“Generally, the “Broader Public Sector” refers to the organizations that receive funding from the Government of Ontario. They are not, however, a part of the government itself.
Examples of BPS organizations include hospitals, universities, colleges, and school boards.”
It appears to apply to library boards as well.
“On July 8th 2014 the Ontario legislature reintroduced as Bill 8 that amends the Ombudsman Act, see: http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&Intranet=&BillID=3000
The Bill was carried on first reading. (PDF: http://www.ontla.on.ca/bills/bills-files/41_Parliament/Session1/b008.pdf)
“Of significance, the BPSECA would also apply to libraries. Schedule 9 sets out that local boards as set out in the Municipal Act and City of Toronto Act (including library boards) would be subject to the Ontario Ombudsman. “
Ontario freezes broader public sector executive pay: August 15, 2018
"TORONTO — Ontario has frozen executive pay across the public sector as it reviews how salary increases are granted to top earners at agencies that include the school boards, universities and hospitals.
In a directive issued to public-sector agencies, Treasury Board President Peter Bethlenfalvy says all base salaries for executives cannot increase beyond their current amounts.
Bethlenfalvy says the government will review its compensation framework program by June 7, 2019.
The freeze affects those who make $100,000 or more at public sector organizations.
The move comes after the Progressive Conservative government froze wages of managers in government ministries and ordered a review of executive and management compensation earlier this summer.
Premier Doug Ford, who took power at the end of June, has pledged to find $6 billion in “efficiencies.” His government has created an independent commission of inquiry and ordered an audit of government books to assess the province’s financial position.”
Ontario Government Introduces Compensation Framework for Designated Executives of Broader Public Sector Employers
“On September 6, 2016, the provincial government filed Regulation 304/16: Executive Compensation Framework (the “Framework”) under the Broader Public Sector Executive Compensation Act, 2014 (BPSECA). The Regulation establishes a framework for the compensation of “designated executives” within the broader public sector. Under the Regulation, designated employers are required to establish written executive compensation programs which will, among other things, cap the salary and performance-related payments payable to “designated executives”. The Regulation gives these employers a year to develop and implement compensation programs that comply with the Framework, including conducting public consultations. The Framework established under the Regulation will become effective for a particular employer on the date the employer publishes its compensation program on its website (“effective date”), which cannot be later than September 5, 2017.
On the same day that the Regulation was filed, the government published an Executive Compensation Framework Guide (Guide) which offers further guidance to employers on how the compensation programs required under the Framework are to be developed and implemented.
The Framework in Context
The adoption of Ontario Regulation 304/16: Executive Compensation Framework under the BPSECA is the latest in a series of measures the provincial government has put in place to ensure that executive compensation in the broader public sector in Ontario is accountable and transparent. The Broader Public Sector Accountability Act, 2010 (BPSAA), put in place a number of controls on compensation, expenses, perquisites, etc. That Act was subsequently amended in 2012 to implement a freeze on all elements of compensation, including performance pay envelopes, for designated executives and office holders within the broader public sector. Those compensation restraint measures remain in place and will continue to apply until a compensation framework becomes effective for a particular designated employer. The BPSECA, which came into force in March 2015, authorized the government to establish compensation frameworks, such as the one adopted by way of the Executive Compensation Framework Regulation.
Under BPSECA, “designated employers” include public hospitals and the University of Ottawa Heart Institute, universities, colleges, school boards, all community care access corporations, Independent Electricity System Operator and Ontario Power Generation, Ornge, and other prescribed public bodies.
As was the case under the BPSAA, the Framework adopted under the BPSECA applies only to “designated executives” who earn at least $100,000 or more in a calendar year and who are:
- the head of a designated employer, regardless of their title;
- the Vice-President (VP), Chief Administrative Officer (CAO), Chief Operating Officer (COO), Chief Financial Officer (CFO) or Chief Information Officer (CIO) of a designated employer;
- a person holding any other executive position or office with a designated employer, regardless of title; and
- a Director of Education or Supervisory Officer of a school board.
The most significant aspects of the Framework can be summarized as follows:
Under the Framework, designated broader public sector employers have one year to put into place a written compensation program for “designated executives”. The programs must comply with the Framework and must include information with respect to the following:
- the employer’s compensation philosophy – i.e., the guiding principles that drive compensation decision-making within the organization;
- salary and performance-related pay caps for designated executives;
- comparative analysis details; and
- other elements of compensation.
Executive compensation programs are required to be posted on the employer’s website and will become effective as of the date they are first posted, which must be no later than September 5, 2017.
Comparative Analysis Required to Determine Maximum Salary and Performance-Related Pay for Designated Executives
The Framework requires that salary and performance-related pay caps for designated executives must be established by way of a comparative analysis. Employers are required to identify comparable positions within a minimum of eight (8) appropriate “comparable organizations.” Comparable organizations are ones that are similar to the employer with respect to all or most of the following factors:
- scope of responsibilities of the organization’s executives;
- type of operations the organization engages in;
- industries within which the organization competes for executives;
- size of the organization; and
- location of the organization
Comparisons are generally required to be made with other Canadian public sector organizations. Employers are required to seek special permission (based on the submission of a business case) from the President of the Treasury Board in order to include private sector and/or international organizations for purposes of making the required comparisons. At least one Canadian public sector or broader public sector comparator organization must be included in the comparative analysis.
The Framework describes in detail how the comparative analysis that is required in order to establish caps on salary and performance-related pay is to be conducted. A typical analysis will involve two steps:
- determine the maximum amount of annual base salary and performance-related pay available to comparable executives from at least eight (8) appropriate comparator organizations; and
- determine an amount in the range of comparator compensation values that is no greater than the 50th percentile. This value becomes the “cap” for the position (or class of positions) being evaluated.
Where permission has been granted to include Canadian private sector and/or international organizations in the comparison, a more complicated comparison process is required to be followed. The process that is required to be followed in these cases is described in detail in the government’s Guide.
Other Elements of Compensation Prohibited or Capped
Other than salary and performance-related pay, designated employers are not permitted under the Framework to provide any other elements of compensation to designated executives unless:
- that compensation is also generally provided to non-executive managers; or
- that element of compensation is required for the performance of the executive’s job or to satisfy a critical business need.
In addition, designated employers are expressly prohibited from providing designated executives with any of the following elements of compensation:
- payments or other benefits provided in lieu of perquisites
- signing bonuses
- retention bonuses
- cash housing allowances
- insured benefits not generally provided to non-executive managers.
The Framework establishes the following caps on other types of payments or compensation that might be payable to designated executives:
- Severance/termination pay
- termination pay, including pay in lieu of notice of termination and severance pay, may not exceed a maximum of 24 months’ base salary
- termination and severance pay may not be provided in the event of termination for cause
- Paid administrative leave
- paid administrative leave may only be provided to the head of a college or university or another designated executive who is part of or will return to the faculty at a college or university
- paid administrative leave cannot be accrued at a rate that exceeds 10.4 paid weeks per year
- administrative leave may not be paid out in lieu of time off
Application to New and Existing Executives
The Framework will apply to all newly hired designated executives, and any existing employees who change designated executive positions, from the effective date for that employer. However, for designated executives who are already employed by a designated employer prior to the effective date of the Framework, section 9 of BPSECA provides that any element of their compensation plan that exceeds what is permitted under the Framework will remain valid and in effect for a period of three (3) years following the effective date. After that three (3) year period, any elements of a designated executive’s compensation that do not comply with the Framework will be invalid and not payable.
Public Consultation Requirements
Designated employers are required to engage in public consultations in order to afford members of the public a reasonable opportunity to provide comments on the manner in which the employer determines the compensation that it may provide to its designated executives. Although the Regulation does not specify how this requirement is to be met, the Guide published by the provincial government indicates that designated employers are required to post draft executive compensation programs on their public-facing websites for a minimum of 30 days in order to allow members of the public to comment on them. Employers are also required to establish a process for collecting feedback for consideration in finalizing their compensation program. The government’s Guide indicates that any and all public feedback received by an employer must be retained “until the conclusion of the compensation program and two subsequent programs” in the event that it is requested by the overseeing Ministry or the Treasury Board Secretariat.
Next Steps for Designated Employers
Those organizations that are “designated employers” under the BPSECA will want to begin taking some of the steps necessary to comply with the requirements established under the Framework. In particular, designated employers will want to:
- identify any “designated executives” within their organization, as well as any non-executive managers;
- chart out the compensation that is currently being paid to executives and non-executive managers within the organization;
- identify appropriate comparator organizations and positions;
- determine whether permission might need to be sought to include Canadian private sector and/or international organizations as comparators, and begin developing a business case to support that;
- determine whether the comparison process required under the Framework will be conducted by someone within the organization or whether an external consultant should be hired to conduct the required comparisons; and
- begin drafting a written Executive Compensation Program that complies with the Framework.
For further information or assistance in understanding any obligations that may apply to your organization under the Framework, please contact Lynn Harnden at 613-940-2731 or Vicky Satta at 613-940-2753.
 The government’s Guide can be found here:
ONTARIO GOVERNMENT PROPOSES NEW PUBLIC SECTOR COMPENSATION RESTRAINT LEGISLATION
On July 8th the Ontario legislature reintroduced as Bill 8 that amends the Ombudsman Act, see: http://www.ontla.on.ca/web/bills/bills_detail.do?locale=en&Intranet=&BillID=3000
The Bill was carried on first reading. (PDF: http://www.ontla.on.ca/bills/bills-files/41_Parliament/Session1/b008.pdf)
Originally introduced on March 24, 2014, the Ontario government introduced Bill 179, the Public Sector and MPP Accountability and Transparency Act, 2014. If passed, Bill 179 would give the government the authority to create comprehensive compensation frameworks for certain employers in the broader public sector (“BPS”), and would implement a number of measures to enhance “accountability and transparency” in the government and the public sector.
COMPENSATION RESTRAINT – A NEW STATUTE
Bill 179 would effect changes to the compensation restraint measures contained in Part II.1 of the Broader Public Sector Accountability Act, 2010 (“BPSAA”) [these changes were introduced in the 2012 Budget, and implemented by Bill 55]. To accomplish this, Bill 179 would enact a new statute called the Broader Public Sector Executive Compensation Act, 2014 (“BPSECA”) which would complement the BPSAA.
But for one significant addition, the BPSECA would primarily apply to the same BPS organizations that are currently subject to Part II.1 of the BPSAA – hospitals, school boards, universities and colleges, Hydro One, the Independent Electricity System Operator, the Ontario Power Authority and Ontario Power Generation (collectively, “designated employers”).
Of significance, the BPSECA would also apply to libraries. Schedule 9 sets out that local boards as set out in the Municipal Act and City of Toronto Act (including library boards) would be subject to the Ontario Ombudsman.
The BPSECA would also apply only to “designated executives”. This term is defined in a similar fashion to the BPSAA definition, and would apply to any of the following individuals who make at least $100,000 in compensation on an annualized basis:
the head of the organization (whatever his or her title);
a vice president, chief administrative officer, chief operating officer, chief
financial officer, chief information officer or other executive; or
a director of education or supervisory officer of a school board.
(Noticeably absent from the definition of “designated executive” are full-time members of board of directors, board of governors and board of trustees, as well as provosts and deans of colleges and universities.)
“The BPSECA would not itself establish restraints on compensation; rather, it would give the government the authority to do so in the future by directive and regulation. The key features of BPSECA can be summarized as follows:
the Management Board of Cabinet would have the authority to issue directives to BPS organizations requiring them to provide detailed information related to compensation and other payments made to designated executives, including information of specific individuals;
the Lieutenant Governor in Council (i.e. Cabinet) could make regulations establishing “compensation frameworks” that could apply to all designated employers and designated executives, or could apply on a more limited class or specific individual basis;
a compensation framework would govern the compensation that could be paid by a designated employer to a designated executive, and could establish limits on any element of the compensation plan, including salary, benefits, perquisites, bonuses, incentives, etc.; and
compliance with a compensation framework would be mandatory, and could be enforced through a number of measures (for hospitals, a compensation framework would take precedence over section 9 of the Excellent Care for All Act, 2010).” (Source: Hicks Morley: http://www.hicksmorley.com/images/pdf/2014/20140327_FTR_Now_BPS_Restraints.pdf)
There is apparently an exemption to this that one may apply for.
If you have any comments or concerns, please feel free to contact your FOPL board of directors or Stephen Abram, FOPL executive director at email@example.com.”