The minority Liberals and Progressive Conservatives teamed up to pass the legislation, which has angered unions and a national civil liberties group.
They say it violates constitutional rights and have vowed to fight the bill all the way to the Supreme Court of Canada.
The governing Liberals brought back the legislature early to get the bill passed before Sept. 1, saying the province couldn't afford the rollover of old contracts.
But since the proposed legislation is retroactive to that date, it would claw back any pay hikes or benefits once it becomes law.
The bill, which passed by a vote of 82 to 15, would force new contracts on the majority of teachers and education workers in the province to help eliminate Ontario's $15-billion deficit.
It's based on an agreement the province reached with English Catholic and francophone teachers, which included three unpaid days off in the second year and cutting sick days in half to 10 a year.
But the two biggest unions representing elementary and high school teachers have rejected it.
The Canadian Civil Liberties Association has also complained about the bill, saying it's unconstitutional and undemocratic.
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