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May 26, 2017
Ontario’s Changing Workplaces Review: A Focus on Penalties and Enforcement of Employment and Labour Standards in the Province
After more than two years of review, which included twelve public consultation sessions held across Ontario, 200 presentations, 300 written submissions from stakeholders, and an interim assessment, the Ontario government’s long-awaited final report, The Changing Workplaces Review: An Agenda for Workplace Rights (the “Review”), has been released.
The two Special Advisors were tasked by the Ontario government to conduct a thorough independent examination of the Employment Standards Act, 2000 (the “ESA”) and the Labour Relations Act, 1995 (the “LRA”), and how these two legislative pillars affecting all of Ontario employees and employers might be changed to address issues affecting vulnerable employees in Ontario’s changing modern economy. The Review is the first independent analysis of employment legislation in Canada to make recommendations for changes to both employment standards and labour relations legislation in a single document.
Fundamentally, while there are a number of recommendations which affect employers in particular industries, the majority of the Review’s recommendations focus on changes that would, in the words of the Special Advisors who co-wrote the Review, “create a culture of compliance” in employment and labour standards in the Province. This would predominantly be achieved by increasing both the numbers and powers of government (Ministry of Labour) inspectors/officers, changing their focus from complaint receipt and adjudication to one of investigation, enforcement and imposition of monetary penalties on Ontario companies.
The Review’s recommendations, effectively, move employment and labour standards away from an individual “complaint driven system,” to one that is modelled more closely to that which is currently utilized by the Ministry of Labour in Occupational Health and Safety matters. Employment and labour standards officers (as well as the Ontario Labour Relations Board) would be given the resources to engage in proactive inspection, workplace audits and enforcement, all of which could be specifically targeted to certain business and geographic sectors, without the need for an existing complaint. Enforcement would ultimately be backed up by increased fines, penalties and public disclosure of businesses engaging in prohibited policies.
The first recommendation of the Review is the creation of a “Workplace Rights Act” that would consolidate workplace rules and regulations into a single piece of provincial legislation. These rules and regulations are currently addressed in three separate pieces of legislation: the ESA, LRA and the Occupational Health and Safety Act. Consolidation would thus complement increased investigation and enforcement, as well as transferring greater responsibility for education and training regarding employee workplace rights onto Ontario companies.
While the Review makes many specific recommendations for particular changes to the ESA and LRA (173 in all), many of which are procedural or focus on particular business sectors, the overall thrust of the Review is to transition the Ministry of Labour into becoming “a more traditional law enforcement agency and less an agency involved in customer service.” Therefore, if the changes are accepted and implemented, all businesses in Ontario can expect to become subject to greater scrutiny and investigation into their employment and labour standards compliance, absent any complaint by any of their employees.
Ontario employers will have to be prepared for increased participation in legal proceedings before employment and labour tribunals, particularly as the final Review has recommended a substantial increase for employer penalties both for minor infractions (“ticket” increases from $295.00 to $1,000.00) and substantial administrative penalties of up to $100,000.00 per contravention. The Review further recommends that the applicable legislative tribunal have authority to order employers to pay the costs of their investigation.
The broader key recommended changes to the ESA proposed by the Review include:
- Elimination of student specific and liquor service minimum wage, to a single minimum wage applicable to all employees;
- Elimination of the student exemption from the “three hour” call-in pay rule and the three hours paid at the employee’s regular wage rate;
- Revising the overtime exemption for managerial and supervisory employees to include a minimum salary and certain job duties before an overtime exemption is permitted;
- Eliminating any differential in pay between part-time, casual, temporary, contract and seasonal employees when compared with their full-time equivalent, unless the difference is objectively supported (such as a seniority or merit pay system);
- Granting employees the right to request changes/flexibility in work hours and work location after one year of employment;
- Streamlining hours of work and overtime averaging approvals;
- Extending personal emergency leave to workplaces with less than 50 employees, as well as increasing other protected leaves (but no recommendation that such leaves be provided with pay);
- Employers to pay for any doctor’s note requested to support a leave;
- Temporary help agency employees contracted to a client would, after six months of assignment, receive the same compensation as the comparable client employee performing similar work;
- Elimination of unpaid interns and trainees;
- Extending Director liability to six months of wages and 12 months of accrued vacation pay;
- Include the term “dependent contractor” in the definition of employee under the ESA, to limit exemption from application of the ESA to only “true” independent contractors; and
- A recommendation increasing vacation entitlement to three weeks per year after 5 years of service with the same employer.
Recommendations in respect of labour relations and the LRA were not as broad as initially expected. However, some key changes have been recommended. These include:
- Permitting domestics (nannies) and agricultural and horticultural employees to unionize under the LRA;
- Supporting remedial automatic certification in the event of employer misconduct and include automatic first contract arbitration, unless the union bargains in bad faith;
- Move to a “mediation intensive” model for resolution for first contract negotiations, including after remedial certification;
- Require employers to provide employee contact information to any union that has demonstrated 20 percent support of the bargaining unit the union is attempting to certify; and
- Most importantly, a recommendation that franchisees of the same franchisor bargain together in broader geographic areas through an employer association (similar to the process used in Ontario’s construction industry).
Overall, however, the Review does not include, as was anticipated, a wholesale redrafting and restructuring of the current employment and labour legislation and framework. While certain business sectors (such as those dependent upon temporary help agencies, student employment and highly-franchised operations) could be fundamentally affected if those sector-specific recommendations are followed, the broader economic impact of the other recommendations are not as wide ranging as initially expected (although the current government’s intent to review and increase minimum wage remains on the table, notwithstanding the conclusion of the Review).
However, an increase in the number of inspectors, with increased penalties, and a mandate to investigate in a manner, as described by the Review, that is more like a “law enforcement agency” has to be of concern to all Ontario employers.
We’ll wait and see how many of the Review’s recommendations make it to concrete legislative proposals for change.