After much anticipation, the Special Advisors appointed to lead the Ministry of Labour’s Changing Workplaces Review (Review) released their final report (Report) this past Tuesday (May 22, 2017). The Report proposes a number of amendments to the Employment Standards Act, 2000 (ESA) and the Labour Relations Act, 1995 (LRA).
The Review was initiated by the Ontario Government in February of 2015 with a view to evaluating how Ontario’s employment and labour law framework addresses broader issues and trends currently affecting Ontario’s workplaces (such as globalization, technological advancement, and a shift from manufacturing to service sector jobs), with a particular emphasis on issues faced by vulnerable workers in precarious employment.1 During the Review process, the Special Advisors consulted with and received submissions from public stakeholders, including workers, unions and businesses, as well as academics and experts.
The Report contains 173 recommendations which the Special Advisors describe as being aimed at “creating better workplaces in Ontario, where there are decent working conditions and widespread compliance with the law.” It remains to be seen which of these recommendations will actually be implemented by the Ontario Government. Ontario’s Minister of Labour, Kevin Flynn, released a statement on Tuesday indicating that they will be announcing a formal response within the next week.
Below we have provided an overview and discussion of some of the key recommendations of which employers in Ontario should be aware. We will continue to provide updates on the Government’s response to the Report and any legislative changes as information becomes available.
The Report includes a number of recommendations with respect to basic ESA standards that could have a significant impact on employers in Ontario.
Leaves of Absence - Despite early predictions, the Special Advisors did not recommend the introduction of paid sick time in Ontario, however they do recommend a number of amendments to the leave provisions which will provide for greater access to emergency leave and increased family medical leave entitlements, as follows:
Equal Pay for Part-time, Casual, Temporary and Seasonal Employees – The Special Advisors recommend amending the ESA to create a rule that no employee be paid a rate lower than a comparable full-time employee of the same employer. This rule would apply to part-time, casual, temporary or seasonal employees, with the justification that it would be “unconscionable” to continue to allow differential treatment of these workers. The equal treatment rule would contain the following limitations:
Hours of Work and Overtime – The Special Advisors are not recommending a change in the threshold for overtime pay in Ontario (currently 44 hours per week), however they do recommend the following amendments to the current overtime and hours of work provisions:
Temporary Help Agencies – Consistent with the emphasis on vulnerable workers, the Special Advisors recommend the following changes to the ESA to provide for compensation equality and greater job permanency for “assignment” workers from temporary help agencies:
Scheduling – The Special Advisors recommend providing the Ministry of Labour with the authority to regulate the scheduling of employees by employers, and to adopt a sector-specific approach to the regulation of scheduling, making the fast food and retail industries a priority. They also recommend that employees be given a “right to request” changes to their schedules on an annual basis, with an obligation on the employer to discuss the request with the employee and provide reasons in writing if the request is turned down. The reasons for the employer’s decision will not be subject to review, however as a result of the proposed amendment, employees will be protected from reprisal for making scheduling requests.
Minimum Wage – The Special Advisors recommend phasing out the lower minimum wages for liquor servers (currently $9.90 per hour) and students under 18 (currently $10.70 per hour) such that both groups would be entitled to the higher general minimum wage (currently $11.40 per hour).
Increasing Vacation with Pay – To bring Ontario’s vacation provisions in line with other provinces, the Special Advisors recommend increasing the vacation entitlement from two weeks per year to three weeks per year after an employee has five consecutive years of employment with the same employer, and making a corresponding amendment to the vacation pay provisions (i.e., at least 6% vacation pay after five years of employment).
Public Holiday Pay – The Special Advisors did not recommend any specific changes to the public holiday pay provisions of the ESA however note that the provisions are complicated and difficult to enforce. The Special Advisors recommend the provisions be reviewed and replaced by provisions that are “simpler and easier” to understand.
Dependent and Independent Contractors – Despite early predictions, the Special Advisors did not recommend giving independent contractors access to the ESA standards, however they do recommend adding the term “dependent contractor” as defined in the LRA to the definition of employee under the ESA. Dependent contracts are a category of worker in which an individual contracts to perform services but those services are exclusively (or nearly exclusively) provided to a single organization, resulting in a relationship of dependency. The Special Advisors also recommend making worker misclassification (employee vs. independent contractor) a priority enforcement issue and, in the event of a dispute, creating a reverse onus requiring the employer to establish that the contractor is not an employee.
Consolidated Legislation and Increased Education, Enforcement and Administration
One of the themes of the Report is what the Special Advisors identify as a need to create a “culture of compliance” in Ontario workplaces. To this end, the Report makes a number of recommendations aimed at deterring non-compliance, increasing awareness among employers and employees of workplace rights and responsibilities, and ensuring that workplace laws are easy to access, understand and administer. These recommendations include the following:
In addition, the Special Advisors recommend amending the ESA and the Ontario Business Corporations Act to remove the barriers currently in place for employees to recover wages and vacation pay directly from directors of a corporation, including the requirement in the ESA that formal insolvency proceedings be commenced before a remedy can be sought. The Special Advisors recommend that the legislation be amended to provide that up to six months’ wages and up to 12 months’ accrued vacation pay are the responsibility of the directors and to provide that the only condition that must be met in order for an employee to receive these amounts is that the employee has not been paid them by the corporation.
Several of the Report’s recommendations to amend the LRA could, if implemented, have a considerable impact on labour relations in Ontario.
Additional proposed amendments to the LRA include:
The Special Advisors’ review of the LRA was informed in part by recent Supreme Court of Canada jurisprudence finding that the right to meaningful collective bargaining is an essential component of freedom of association under section 2(d) of the Canadian Charter of Rights and Freedoms.
Implications for Franchising
The Report contains a number of references to the franchise business model. For a discussion of the Report’s recommendations as they relate to the franchise business model, we recommend this article written by our colleague, Larry M. Weinberg, a partner in our franchise group.