Ontario's repealed wage restraint law Bill 124 still rippling through public sector

Rows of power lines are shown in Mississauga, Ont., on Monday, August 19, 2019. THE CANADIAN PRESS/Nathan Denette

TORONTO — Ontario’s ill-fated wage restraint law known as Bill 124 is still sending ripples through the public sector across the province, even years after the law was repealed, with the electricity system now attempting to untangle the fallout.

The Independent Electricity System Operator is looking to recover $329 million from ratepayers this year, which is a 40 per cent jump from last year.

The large increase is mostly due to the Bill 124 reversal and won’t be repeated in the next few years, when the IESO looks for increases of nine per cent and two per cent, the Crown corporation wrote in its 2026-2028 business plan.

“As a not-for-profit corporate entity, this step change largely represents a one-time correction to address the structural deficit to bring the IESO back to a balanced budget,” the plan said.

After Bill 124 was repealed, the IESO gave about $45 million in retroactive raises and benefits owed to its workers. However, the organization had to fund it through its reserves and debt. It could not ask for approval to recover that money through hydro bills because it occurred in the middle of its last three-year business plan cycle.

Energy Minister Stephen Lecce has signed off on the IESO’s new business plan and the money it seeks from ratepayers – estimated to work out to 48 cents on the average monthly residential bill – and now the Ontario Energy Board must also approve it.

Green Party Leader Mike Schreiner said it speaks to the mess Bill 124 caused across Ontario.

“It was not worth it,” he said. “It cost us more, and now our public services are paying the price.”

At the same time, thousands of community and social services workers across the province represented by the Ontario Public Service Employees Union are on strike, with one of the issues being retroactive wage increases to make up for the effect of Bill 124.

Premier Doug Ford’s government tabled the 2019 legislation that capped salary increases for workers in the broader public sector to one per cent a year for three years in a bid to reduce the multi-billion-dollar deficit.

Contracts were negotiated or arbitrated under those conditions for years for everyone from civil servants to nurses to teachers, but the government ultimately lost a constitutional challenge of the law and ended up repealing it in 2024.

Once the law was off the books it proved no small feat to unravel. Workers sought retroactive compensation and arbitrators awarded various amounts based on what they believed would have been reached through collective bargaining during those three years if Bill 124 hadn’t been in effect.

The sudden financial pressures caused by the retroactive pay awards strained some budgets in the broader public sector, with hospitals in particular saying it caused extreme cash flow difficulties.

The constrained wages also caused staff shortages in some sectors such as nursing, advocates said.

Ontario’s financial accountability officer estimated in 2022 that Bill 124 would save the province $9.7 billion on public sector wages, but two years later projected that the province would end up spending $13.7 billion to provide retroactive compensation increases.

The province also spent $4.3 million in legal fees related to the court challenge.

Liberal finance critic Stephanie Bowman said the Ford government tried to balance the budget on the backs of workers, most of them in female-dominated professions.

“Doug Ford’s ill-advised Bill 124 continues to cost taxpayers money and in front-line services seven years after it was introduced,” she wrote in a statement.

A spokesperson for Ontario’s Treasury Board Secretariat said retroactive compensation is now nearly complete.

“Payments have been implemented for all (Ontario Public Service) employees,” spokesperson Michelle Burr wrote in a statement.

“For broader public sector employers, the majority of remedies have been reached and the majority of payments to employees have been provided.”

This report by The Canadian Press was first published June 17, 2026.

Allison Jones, The Canadian Press