Federally regulated employers – brace for impact: (a lot of) changes are coming

Employers in Canada – more significant legislative change is on its way, this time from the federal government in the form of Bill C-86. Bill C-86 has now passed its second reading in parliament and, subject to it passing third reading and receiving royal assent, employers in federally regulated industries will be significantly affected.

The bottom line

Following on the heels of Bill 148 in Ontario that introduced significant changes under the Employment Standards Act, 2000 (the ESA) and Labour Relations Act, 1995 – many of which will be rolled back under the new government’s Bill 47 (which received royal assent on November 22, 2018: see our blog post on the subject) – and similar employment standards reform legislation in other provinces, the federal government has joined in on the fun. Bill C-86’s proposed reforms would have a significant impact on many aspects of federally regulated employment. We have set out several of the proposed changes below. 

Based on the wave of issues that emerged for employers in Ontario as a result of Bill 148, we advise that employers ensure they are well positioned to comply well before the effective date of the changes with whichever of the new requirements introduced under Bill C-86 become law.

One lesson learned from the introduction of the Bill 148 changes is there will be unintended complications for existing employment policies and procedures. For example, questions will undoubtedly arise on whether employers are already in compliance with new requirements under their existing policies and such questions will need to be assessed carefully. The introduction of new employment standards will also substantially impact employment costs and companies will need to be mindful of those impacts.

Proposed changes under the Canada Labour Code

Amongst the package of reforms, the following changes to the Canada Labour Code (the Code) are proposed:

• Individual Termination of Employment: The Code will amend its termination notice scheme to align with many of the regimes in place under provincial employment standards legislation so that employers’ notice obligations increase based on years of service, starting at two weeks after three months continuous employment up to a maximum eight weeks for employees who have completed eight years of employment.

• Group Termination of Employment: The group termination regime under the Code is getting significantly revised. Among the changes is the introduction of various options for complying with the re-branded 16-week “group notice period” under the group termination regime. For example, the proposed amendments would expressly permit employers to provide 16 weeks’ pay in lieu of notice. The amendments also require employers to provide “redundant employees” under the regime with “transitional support measures” that will be prescribed by regulation.

• Equal Pay for Equal Work: Bill C-86 proposes prohibitions on employers from paying their employees differently based on “employment status” (i.e. full-time vs. part-time) if such employees share certain work characteristics (including working in the same industrial establishment, performing substantially the same kind of work that requires substantially the same skill, effort and responsibility under similar working conditions, and any other factor prescribed by regulation).

  Like the amended ESA, there will be exceptions permitting differential pay based on certain enumerated criteria including seniority, merit, quantity or quality of production, or any other criterion that is prescribed by regulation; employers must be careful that, if they draw such distinctions, they can be proven to be bona fide as employees will have a right to make a written request for a review of their rate. Employers provided with such a request will have 90 days to either increase the rate of wages or provide a statement explaining why the employer is in compliance. Employers will also be prohibited from decreasing the rate of pay of an employee to comply with the equal pay obligation. In addition, the proposed legislation will affect temporary help agencies and companies who use temporary help agencies in several ways, including by preventing such agencies from paying their employees less than what an employee of the client company is paid for the same work. Relatedly, there are also new obligations related to temporary employees (for example, such employees must be treated the same as other employees regarding opportunities for employment).

• Who is an “employee”?: The proposed changes impose the burden of proof on employers to prove they have not mistakenly classified an “employee” as an independent contractor in any proceeding in which the employer alleges a complainant is not an employee.

• Vacation/Holiday Pay: Vacation entitlement to be increased as follows: (i) three weeks after five years; and (ii) four weeks after 10 years. The corresponding percentages for vacation pay will also be increased to, respectively, at least 6% after five years and 8% after 10 years. The minimum length continuous service requirement for holiday pay is also being eliminated.

• New Leaves: The continuous service requirement to trigger entitlements to various leaves (i.e., medical leave, maternity leave, parental leave, leave related to critical illness and leave related to death or disappearance of a child) will be removed. Other changes/amendments include:

  • Personal leave of up to five days in every calendar year for illness, injury, carrying out responsibilities related to the health or care of a family member, carrying out responsibilities related to the education of a family member who is under 18 years of age, urgent matters concerning the employee or a family member, attending a citizenship ceremony, and any other reason prescribed by regulation. Three of these days are to be paid after three months of continuous employment. Employers will have a limited right to request documentation to support the reasons for the leave.
  • Unpaid leave for pregnant or nursing women if it is determined by a health care practitioner that the employee cannot perform duties of the job (including modified duties) without risk.
  • Unpaid jury leave for employees who are jurors, witnesses or are required to participate in jury selection.
  • Employees who are victims of family violence who have completed three months of employment will be paid for their first five days of leave.
• Scheduling: Employers will have to provide an employee with his/her work schedule in writing at least 96 hours before the start of the employee’s first work period/shift under that schedule. If an employer fails to meet these requirements, employees will have a right to refuse work. Similar to the Bill 148 amendments in Ontario, there will be exceptions to account for emergencies. Some industries will also be exempted and primacy will be given to collective agreements if a collective agreement provides an alternate time frame or provides that the section does not apply.

• Shift Breaks: Employers will have to provide an unpaid break of 30 minutes after five consecutive hours between shifts. In addition, after eight consecutive hours of work, employers must provide a paid rest between shifts. Exemptions are provided for emergencies and certain industries. For employees who are nursing or have medical issues, there is also a requirement to provide unpaid breaks.

• Work-Related Expenses: Employees will be entitled to reimbursement of reasonable work-related expenses, subject to certain conditions.

The new Pay Equity Act

In addition to the above changes to the Code, Bill C-86 also proposes a new Pay Equity Act. It would introduce several measures to address pay equity including:

• require employers to establish plans for pay equity;

• require certain employers to implement committees to deal with pay equity;

• establish a commissioner to administer and enforce the Pay Equity Act; and

• implement monetary penalties to ensure compliance.

Note that the specific requirements will vary based on the size of employer. For a more detailed assessment of the proposed pay equity legislation, see our blog post on the subject.