Ontario's troubled air ambulance service is giving its managers and executives performance pay after trying to cancel the bonuses last year.

Ornge said last March that it wouldn't award bonuses to its non-unionized employees, just unionized workers in keeping with their collective agreement.

But The Canadian Press has learned a group of employees appealed the decision to the federal government arbiter and won, causing Ornge's board of directors to reverse course.

Ornge chairman Ian Delaney says Ornge will award nearly $2 million in performance pay to 424 unionized and non-unionized employees this fiscal year — an average of about $4,632 each.

Not all employees eligible

In a letter to Health Minister Deb Matthews, Delaney says it won't apply to anyone who worked for the now bankrupt entities of Ornge.

It also doesn't apply to anyone who joined Ornge after March 31, 2012, including its current executives.

But starting next year, Delaney says there will be strict rules on performance pay for non-unionized staff.

"Ornge is committed to operating within the funding envelope provided to it by the government of Ontario and will deal with this and other costs within that envelope," he wrote in a letter to Matthews that was obtained by The Canadian Press.

Due to the labour ruling, Ornge has little choice but to provide the bonuses as was set out in their contracts with non-unionized employees, Matthews said in a statement Monday.

"Ornge's employees are receiving the same amount of performance pay they received the year before," she said. "It has been provided on a one-time basis and does not result in a permanent pay increase."

In future, performance pay will be awarded based a yearly quality improvement plan, she said. The plan, developed by Ornge, sets out certain goals that Ornge must meet to improve the service it provides.

More discretion on awarding bonuses

The Ornge board will also have more discretion on whether or not performance pay will be provided, Matthews said.

Bonuses won't be considered unless Ornge is working within its budget, Delaney said in his letter.

The decision comes as the governing Liberals are trying to freeze pay for about one million public sector workers. They brought in legislation last year to force a pay freeze on thousands of teachers and education workers.

Ornge, which receives about $150 million a year from the province, has been under fire for more than a year over sky-high salaries and financial irregularities that are currently under police investigation.

EHealth, the electronic health records agency that landed in hot water in 2009, also tried to cancel employee bonuses with mixed results.

EHealth employees filed a class-action lawsuit after Matthews told the agency to cancel raises of up to 1.9 per cent and promised bonuses of up to 7.8 per cent in 2011.

Former health minister David Caplan was forced to resign in 2009 after eHealth spent $1 billion trying to develop electronic health records but had very little to show for all the money.

Millions of dollars were given to consultants with ties to the Liberal government in the form of untendered contracts, while auditors uncovered widespread abuses of expense accounts at the agency.