An arbitrator has awarded Ontario college faculty enhanced severance packages and modest wage increases while acknowledging the sector faces “unprecedented financial pressures” from federal restrictions on international students.
The ruling affects approximately 15,000 full-time and partial-load professors, instructors, counsellors and librarians represented by OPSEU across Ontario’s public colleges. Arbitrator W.K. settled the dispute between the union and the College Employer Council following failed negotiations for a collective agreement that expired Sept. 30, 2024.
The three-year deal includes wage increases of three per cent in 2024, 2.5 per cent in 2025 and two per cent in 2026, along with a new severance formula that provides significantly higher payouts based on years of service.
Financial crisis from international student caps
The arbitrator, William Kaplan, found that federal government changes to international student visa rules created an existential crisis for the college system. Between 2012-13 and 2020-21, Ontario colleges experienced a 15 per cent decline in domestic students but a 342 per cent growth in international enrolment.
When the federal government imposed caps on international student visas in January 2024, the impact was immediate and severe. Twenty-three of 24 colleges reported a 48 per cent decrease in first-semester enrolment from September 2023 to September 2024 — dropping from 91,306 to 46,555 students.
The revenue loss was devastating since international students typically pay four times the tuition of domestic students. In 2022-23, an estimated 76.6 per cent of the sector’s $4.356 billion in tuition revenue came from international student fees.
By spring 2025, more than 600 programs were cancelled or suspended, and four colleges closed or announced closure of campuses. Nineteen colleges reported current and planned staff reductions of more than 8,000 employees across all categories.
Competing views on financial health
The colleges argued they faced an existential crisis requiring conservative measures. They pointed to projected combined budget deficits of approximately $228 million in 2025-26, rising to an estimated $500-900 million by 2026-27.
The colleges maintained that existing surpluses were needed for debt service, technology, equipment renewal and deferred maintenance. They argued that using accumulated surpluses for wage increases would violate statutory requirements to ensure balanced budgets and long-term financial stability.
OPSEU disputed the apocalyptic assertions, noting that “all but one College remain in a surplus position” in 2024-25. The union argued that international student enrolment, while down, remained at 2022 levels and that domestic enrolments were increasing.
The union contended that existing surpluses provided sufficient funding for its proposals, especially with a shorter contract term. It argued the colleges were taking “opportunistic advantage of the current moment to dismantle in part the College system in real time.”
Enhanced severance package
The arbitrator awarded a new severance formula that provides substantially higher payouts than the previous agreement. The enhanced severance applies to all layoff notices issued on or after the award date and remains in effect until Sept. 30, 2027.
Under the new formula, employees with two years of service receive 13 per cent of annual salary, rising incrementally to 80 per cent for those with 24 or more years of service. Employees must waive recall rights and provide written election within 120 days of termination to receive the enhanced severance.
Workload and other improvements
Despite union requests for significant workload changes following a 2024 taskforce report, the arbitrator made only modest adjustments. Changes include adding one hour for complementary functions for out-of-class student assistance and new course credit for teaching in a new delivery mode.
The ruling also introduces overtime compensation for counsellors and librarians at 0.083 per cent of annual salary for hours exceeding 35 per week.
For partial-load employees, the award establishes automatic registration for priority hiring consideration starting in the 2026-27 academic year. Previously employed partial-load staff will automatically be registered unless they opt out.
Registry and benefit improvements
The arbitrator improved access to the Joint Employment Stability Reserve Fund (JESRF) for laid-off employees and those identified for retraining. Colleges must now advise affected employees about available JESRF funds and invite applications.
Partial-load employees will receive $65 per hour for mandatory meetings and training not associated with their academic deliverables, with a minimum one-hour payment.
Term and implementation
The arbitrator chose a three-year term over the union’s request for one year and the colleges’ proposal for four years, citing the need for stability while acknowledging ongoing uncertainty.
The ruling notes that the parties had already reached agreement on some items through mediation, including benefit improvements for partial-load employees that were implemented earlier.
All retroactive wage increases must be paid within 90 days to current and former employees. The arbitrator remains available to assist with implementation issues.
The decision reflects the challenging balance between addressing employee needs and acknowledging genuine financial pressures facing Ontario’s college system as it adapts to reduced international student revenues.
See the full ruling at The College Employer Council for the Colleges of Applied Arts and Technology v OPSEU, 2025 CanLII 62455 (ON LA).
