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The Respondent ("the Government") and the Appellant ("the Union") throughout the relevant time period have been parties to collective agreements respecting several health care bargaining units. On June 24, 1988 the Government and the Union signed a Pay Equity Agreement which was later incorporated into their collective agreements, including that to which the Newfoundland Hospital and Nursing Home Association was a party. There was no agreement on the specific amount of the adjustments required to achieve pay equity in the affected classifications until March 20, 1991.

The Pay Equity Agreement stated that the pay equity adjustments were to be made over five fiscal years beginning April 1, 1988. The amount available for the pay equity adjustments was capped for the first four years by a maximum of 1% per year of the payroll in the Health Care sector for the 1987 fiscal year. If pay equity was not achieved at the end of the fourth year the remaining adjustment was to be made in the fifth year.

In April 1991 the legislature passed the Public Sector Restraint Act, S.N. 1991, c. 3 and came into force on March 31, 1991. Section 9 of that Act prohibited the payment of pay equity adjustments in respect of prior fiscal years.

In April 1991 grievances were filed on behalf of affected employees respecting a variety of matters including non-payment of the pay equity wage adjustments. In accordance with the Collective Agreement the grievance proceeded directly to arbitration. The Board was unanimous on two preliminary matters. The majority held that s. 9 of the Act infringed s. 15(1) of the Charter and that the infringement was not justified under s. 1 of the Charter. R. Noseworthy, Q.C. dissented in part, concluding that, though s. 9 of the Act infringed s. 15(1) of the Charter, the infringement was justified under s. 1 of the Charter.

The Government applied for judicial review of the Board's decision. The Union brought a cross-application for judicial review. Mercer J. of the Newfoundland Supreme Court, Trial Division, allowed the application and set aside the Board's decision on the grounds that the Board lacked jurisdiction to determine the constitutional validity of s. 9 of the Act or, alternatively, that the Board erred in finding that the infringement of s. 15(1) of the Charter was not saved under s. 1 of the Charter. The cross-application was dismissed. The Newfoundland and Labrador Court of Appeal dismissed the appeal and cross-appeal.