Reforming Executive Compensation in the Broader Public Sector
Ontario Moves Forward With Legislation to Provide Hard Caps for Executive Compensation
Ontario is addressing executive compensation in the broader public sector through the proposed Public Sector and MPP Accountability and Transparency Act (Bill 8). The act, which begins second reading debate today, would, if passed, allow the government to take a principle-based, long-term approach to reform executive compensation.
If the bill passes second reading, the government plans to bring forward an amendment that would add other broader public sector organizations such as Ornge, LHINs, eHealth, Metrolinx, OLG and LCBO to the list of employers already set out under the proposed legislation.
The proposed legislation would provide clarity and consistency across the public sector and broader public sector by authorizing the collection of compensation information and creating sector-specific frameworks, including hard caps. The frameworks would be developed in consultation with affected ministries and designated employers, and would establish appropriate and reasonable approaches that would include a range of public sector comparators and building in sector-specific considerations. Heads of organizations would be required to attest to compliance and could be subject to penalties if they do not comply with the frameworks.
The proposed Public Sector and MPP Accountability and Transparency Act sets a high standard for oversight across the public sector and is part of Ontario's commitment to being the most open and transparent government in the country.Managing public sector compensation costs is part of the government's economic plan for Ontario. The four part plan is building Ontario up by investing in people's talents and skills, building new public infrastructure like roads and transit, creating a dynamic, supportive environment where business thrives, and building a secure savings plan so everyone can afford to retire.
- The Public Sector Compensation Restraint to Protect Public Services Act, 2010, froze compensation structures for employees who do not bargain collectively in the Ontario Public Service and broader public sector.
- Executive compensation at hospitals, school boards, colleges, universities and hydro entities has been restrained under the Broader Public Sector Accountability Act since March 31, 2012. All elements of compensation are frozen, including base salaries.
“The people of Ontario have a right to know how their dollars are being spent and that includes executive compensation. We are taking a strong and fair approach to creating frameworks that will provide consistency and clarity. Every dollar counts and it is important that all of our partners do their part.”