Tens of thousands of Nova Scotia public sector workers who had their constitutional rights to freely bargaining restricted will now receive up to $470 million in compensation.
The October 19 deal follows a February ruling by Nova Scotia Supreme Court Justice Ann E. Smith that found Bill 148, the Public Services Sustainability Act, unconstitutional. Introduced by the former Liberal government of Stephen McNeil in 2015 and proclaimed into law in 2017, the legislation imposed wage restraint and eliminated previously negotiated benefits for public sector workers.
The court-approved remedy will provide affected workers with lump-sum payments of up to $5,000. The provincial government has also agreed not to appeal the decisions, bringing an end to a legal battle that has lasted more than a decade.
The ruling represents another significant victory for organized labour and adds to a growing body of jurisprudence affirming that governments cannot simply override workers’ Charter-protected collective bargaining rights to achieve their fiscal objectives.
Yet it also raises a familiar question: Why do governments continue to enact legislation restricting collective bargaining when the courts have repeatedly found such interference unconstitutional?
The origins of Bill 148 lie in the McNeil government’s determination to restrain public sector compensation as part of its broader fiscal agenda. Introduced in December 2015, the legislation was justified as necessary to address the province’s financial difficulties, including a deficit exceeding $200 million.
Rather than negotiate compensation restraint with public sector unions, the government sought to impose its preferred terms through legislation.
Bill 148 established a wage pattern that included two years of zero increases, followed by increases of 1 and 1.5 per cent, with an additional 0.5 per cent bump at the end of the agreement. It also eliminated the further accumulation of retirement allowances, sometimes called long-service awards, retroactive to April 2015. Arbitrators were prohibited from awarding wage increases exceeding the legislated limits.
The legislation affected workers throughout the broader public sector, including those employed in health care, education, long-term care and community services. Many were modestly paid workers whose compensation and retirement benefits had been negotiated through successive rounds of collective bargaining.
Unions immediately recognized the legislation as an attack on their members’ constitutional rights.
When the government referred portions of Bill 148 to the Nova Scotia Court of Appeal for constitutional review in 2017, it initially excluded the unions representing affected workers from the proceedings.
Unifor and several other unions subsequently sought standing in the case. Following union pressure, the government agreed to refer the entire legislation for constitutional review, including its provisions restricting retirement benefits.
At the time, Unifor president, then-Atlantic regional director, Lana Payne described the government’s actions as a “profound abuse of the legislature” aimed at undermining unions and collective bargaining rights.
The legal fight would continue for years.
In 2021, Tim Houston’s Progressive Conservatives formed government after having promised to repeal Bill 148. But the legislation remained in place and the constitutional litigation continued.
By September 2023, eight unions were publicly renewing their demand for the legislation’s repeal, pointing to the years of delay workers had already endured.
The unions’ persistence eventually paid off. This February, Smith ruled that Bill 148 violated the freedom of association protections guaranteed by section 2(d) of the Canadian Charter of Rights and Freedoms.
The decision vindicated the unions’ longstanding argument that the government had substantially interfered with meaningful collective bargaining by unilaterally imposing compensation restrictions and eliminating negotiated benefits.
Following the constitutional ruling, the unions and provincial government entered mediation to determine an appropriate financial remedy. Their agreement was brought before the court on October 19.
Under the resulting compensation arrangement, eligible workers will receive $1,250 for each of the first two years of wage restraint, $750 for the third year and $500 for the fourth. Those who would otherwise have accumulated additional service toward a retirement allowance will receive another $1,250.
The total potential compensation is therefore $5,000 per eligible worker. Approximately 81,000 workers could receive payments, at an estimated total cost of up to $470 million.
Although the government has agreed not to appeal, the precise timeline for distributing compensation remains uncertain.
In an October 21 statement, Payne said the ruling sends a warning to governments contemplating similar restrictions on workers’ rights.
Unifor Atlantic regional director Jennifer Murray similarly welcomed the outcome while emphasizing that financial compensation cannot fully repair the consequences of unconstitutional legislation.
“While no amount of compensation can make up for the years workers were denied their rights, this decision is an important step toward accountability and shows what we can achieve when we stand together,” Murray said.
Nova Scotia’s experience is hardly unique. Across Canada, governments of different political stripes have repeatedly attempted to use the law to suppress public sector wages, only to face constitutional challenges from unions and labour federations.
The most prominent recent example is Ontario’s Bill 124, introduced by Doug Ford’s Progressive Conservative government in 2019. That legislation capped public sector compensation increases at 1 per cent annually for three years, affecting hundreds of thousands of workers.
In 2022, the Ontario Superior Court ruled that Bill 124 substantially interfered with collective bargaining and violated section 2(d) of the Charter. The Ford government appealed, but in February 2024, the Ontario Court of Appeal largely upheld the ruling, finding the restrictions unconstitutional as applied to unionized workers.
The government subsequently repealed the legislation. Unions negotiated or arbitrated retroactive compensation increases, producing billions of dollars in additional payments to affected workers.
But the courts have not uniformly rejected wage restraint. In Manitoba, Brian Pallister’s Progressive Conservative government introduced similar legislation in 2017. Although a lower court initially declared the law unconstitutional, the Manitoba Court of Appeal reversed that finding in 2021. The Supreme Court of Canada subsequently declined to hear the unions’ appeal. The legislation was nevertheless repealed in 2022.
These cases illustrate both the importance and the limitations of constitutional protections for collective bargaining.
For workers in Nova Scotia, the latest ruling represents a significant victory. After more than a decade of litigation, they have secured recognition that their rights were violated and compensation for the government’s unlawful interference.
It also demonstrates that governments can be held financially accountable for imposing unconstitutional restrictions on collective bargaining.
Yet the persistence of such legislation suggests that governments have learned to treat constitutional challenges as an acceptable political risk.
The immediate advantages of wage suppression are considerable. Governments can reduce compensation expenditures, constrain workers’ bargaining expectations and demonstrate fiscal restraint to employers and investors. The legal consequences, meanwhile, often arrive years later, sometimes under a different government.
Even successful litigation cannot fully restore workers’ lost bargaining power or undo the hardship caused by years of suppressed wages.
This is one of the central contradictions facing Canada’s labour movement. The constitutional right to meaningful collective bargaining is now well established, but governments continue to violate it or test its limits.
Legal challenges remain essential, but unions cannot rely on the courts alone to defend their rights.
Governments must face real consequences when they interfere with workers’ rights, not years later in a courtroom, but immediately through an organized and co-ordinated response from the labour movement.
The lesson of Nova Scotia is therefore not simply that workers can eventually win justice through the courts. It is that protecting collective bargaining requires building sufficient power to make governments think twice before attacking it in the first place.
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