Part IV.1: Perquisites of the Broader Public Sector Accountability Act, 2010, (the "Act") will come into force on August 2, 2011. That Part authorizes the Management Board of Cabinet ("MBC") to issue directives requiring designated broader public sector ("BPS") organizations to establish rules about perquisites ("Rules"). Essentially, Part IV.1 provides that a perquisite is not allowable, and may not be provided by a designated BPS organization, unless it meets the requirements set out in the Rules.
Under the Act, designated BPS organizations include hospitals, school boards, community care access corporations, publicly funded organizations that received public funds of 10 million dollars or more in the previous fiscal year of the Government of Ontario and corporations controlled by one or more designated BPS organizations that exist primarily for the purpose of purchasing goods or services for the designated BPS organization(s).
The MBC has issued a Perquisites Directive ("Directive") which will also be effective August 2, 2011. Under the Directive, a perquisite refers to a privilege that is provided to an individual or a group of individuals, provides a personal benefit, and is not generally available to others. The Directive states that Rules to be established by designated BPS organizations apply to all individuals in the organization, including, appointees, board members, elected officials and employees. However, the Directive does not apply to the terms of collective agreements, insured benefits, or accommodations made for human rights or accessibility considerations. In other words, the requirements for perquisites set out in the Directive will not prevail over the terms of a collective agreement.
The Directive states that a perquisite, to be allowable, must be a business-related requirement for the effective performance of an individual's job. Furthermore, Rules must set out that the following perquisites are not allowed under any circumstance:
- club memberships for personal, recreational or socializing purposes, such as fitness lubs, golf clubs or social clubs.
- seasons tickets to cultural or sporting events.
- clothing allowances unrelated to health and safety requirements.
- access to private health clinics; and
- professional advisory services for personal matters, such as tax or estate planning.
Among other things, Rules must include an accountability framework and require that good record keeping practices be maintained for verification and audit purposes. Rules must also set out how summary information about allowable perquisites will be made publicly available.
Under section 21(1) of the Act, any provision in an agreement that conflicts with the designated BPS organization's obligation to comply with the Directive will not be valid or enforceable, and under section 23 of the Act no person is entitled to compensation for any loss arising from anything done in accordance with the Act or the Directive.
In preparation for the new Directive, designated BPS organizations will want to:
- establish Rules for perquisites in accordance with the requirements of the Directive;
- review the terms of their compensation plans, individual employment contracts and policies with respect to perquisites, to determine whether or not they comply with the Directive;
- notify employees who may be impacted by the Directive; and
- determine what options, if any, are available and appropriate to address compensation issues arising from the application of the Directive.