Canada Labour Code updates in 2024 budget legislation

We now have details on proposed changes to the Canada Labour Code announced in the 2024 federal budget. On May 2, the Budget Implementation Act, 2024, No. 1 (BIA 2024) received first reading. BIA 2024 contains several proposed amendments to the Code.

Of the proposed Code amendments, the following are of particular interest.

Presumption of employment

BIA 2024 adds a new presumption of employee status for “a person who is paid remuneration by an employer.” In any Code proceeding other than a prosecution, employers will now bear the onus of proving individuals who receive remuneration are not employees. Currently the reverse is normally the case – an individual asserting employee status must prove it.

This new presumption applies to each of the Code’s Part I (Industrial relations), Part II (Occupational health and safety), and Part III (Standard hours, wages, vacations and holidays). 

The Code will also be amended to prohibit employers from treating an employee as a non-employee. Doing so may lead to an order, a requirement to pay remuneration, an unfair labour practice, or a complaint and related investigation.

These amendments would not apply to any proceeding commenced before the bill receiving royal assent. The changes relating to Part III would only apply to a proceeding for a contravention occurring on or after the day on which the bill receives royal assent.

Takeaway

The legal framework for assessing whether a worker is an independent contractor or employee will not change based on these amendments, but this new presumption and onus on the employer to disprove employee status may lead to more cases in which a contractor’s status is challenged. Employers would be well served by reviewing their approaches to classifying workers in light of these Code amendments and confirming that those engaged as independent contractors have the indicia of a true independent contractor. 

Disconnecting from work policy

BIA 2024 will add new provisions to Part III of the Code requiring employers to implement a “policy on disconnecting.” The policy must include:

• a general rule respecting work-related communication outside of scheduled hours of work, including the employer’s expectations and any opportunity for employees to disconnect from means of communication;
• any exceptions to the rule and their underlying rationale;
• the effective date of the policy; and
• any other elements that may be prescribed by regulation.

An employer will be permitted to exclude certain employees from application of the policy (e.g. managers, certain professionals). An employer and a union may agree to address these policy requirements in a collective agreement rather than in a discrete policy.

In developing this policy an employer must consult with affected employees (or the relevant union) and, in the case of non-unionized employees, provide a 90-day period for feedback. It must keep a record of consultations.

On or before its effective date, the policy must be posted visibly in the workplace, and the employer must provide a paper or an electronic copy to every affected employee within 30 days from the date it applies to each employee. The employer must provide a copy in an accessible format upon request.

This policy requirement will come into force on a date to be determined by the government, and employers would have one year to develop their policies. The policy will have to be updated every three years.

Takeaway

This new policy requirement does not create a positive right for employees to disconnect from work – only a requirement that employers explain procedures around limiting after-hours communications. This is similar to the “disconnecting from work policy” required by Ontario’s Employment Standards Act, 2000. 

However, unlike Ontario, employers under the Code must consult employees in developing the policy. This is becoming a trend in new workplace policy requirements in the federal jurisdiction. A similar consultation obligation was included in the obligation to develop an accessibility plan under the Accessible Canada Act.

Notice and severance pay eligibility

BIA 2024 will amend Part III of the Code to clarify that an employee’s entitlement to notice of termination or pay in lieu, and to severance pay, under the Code arises regardless of whether the employee meets the criteria to make an unjust dismissal complaint under the Code. Also, the employer paying these amounts will not affect the employee’s right to see an unjust dismissal remedy. This change will come into effect on a date to be determined by the government. When it comes into effect, it will apply to any ongoing complaint or claim.

Takeaway

There has been confusion among adjudicators on this point since the Supreme Court of Canada decision in Wilson v Atomic Energy of Canada Ltd. These changes would end that confusion.

Employers should also note that as of February 1, 2024, the Code was amended to increase the notice of termination or pay in lieu owing to employees, to a new maximum of eight weeks. For more information, see our update Greater termination entitlements coming for federally regulated employees.