The province has passed legislation to cap public sector wage increases at an average of one per cent annually for the next three years.

The bill, called the Protecting a Sustainable Public Sector for Future Generations Act, passed on Thursday.

The province said in a news release that Bill 124 will let the government manage public sector compensation in a "fair and reasonable way."

"The legislation passed today reflects a balanced and collaborative approach to engaging with stakeholders and responding to their feedback," said Peter Bethlenfalvy, president of the Treasury Board, in a statement.

"Taking action to ensure increases in public sector compensation reflect the province's fiscal reality is part of our government's balanced and prudent plan. Moderating compensation growth to protect front-line services for the people of this province is the right thing to do."

The province says the legislation will apply to:

Provincial authorities where the majority of the directors, members or officers are appointed by the province.

Ornge air ambulance.

School boards.

Colleges and universities.

Hospitals.

Not-for-profit long-term care homes.

Children's aid societies.

The Ontario Public Service.

Transfer payment recipients who received more than $1 million in annual funding in 2018.

Bill 'tramples' on rights, education unions warn

Reaction was swift from four of the province's education unions — all of them currently in negotiations with the government for new collective agreements.

In a written statement released not long after the vote, the Elementary Teachers' Federation of Ontario (ETFO), the Association des enseignantes et enseignants franco-ontariens (AEFO), the Ontario English Catholic Teachers' Association (OECTA), and the Ontario Secondary School Teachers' Federation condemned the legislation and announced they're preparing a court challenge to the bill.

"The Protecting a Sustainable Public Sector for Future Generations Act tramples on collective bargaining rights and targets public sector workers with unfair austerity measures for the next three years," the statement reads.

"The legislation ensures that compensation for educators and other public sector workers will continue to fall behind the rate of inflation."

The statement also points out the bill was passed "just one day after the Minister of Finance bragged to Ontarians that the economy is thriving and that the government is more than a billion dollars ahead of its deficit reduction targets."

The vote also comes just days after ETFO requested a no-board report from the Ministry of Labour, saying bargaining with the government was going nowhere.

Once the ministry delivers the no-board notice, the union will be in a legal position to strike in 17 days.