Anyone who is unfamiliar with Québec’s current events and public debates might be puzzled by the sight of police officers wearing funky cargo pants and by fire trucks and subway cars covered with red stickers.

No, these are not part of some kind of celebration or festival.

The province is currently living through what some would call a budgetary crisis. At stake lies the $3.9 billion ($2.2 billion according to the unions) deficit of Québec municipal employees’ pension plans.

Throughout Canada, municipal employees’ collective agreements are bargained with the municipalities.  Some believe there has been an imbalance of power between municipalities and unions (for instance, subject to exception for essential services, employees have the right to strike while municipalities cannot impose lockouts). This may partly explain municipal employees’ higher wages and numerous benefits compared to provincial public service employees.

At issue is the contribution limit for municipal employees’ pension plans. As a result of many years of collective bargaining, the amount related to the service and stabilization contribution by the employees must currently not exceed 18% of the overall payroll of the plan’s active members (or 20% in the case of firefighters and police officers).

Over the years, it has been increasingly difficult for municipalities to pay their contribution, and most of the 170 pension plans, currently covering over 120,000 active members and 50,000 retirees, started to generate a deficit that is now considered to be out of control by the provincial government.

To tackle the issue, the Quebec government introduced Bill 3 – An Act to Foster the Financial Health and Sustainability of Municipal Defined Benefit Pension Plans in Quebec (Bill 3).

Bill 3 provides that municipal defined benefit pension plans must be restructured with a view to improving their financial health. It imposes several amendments to the 170 pension plans, the most significant requiring the plans to provide that current service contribution is to be shared equally (50%-50%) between the municipality and the active members, as well as the establishment of a stabilization fund.

Effectively, the government, by legislative intervention, is interfering with collective agreements bargained in good faith between unions and municipalities.

There is no doubt that provincial legislatures have a lot of leeway in imposing compensation and benefits packages to public sector employees. Examples include using back-to-work legislation, binding arbitration, and imposing new contracts. But whatever the means used by the government to push the reform, it seems the constitutional right to bargain collectively as recognized by the Supreme Court of Canada (the “Supreme Court”) is clearly at stake here.

In BC Health Services and Support – Facilities Subsector Bargaining Assn. v. British Columbia2007 SCC 27,(“BC Health Services”) the Supreme Court, reversing its earlier jurisprudence, recognized the right to collective bargaining as a fundamental right derived from the freedom of association (section 2(d) of the Canadian Charter of rights and Freedoms). On that occasion, the Supreme Court struck down a statute from British Columbia which retroactively canceled certain provisions of collective agreements in the health sector and curtailed the bargaining on specific matters for the future.

To reach this conclusion, the Supreme Court considered the importance of the affected individuals, as well as the substantial interference with collective bargaining imposed by the legislative intervention. In Ontario (Attorney General) v. Fraser, 2011 SCC 20, a subsequent decision on the situation of farm workers in Ontario, the Supreme Court, despite creating some confusion, reaffirmed the conclusion in BC Health Services.

Based on the foregoing, one can expect that the unions in Quebec will most certainly challenge the constitutional validity of Bill 3 as being an encroachment on the right of collective bargaining.

We therefore are probably off to lengthy social and legal battles.