiations by mutualagreement without restrictions on subject-matter, strikes or lockouts, and dispute arbitration in its various forms.

Admittedly, theSupreme Court notes that the facts that gave rise to Health Services do not represent a minimum threshold for a violation of s. 2(d).[30]Nevertheless, the fact remains that the effect of the impugned statute in that case, the Health and Social Services Delivery ImprovementAct,[31] was also structural.

Indeed, it put the employer’s prerogative to sub-contract work beyond the reach of the collective bargainingprocess (we may easily imagine the structural impact of such a rule in the health sector) and supplemented this measure with variousrestrictions on the existing terms governing layoffs and bumping in the collective agreements in force.[32] Here, the collectivebargaining unfolded normally, following the usual pattern, under a statute which creates an area of general federal law governing labourrelations: the Canada Labour Code.[33] [28] Second, recall again that the constitutional protection of freedom of association “guarantees a process rather than an outcome oraccess to a particular model of labour relations”.[34] [29] The real issue here is the infringement of a series of freely negotiated clauses contained in two collective agreementsestablishing employee remuneration.

The amendment of these clauses by the ERA affected their scope for the duration of the agreementsby partially reducing the wage increases intended by the parties. Their future scope was also affected, in that the wage threshold on thebasis of which future remuneration would be negotiated was lower and the attendant benefits (in particular those relating to pensions)reduced accordingly.

The parties to a collective agreement reached after the ERA came into force were also barred from setting outretrospective measures neutralizing the limits on wage increases for the years contemplated in the Act. [30] It can therefore be posited at the outset – and the appellant does not dispute – that the ERA did indeed affect the collective

agreements signed by the parties and, for a time, affected the parties’ ability to freely negotiate the terms of a new collective agreement with their employers. Whether this constitutes substantial interference with freedom of association guaranteed to the parties and their members under s. 2(

d) of the Charter , however, is the debate the Court must settle here. [ 31 ] For there is indeed a debate. It is difficult to see how we can accept the respondents’ claim that any statutory amendment of freely negotiated clauses in a collective agreement inevitably constitutes substantial interference with the ability to negotiate of those who enjoy freedom of association. This proposition, as stated, would mean that the contents of a collective agreement, by its mere existence, take on a sort of immutable constitutional status through the effect of s. 2 ( d ).

Not only has this never been stated in the relevant case law, but it seems far removed from the nuanced and contextual analyses that the Supreme Court proposes in even its most recent judgments. While it is conceivable that a government’s statutory, regulatory or other measures modifying or neutralizing certain clauses in a collective agreement may have such an impact, the question is to what degree or intensity, and the measure must sufficiently interfere in the process to violate the Charter .

This is what we saw in Health Services , where the Supreme Court held that certain statutory provisions constitute a substantial interference with the exercise of freedom of association, while others do not. [35] [ 32 ] Third, it should also be remembered that in Meredith , the Supreme Court considered the ERA – notably from the perspective of the impact the Act had on wage increases – and, applying the test outlined above, concluded that there was no interference with freedom of association.

This is in fact why the majority judges found it pointless to proceed with the s. 1 analysis. - VII - [ 33 ] The question is therefore whether the application of the ERA substantially interferes with freedom of association as guaranteed by s. 2(

d) of the Charter because it affects agreements already entered into by the respondents and partially limits their future ability to negotiate. If the answer is yes, the s. 1 Charter analysis must then be carried out. * * [ 34 ] To begin, it is worth reproducing the provisions that form the core of both the ERA and this dispute: [36] 13.

(1) This Act applies to employees who are employed in or by … (

b) the Crown corporations and public bodies named in

Schedule 1; and … 13 .

(1) La présente loi s'applique aux employés : […]

b) des sociétés d'État et organismes publics figurant à l'annexe I; […] 16. Despite any collective agreement, arbitral award or terms and conditions of employment to the contrary, but subject to the other provisions of this Act, the rates of pay for employees are to be increased, or are deemed to have been increased, as the case may be, by the following percentages for any 12-month period that begins during any of the following fiscal years:

Malgré toute convention collective, décision arbitrale ou condition d’emploi à l’effet contraire, mais sous réserve des autres dispositions de la présente loi, les taux de salaire des employés sont augmentés, ou sont réputés l’avoir été, selon le cas, selon les taux figurant ci- après à l’égard de toute période de douze mois commençant au cours d’un des exercices suivants : (

a) the 2006–2007 fiscal year, 2.5%;

a) l’exercice 2006-2007, un taux de deux et demi pour cent; (

b) the 2007–2008 fiscal year, 2.3%;

b) l’exercice 2007-2008, un taux de deux et trois dixièmes pour cent; (

c) the 2008–2009 fiscal year, 1.5%;

c) l’exercice 2008-2009, un taux de un et demi pour cent; (

d) the 2009–2010 fiscal year, 1.5%; and

d) l’exercice 2009-2010, un taux de un et demi pour cent; (

e) the 2010–2011 fiscal year, 1.5%.

e) l’exercice 2010-2011, un taux de un et demi pour cent.

(1) The provisions of any collective agreement that is entered into, or arbitral award that is made, after the day on which this Act comes into force may not provide for increase to rates of pay that are greater than those set out in

section 16, but they may provide for increases that are lower.

(2) For greater certainty, any collective agreement that is entered into, or any arbitral award that is made, after the day on which this Act comes into force and that provides for increases to rates of pay for any period that begins during the restraint period must do so on the basis of a 12-month period. 17 .

(1) Les dispositions de toute convention collective conclue – ou décision arbitrale rendue – après la date d’entrée en vigueur de la présente loi ne peuvent prévoir des augmentations des taux de salaire à des taux supérieurs à ceux prévus à l’article 16, mais elles peuvent en prévoir à des taux inférieurs.

(2) Il est entendu que toute augmentation prévue dans la convention ou la décision visée au paragraphe (1) à l’égard de toute période commençant au cours de la période de contrôle doit être fondée sur une période de douze mois. 19. With respect to a collective agreement that is entered into, or an arbitral award that is made, before December 8, 2008, 19. S’agissant de toute convention collective conclue – ou de toute décision arbitrale rendue – avant le 8 décembre 2008, les règles suivantes s’appliquent : (

a) section 16 does not apply in respect of any period that began during the 2006– 2007 or 2007–2008 fiscal year; and

a) l’article 16 ne s’applique pas à l’égard de toute période commençant au cours des exercices 2006-2007 ou 2007- 2008; (

b) for any 12-month period that begins during any of the 2008–2009, 2009–2010 and 2010–2011 fiscal years,

section 16 applies only in respect of periods that begin on or after December 8, 2008 and any provisions of those agreements or awards that provide, for any particular period, for increases to rates of pay that are greater than those referred to in

section 16 for that particular period are of no effect or are deemed never to have had effect, as the case may be, and are deemed to be provisions that provide for the increases referred to in

section 16.

b) en ce qui concerne toute période de douze mois commençant au cours de l’un ou l’autre des exercices 2008-2009, 2009- 2010 et 2010-2011, l’article 16 s’applique uniquement à l’égard de toute période commençant le 8 décembre 2008 ou après cette date, et toute disposition de cette convention ou décision prévoyant, pour une période donnée, une augmentation des taux de salaire supérieure à celle qui est prévue à l’article 16 pour cette période est inopérante ou réputée n’être jamais entrée en vigueur et est réputée prévoir l’augmentation prévue à cet

article pour cette période. 21. If a collective agreement or arbitral award to which

section 19 applies provides for an increase to rates of pay for a period of other than 12 months that begins during any particular fiscal year that begins during the period that begins on December 8, 2008 and ends on March 31, 2011, that increase is of no effect or is deemed never to have had effect, as the case may be, and is deemed to be an increase for that period of other than 12 months, determined on an annualized basis to the nearest 1/100%, that provides for the increase referred to in

section 16 for a period that begins during that particular fiscal year. 21.

Dans le cas où une convention collective ou une décision arbitrale visée à l’article 19 prévoit une augmentation des taux de salaire pour toute période d’une durée autre que de douze mois commençant au cours d’un exercice qui commence au cours de la période allant du 8 décembre 2008 au 31 mars 2011, cette augmen​tation est inopérante ou réputée n’être jamais entrée en vigueur et est réputée être une augmentation – applicable à la période d’une durée autre que de douze mois – établie sur une base annuelle et arrondie au centième pour cent près, qui donne le taux prévu à l’article 16 pour toute période com​- mençant au cours du même exercice. 23.

Subject to sections 31 to 34;

Sous réserve des articles 31 à 34 : (

a) no provision of a collective agreement that is entered into, or of an arbitral award that is made, after the day on which this Act comes into force may provide for the restructuring of rates of pay during any period that begins during the restraint period;

a) aucune disposition d’une convention collective conclue – ou d’une décision arbitrale rendue – après la date d’entrée en vigueur de la présente loi ne peut prévoir de restructuration des taux de salaire au cours de toute période commençant au cours de la période de contrôle;

(

b) any provision of a collective agreement that is entered into, or of an arbitral award that is made, during the period that begins on December 8, 2008 and ends on the day on which this Act comes into force that provides for the restructuring of rates of pay during any period that begins during the restraint period is of no effect or is deemed never to have had effect, as the case may be; and

b) toute disposition d’une convention collective conclue – ou d’une décision arbitrale rendue – au cours de la période allant du 8 décembre 2008 à la date d’entrée en vigueur de la présente loi prévoyant une restructuration des taux de salaire au cours de toute période commençant au cours de la période de contrôle est inopérante ou réputée n’être jamais entrée en vigueur; (

c) any provision of a collective agreement that is entered into, or of an arbitral award that is made, before December 8, 2008 that provides for the restructuring of rates of pay during any period that begins during the period that begins on December 8, 2008 and ends on March 31, 2011 is of no effect or is deemed never to have had effect, as the case may be.

b) toute disposition d’une convention collective conclue – ou d’une décision arbitrale rendue – au cours de la période allant du 8 décembre 2008 à la date d’entrée en vigueur de la présente loi prévoyant une restructuration des taux de salaire au cours de toute période commençant au cours de la période de contrôle est inopérante ou réputée n’être jamais entrée en vigueur; 26.

If a collective agreement that is entered into, or an arbitral award that is made, before December 8, 2008 contains provisions that, for any period that begins in the period that begins on December 8, 2008 and ends on March 31, 2011, provide for an increase to the amount or rate of any additional remuneration that applied to the employees governed by the collective agreement or the arbitral award immediately before the first period that began on or after December 8, 2008, those provisions are of no effect or are deemed never to have had effect, as the case may be. 26.

Est inopérante ou réputée n’être jamais entrée en vigueur la disposition de toute convention collective conclue – ou décision arbitrale rendue – avant le 8 décembre 2008 prévoyant, à l’égard de toute période commençant au cours de la période allant du 8 décembre 2008 au 31 mars 2011, une augmentation des montants ou des taux de toute rémunération additionnelle applicable, avant la première période qui commence le 8 décembre 2008 ou après cette date, aux employés régis par cette convention ou décision. 29.

If a collective agreement that is entered into, or an arbitral award that is made, before December 8, 2008 contains a provision that provides, for any period that begins in the period that begins on December 8, 2008 and ends on March 31, 2011, for any additional remuneration to the employees governed by the collective agreement or the arbitral award that is new in relation to the additional remuneration that applied to the employees governed by the collective agreement or arbitral award, as the case may be, immediately before the first period that began on or after December 8, 2008, that provision is of no effect or is deemed never to have had effect, as the case may be. 29.

Est inopérante ou réputée n’être jamais entrée en vigueur la disposition de toute convention collective conclue – ou décision arbitrale rendue – avant le 8 décembre 2008 prévoyant, à l’égard de toute période commençant au cours de la période allant du 8 décembre 2008 au 31 mars 2011, une rémunération additionnelle qui est nouvelle par rapport à celle applicable, avant la première période qui commence le 8 décembre 2008 ou après cette date, aux employés régis par cette convention ou décision. 56.

Any provision of any collective agreement that is entered into – or of any arbitral award that is made, or of any terms and conditions of employment that are established – after the day on which this Act comes into force that is inconsistent with this Act is of no effect. 56. Est inopérante toute disposition d’une convention collective conclue – ou d’une décision arbitrale rendue ou de conditions d’emploi établies – après l’entrée en vigueur de la présente loi et incompatible avec celle-ci. 57.

No provision of any collective agreement that is entered into – or of any arbitral award that is made, or of any terms and conditions of employment that are established – after the day on which this Act comes into force may provide for compensation for amounts that employees did not receive as a result of the restraint measures in this Act. 57.

Aucune disposition d’une convention collective conclue – ou d’une décision arbitrale rendue ou de conditions d’emploi établies – après la date d’entrée en vigueur de la présente loi ne peut prévoir une indemnisation des employés pour les sommes qu’ils n’ont pas reçues en raison des mesures de contrôle prévues à la présente loi.

59. No provision of any collective agreement that is entered into – or of any arbitral award that is made, or of any terms and conditions of employment that are established – after the day on which this Act comes into force may, for any period that begins during the restraint period, change the performance pay plans, including the amounts or rates, that apply to any employees governed by the agreement, award or terms and conditions of employment. 59.

Aucune disposition d’une convention collective conclue – ou d’une décision arbitrale rendue ou de conditions d’emploi établies – après la date d’entrée en vigueur de la présente loi ne peut, à l’égard de toute période commençant au cours de la période de contrôle, modifier les régimes de rémunération au rendement – y compris les montants ou les taux –, qui s’appliquent aux employés régis par la convention, la décision ou les conditions d’emploi. 64.

(1) Every amount paid – including amounts paid before the day on which this Act comes into force – to any person in excess of the amount that should have been paid as a result of this Act is a debt due to Her Majesty and may be recovered as such. 64.

(1) Toute somme supérieure à celle qui aurait dû être versée à une personne – y compris avant la date d’entrée en vigueur de la présente loi – en application de la présente loi peut être recouvrée à

titre de créance de Sa Majesté. … […] 65. The Governor in Council may, on the recommendation of the Treasury Board, by order, amend

Schedule 1 by adding to or deleting from it the name of any Crown corporation or public body. 65. Le gouverneur en conseil peut par décret, sur recommandation du Conseil du Trésor, ajouter à l’annexe 1 ou en retrancher le nom de toute société d’État ou de tout organisme public.

schedule 1 (Sections 13 and 65) crown corporations and public bodies … Canadian Broadcasting Corporation Corporation Radio-Canada

annexe 1 (articles 13 and 65) sociétés d'état et organismes publics […] Société Radio-Canada Canadian Broadcasting Corporation [ 35 ] Against the exceptionally turbulent background of the global financial crisis that began in 2007 in the United States, the ERA was enacted to circumscribe and limit Canadian government expenditures by controlling the salaries drawn from its budget while consolidating this situation for the future. [37] It imposed the same restrictions on unionized and non-unionized employees, with distinctive features for a few specific groups (employees in the Border Services Group, [38] the Operational Services Group, [39] the Ships’ Officers Group, [40] the Law Group, [41] members of the RCMP [42] ).

It also applied to senators and members of Parliament, but on different terms. [43] [ 36 ] In the present case, the application of the ERA had the following consequences for the respondents: - In the case of the Association des réalisateurs, whose collective agreement was signed on October 17, 2007, came into force on October 1, 2007, and expired on December 11, 2011, the employees were deprived of the full wage increase they had agreed to with the employer for the period defined in ss. 19 and 21 ERA .

Although the collective agreement provided for a 2.5% wage increase on December 15, 2008, another on December 14, 2009, and again on December 13, 2010, the annual increase was instead 1.5%, the maximum allowed under the Act . - In the case of the Canadian Union of Public Employees, Local 675, whose collective agreement was signed on October 1, 2007, came into force that day, and expired on September 26, 2010, the employees were deprived of the full wage increase they had agreed to with the employer for the period defined in ss. 19 and 21 ERA .

Instead of receiving the annual 2.5% increase that was supposed to be paid on September 29, 2008, and again on September 28, 2009, the employees received the maximum 1.5% annual increase under the Act .

Subsequently, the Union and the employer were deprived of the ability to freely negotiate the salaries payable for the 2010-2011 period, in that they were prohibited from providing for a wage increase greater than the 1.5% rate set out in the Act . - After March 31, 2011 (the date on which the restraint period ended), the respondents were deprived of the possibility of negotiating terms with their employer to recover the increases they had lost, and the employer was barred from granting such terms, whether through an adjustment in the rate of pay applicable at any period beginning during the restraint period (ss. 17 and 56 ERA ), the restructuring of rates of pay (s. 23), additional remuneration (s. 27), compensation (s. 57), or changes to performance pay plans (s. 59). - The cap on wage increases during the restraint period had a negative effect on employees who retired during that period or in the few years that followed by reducing the amounts considered for the purposes of the pension under the collective agreement. [ 37 ] That being said, did the scheme implemented by the ERA interfere with the freedom of association of the respondents and that of their members?

[ 38 ] The principles in Health Services , reiterated in MPAO , provide a guide to answering that question: 112 On the analysis proposed above, two questions suggest themselves. First, does the measure interfere with collective bargaining, in purpose or effect? Secondly, if the measure interferes with collective bargaining, is the impact, evaluated in terms of the matters affected and the process by which the measure was implemented, significant enough to substantially interfere with the associational right of collective bargaining, so as to breach the s. 2 (

d) right of freedom of association? [44] [ 39 ] We have already answered the first of these questions (see paragraphs [30] and [33], supra ). Because it invalidated certain duly negotiated clauses in the agreements, at least in part and sometimes retroactively, and because it reduced the ability of those concerned to negotiate the recovery or collection of wage increases not awarded during this period even beyond the period of restraint, there is no doubt that the ERA constituted an interference in collective bargaining, both in purpose and in effect.

To paraphrase paragraph 113 of the majority reasons in Health Services , (even partial) invalidation of the salary clauses of a collective agreement undermines the past bargaining processes that formed the basis for these agreements. [45] Similarly, to borrow from Health Services a second time (again at paragraph 113), restricting the content of future collective agreements, even to a limited degree as in the present case, “constitute[s] an interference with collective bargaining because there can be no real dialogue over terms and conditions that can never be enacted as part of the collective agreement”. [ 40 ] In this case, it can be said that this interference (“ ingérence ”) has a unique flavour, as it takes place in the context of the State’s relations with its unionized employees.

A real dialogue between the parties cannot be achieved or sustained if the shadow of the legislator looms large behind the government purporting to discuss working conditions with its union counterparts, or if promises made at the bargaining table are too frequently withdrawn or neutralized elsewhere. In other words, the State cannot make a habit of giving with one hand (the government’

s) and taking with the other (the legislator’s); otherwise, bargaining risks becoming an artificial process. [46] Establishing a labour-management relationship of trust, an essential element in free and frank bargaining, requires the State to act with restraint in this respect and to impose statutory restrictions only exceptionally, as such restrictions will necessarily affect freedom of association. [47] [ 41 ] In this case, then, there is interference (“ ingérence ”, in the words of the Supreme Court in Health Services ).

This finding is not the complete analysis, however, and we must now answer the second question posed in that judgment, to wit: Does the interference, which here takes the form of legislative provisions capping wage increases for a certain period and perpetuating the effects of the cap, constitute substantial interference with the respondents’ freedom of association?

More specifically, and once again borrowing from McLachlin and LeBel, JJ. in Health Services , does it compromise “the essential integrity of the process of collective bargaining protected by s. 2 ( d )” (“ l'intégrité fondamentale du processus de négociation collective protégé par l' al. 2d) ”)? [48] [ 42 ] Two inquiries requiring an assessment of both the context and the facts are thus in order: first, the nature of the rights affected by the ERA and their importance to the employees’ exercise of their freedom of association must be considered; second, it must be determined whether the ERA allows the parties to benefit from “the processes of collective bargaining” (“ le droit à un processus de négociation collective ”). [49] [ 43 ] On the first point, there is no question that wage issues are certainly important to workers who, through their union, are involved in the collective bargaining process which is an integral part of freedom of association guaranteed by s. 2(

d) of the Charter . These issues are central to the exercise of this freedom in a workplace and are ordinarily one of the crucial points of discussion during collective bargaining. [50] [ 44 ] The interference by the ERA in this respect was therefore not trivial, especially since it was intended to last for three to five years, a fairly considerable length of time, and even to produce certain effects beyond this period. Thus, in cases governed by s. 19 ERA (applicable to the respondents), the Act covered any twelve-month period beginning on or after December 8, 2008, and ending in 2011.

Certainly this was not permanent or structural, but neither was it one-off or transitory. [ 45 ] That said, the interference, which was real, was nevertheless tempered. [ 46 ] It should be noted immediately that we are not saying that only the most serious breaches merit the characterization “substantial interference”. Of course, some legislative measures undoubtedly constitute such interference.

This is the case, for example, where the legislator prohibits government employees from carrying on any associational activity or deprives a group of these employees of the right to constitute the union of their choice and to act freely and independently through this intermediary to negotiate their working conditions [51] (such cases, may even be described as a denial of the right under s. 2 ( d ), rather than interference).

It is also the case where the legislator decides henceforth to set working conditions for its unionized employees peremptorily, or to authorize public and parapublic sector employers to impose conditions unilaterally in the event of disputes (instead of resorting to a review or settlement mechanism in which the unions may take part and argue their positions), or to suppress the right to strike outright, without establishing a dispute-resolution mechanism. [52] [ 47 ] The interference at issue here does not rise to that level of seriousness, but we must refrain from jumping to the conclusion that it is therefore not substantial.

Interference is substantial when, despite not being the worst conceivable violation, it nevertheless disturbs the power balance that s. 2 (

d) seeks to protect by discouraging the collective pursuit of common goals or by seriously compromising collective action. [53] As the Supreme Court explains in Health Services , however, “if, on the other hand, the changes substantially touch on collective bargaining, they will still not violate s. 2 (

d) if they preserve a process of consultation and good faith negotiation ” (para. 94, emphasis added). Is that the case here?

On the scale of seriousness, where do the restrictions established in the ERA fall? [ 48 ] First, we highlight, as did Dalphond, J.A. in this Court’s earlier judgment in this case, [54] that the ERA did not impose salary freezes or reductions, measures that would have been much more draconian. [55] Instead, for a non-negligible period of time, it limited the wage increases payable to those whose compensation depends either wholly or in large part on public funds, which is the case for the employees represented by the respondents.

The legislator expressly provided, however, that employees were entitled to scale increases, [56] merit or performance increases, and other similar bonuses (s. 10) during the restraint period. [ 49 ] The partially retroactive nature of the ERA is certainly regrettable, [57] but it is nevertheless notable that s. 19 mitigates this

retroactivity with respect to collective agreements entered into before December 8, 2008 (which is the case with the agreements at issue here), since in such cases the restrictions take effect only as of the 2008-2009 fiscal year (s. 19( a )) and only as of December 8, 2008 (s. 19( b )). [ 50 ] Moreover, in Meredith , McLachlin, C.J. and LeBel, J. made the following observation about the 1.5% cap on wage increases in the ERA : [28] By contrast, the level at which the ERA capped wage increases for members of the RCMP was consistent with the going rate reached in agreements concluded with other bargaining agents inside and outside of the core public administration and so reflected an outcome consistent with actual bargaining processes .

The process followed to impose the wage restraints thus did not disregard the substance of the former procedure. And the ERA did not preclude consultation on other compensation-related issues, either in the past or the future. [Emphasis added.] [ 51 ] The remark underlined in the above excerpt also applies to the employees represented by the respondents.

The respondents were not consulted (by either the government or their employer) before the ERA was passed – a question we will revisit – but the cap on wage increases under the Act were in fact comparable to those that many of the employees had ultimately negotiated in discussions led by their unions. This element should be considered when assessing the seriousness of the violation. [ 52 ] As for the future (that is, the post-restraint period), as Dalphond, J.A. also indicated in this Court’s earlier judgment, [58] the respondents and the employer were free to negotiate the wage increases they deemed appropriate.

Of course, they were prohibited from agreeing on measures that would permit recovery of amounts lost as a consequence of the ERA (that is, the difference between the 1.5% cap under the Act and the 2.5% increase provided in agreements entered into before December 8, 2008), but the fact that they could not go back in time (i.e., to the restraint period) or rewrite it in an agreement did not prevent them from negotiating future increases that could have the cumulative effect of erasing the losses incurred during the restraint period under the ERA .

Admittedly, the fact that wage increases were reduced during this period had a permanent effect on certain employees, primarily those who retired during that time or in the few years afterwards and whose pensions were calculated on the basis of compensation that did not reach predicted levels. For the others, it is difficult to claim that the loss incurred during the restraint period cannot be mitigated over time, through negotiations that the parties may now carry on freely. [ 53 ] On another note, we must also take into account ss. 6, 7 and 8 ERA . These provisions are reproduced in the

Schedule to this judgment but are worth reproducing here as well: 6. Subject to the other provisions of this Act, the right to bargain collectively under the Canada Labour Code , the Parliamentary Employment and Staff Relations Act and the Public Service Labour Relations Act is continued.

Sous réserve des autres dispositions de la présente loi, est maintenu le droit de négocier collectivement sous le régime du Code canadien du travail , de la

Loi sur les relations de travail au Parlement et de la

Loi sur les relations de travail dans la fonction publique . 7. Nothing in this Act affects the right to strike under the Canada Labour Code or the Public Service Labour Relations Act . 7. La présente loi ne porte pas atteinte au droit de grève qui s’exerce sous le régime du Code canadien du travail ou de la Loi sur les relations de travail dans la fonction publique . 8.

Nothing in this Act precludes the bargaining agent for employees governed by a collective agreement or arbitral award and the employer of those employees from amending, by agreement in writing, any provision of the collective agreement or arbitral award, other than a provision relating to its term, so long as the amendment is not contrary to any provision of this Act. 8.

La présente loi n’a pas pour effet d’empêcher les agents négociateurs représentant les employés régis par une convention collective ou une décision arbitrale et les employeurs de ces employés de modifier, par accord écrit, les dispositions de la convention ou de la décision – exception faite de celle qui en fixe la date d’expiration – dans la mesure où la modification n’est pas contraire à la présente loi. [ 54 ]

Section 6 expressly preserves “the right to bargain collectively under the Canada Labour Code ” (“ C.L.C. ”), the scheme that applies to the respondents and their employer in this case.

As for s. 8, it adds to the general scheme, explicitly allowing the parties to amend the collective agreements clauses affected by the Act , with the following two exceptions: (1) first, amending the date of expiry of the collective agreement is prohibited; (2) the amendment the parties agree to must not be contrary to any provision of the ERA . [ 55 ] This provision, which reinforces the general statement in s. 6 ERA continuing the right to collective bargaining, is crucial.

It allows the union and employer to consult with each other, to negotiate and, in this context, to freely reform or amend the other working conditions of employees affected by the Act , that is, the non-monetary clauses (often referred to in French as “ clauses normatives ” [59] ), which do not directly impact compensation (although they may have pecuniary effect).

These may include working hours, vacations, leave, employment security, or terms affecting work organization, staffing, assignments, transfers, and so on. [60] This possibility of union-management discussion about working conditions not strictly related to wages, which is one of the central aspects of the bargaining process inherent to freedom of association recognized under s. 2( d ), carries clear weight in assessing the seriousness of the impact of ERA ss. 16 et seq . [ 56 ] What is more, this opportunity to negotiate is undoubtedly what McLachlin, C.J. and LeBel, J. are referring to in the majority

reasons in Meredith [61] when they twice remark that “the ERA did not preclude consultation on other compensation-related issues [“ autres questions salariales ”] either in the past or the future”, [62] and moreover that it “did not prevent the consultation process” [63] (the special measure that s. 62 of the Act reserves solely for RCMP officers was the subject of a separate comment). [ 57 ] Finally, we may also consider another aspect of the interaction between ss. 6, 7 and 8 ERA .

It is also possible that s. 8, which opens the door to renegotiating non-monetary clauses in agreements affected by the ERA , in this respect falls within the general framework of the Canada Labour Code , to which s. 6 refers directly, and serves to provide that the collective agreement may be revised within the meaning of s. 49(2) C.L.C . If that were the case, striking would be permitted by virtue of s. 8.1(

a) C.L.C . The legislator would thus have demonstrated its concern for the economy of the collective agreements affected by the ERA and a desire to preserve this essential dynamic of the bargaining process (including the right to strike [64] ). If that is not the case, we may ask why the legislator took care to enact these provisions.

That said, since the parties did not approach the question from this perspective, it is not helpful to make any final determination of this issue. * * [ 58 ] In view of all of these elements – on the one hand, the wage caps imposed on the respondents (with limited retroactive and prospective effects) and, on the other, the maintenance of real bargaining channels that were not used by the respondents but that would have been available to them (and the employer) to begin a consultation process regarding non-monetary clauses – the interference with the freedom of association of the respondents and the employees they represent cannot be characterized as substantial. [ 59 ] Without doubt, there is obstruction or interference (“ ingérence ”), but because it “preserve[s] a process of consultation and good faith negotiation”, it is not the type that deprives employees of their right to “associate in a meaningful way in the pursuit of collective workplace goals” [65] or that leads them to turn away from collective action. [66] The fact that wage increases are not prohibited but are instead capped, and that subsequent recovery of amounts lost during the restraint period is not permitted does not impair the employees’ freedom of choice or their ability to pursue collective goals through an effective process that permits meaningful bargaining (even if one of the bargaining subjects is provisionally limited by an actual legal restriction).

It does not create dependence on the employer, limit the right to strike, or have the structural effects that were at issue in Health Services , for example.

Moreover, this limitation is not part of a series of repeated and successive restraint periods that could cumulatively undermine the ability of employees to come together and defend their interests collectively. [ 60 ] In Fraser , McLachlin, C.J. and LeBel, J., for the majority, relied on Health Services , noting that “the unilateral nullification of significant contractual terms, by the government that had entered into them or that had overseen their conclusion, coupled with effective denial of future collective bargaining, undermines the s. 2 (

d) right to associate, not that labour contracts could never be interfered with by legislation ”. [67] There are therefore cases where the legislator may amend a collective agreement without substantially affecting the right protected by s. 2(

d) of the Charter , and this is precisely such a case. [ 61 ] Accordingly, there is no basis for concluding that there has been a violation of freedom of association guaranteed under s. 2 ( d ). This is the conclusion of the Supreme Court in Meredith , and we should not depart from it. * * [ 62 ] If there were a violation, however, would it be justified under s. 1 of the Charter ?

It is always a delicate matter to undertake such an analysis in the alternative, but in this case it appears useful to do so. [ 63 ] The well-known test used to apply this provision was summarized by Gascon, J. in Mouvement laïque québécois v.

Saguenay (City ): [68] [90] … The impugned provision must therefore satisfy the justification test enunciated in Oakes , which requires the state to prove on a balance of probabilities (1) that the legislative objective is of sufficient importance, in the sense that it relates to pressing and substantial concerns, and (2) that the means chosen to achieve the objective are proportional. This second requirement has three components: (

i) the means chosen must be rationally connected to the objective; (ii) they must impair the right in question as little as possible; and (iii) they must not so severely trench on individual or group rights that the objective is outweighed by the seriousness of the intrusion ( Edwards Books , at pp. 768-69). [ 64 ] Let us consider each of these requirements. [ 65 ] The importance of the objective.

In this case, the trial judge, while recognizing that the legislator’s threefold objective was legitimate, pressing and substantial, nevertheless found that the ERA failed in terms of the means chosen to achieve it: she determined that the means were not rationally connected to the objective sought, did not meet the minimal impairment requirement, and had no beneficial effect, as the seriousness of the intrusion outweighed the objective. [ 66 ] In the judgment rendered in May 2014, this Court, per Dalphond, J.A., expressed a different opinion, which should be adopted here, for the following reasons. [ 67 ] First, recall briefly the legislator’s threefold objective, which the trial judge described as follows: [ translation ] ➢ Display leadership through diligent management of public funds in periods of economic difficulty; ➢ Ensure management of costs associated with public sector compensation that is predictable and that sustainably contributes to the solidity of the government’s financial position; ➢ Reduce upward pressure on private sector salaries. [69]

[68] Confirming the trial judge’s finding in this respect, Dalphond, J.A. wrote: [translation] [73] In this case, as previously indicated, the government demonstrated the existence of three objectives, which in 2008-2009 wereclearly pressing and substantial. I would add that one of these objectives, the stabilization of public finances in 2008, is an example of apressing and substantial objective recognized by the Supreme Court in Newfoundland (Treasury Board) v.

N.A.P.E., 2004 SCC 66 atpara. 69. [69] Admittedly, in Newfoundland (Treasury Board),[70] the Court suggests prudence, even skepticism, when a justification basedon financial considerations is invoked under s. 1 (the first sentence of the following excerpt was in fact reiterated in Health Services, atpara. 147). It does not deny, however, that certain situations raise legitimate concerns and require state intervention: 72 The result of all this, it seems to me, is that courts will continue to look with strong scepticism at attempts to justify infringementsof Charter rights on the basis of budgetary constraints.

To do otherwise would devalue the Charter because there are always budgetaryconstraints and there are always other pressing government priorities. Nevertheless, the courts cannot close their eyes to the periodicoccurrence of financial emergencies when measures must be taken to juggle priorities to see a government through the crisis.

It cannot besaid that in weighing a delay in the timetable for implementing pay equity against the closing of hundreds of hospital beds, as here, agovernment is engaged in an exercise “whose sole purpose is financial”. … 73 This is not the first time the Court has been asked to determine the constitutionality of public sector restraint legislation whoseobjective is to remedy a serious financial situation. In PSAC v. Canada, (SCC), [1987] 1 S.C.R. 424, the union hadattacked a federal law which automatically extended existing collective agreements.

PSAC argued that the law interfered with collectivebargaining contrary to freedom of association (s. 2(

d) of the Charter). The only judges who found a Charter infringement, and whotherefore had to address s. 1, were Dickson C.J. and Wilson J. The Chief Justice accepted that the then need to control inflation justifiedthe law. Wilson J. accepted that controlling inflation at the time of passage of the legislation was an object “of sufficient importance”(p. 455), but considered the government’s response to have been disproportionate, and therefore unjustified.

In this context, Dickson C.J.made the following comments at pp. 439-40: In the present case, though there is no explicit indication of Parliament’s objective in the Act, it is apparent that the general or overridingpurpose for enacting the Public Sector Compensation Restraint Act was the reduction of inflation. This is, in my view, an objective ofsufficient importance for the purpose of s. 1. Inflation at the time of the Act’s passage was a serious problem.

The evidence establishedthat wage and price inflation had reached double digit levels, that Canada’s inflation rate was exceeding that of the United States, andthat the monetary and fiscal restraint policies of 1979 were not having a significant effect. ... The seriousness of inflation underlined by the Court’s decision in Re Anti-Inflation Act supports the characterization of Parliament’sobjective in the present case as relating to a “pressing and substantial concern”.

I am of the opinion, therefore, that the objective ofreducing inflation was, at the time of passage of the Act, an objective of sufficient importance for the purpose of s. 1 of the Charter. See also Wilson J., dissenting, at p. 455. 74 In my view, the union’s argument that budgetary issues should effectively be given no weight in these circumstances goes toofar.

With respect, the need to address a fiscal crisis such as that described by the President of the Treasury Board was a pressing andsubstantial legislative objective. [Emphasis added.] [70] Based on what appears from the evidence, it can be said that in this case, as in Newfoundland (Treasury Board), the need toremedy a crisis like the one that began in 2007-2008 was a pressing and substantial legislative objective from the three perspectivesconsidered by the legislator (control over public expenditures, reduction of upward pressure in the private sector, leadership in economicmanagement), even though the first alone would have sufficed.

As we now know, the Canadian economy and public funds better resistedthe financial crisis than others did, but what we know now does not justify finding that, when the ERA was passed in March 2009 theobjectives sought by the legislator were not pressing or substantial. As the majority wrote in Health Services: [108] Even where a s. 2(

d) violation is established, that is not the end of the matter; limitations of s. 2(

d) may be justified under s. 1 ofthe Charter, as reasonable limits demonstrably justified in a free and democratic society. This may permit interference with the collectivebargaining process on an exceptional and typically temporary basis, in situations, for example, involving essential services, vital stateadministration, clear deadlocks and national crisis. [71] This was the nature of the crisis that began in 2007-2008, and the legislator had every reason for wanting to intervene, inparticular by controlling public expenditures, of which wages represent a substantial part.

The legislator’s threefold objective waslegitimate, pressing and substantial, as the trial judge found, and the first condition under s. 1, as described in Mouvement laïqueQuébécois,[71] is therefore met. [72] The proportionality of the means chosen to fulfill the objective. Is the second condition met?

Are the means chosen by thelegislator proportional to this objective, in that they are rationally connected, minimally infringe the protected right, and do not so trenchon this right that the objective is outweighed by the seriousness of the intrusion? [73] The means chosen are rationally connected to the objective. On the first point, the Supreme Court wrote the following inHealth Services: 148 The second stage of the Oakes analysis requires the government to establish that

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