Law applies to all employers, big or small. Informal agreements regarding overtime, breaks and other matters can lead to substantial liability.
Most of us know that the employment standards legislation in each jurisdiction sets out the absolute minimum obligations and entitlements. The legislation addresses a wide variety of issues, including hours of work, vacation, holidays and termination of employment.
Unfortunately, many employers, especially smaller ones, get into trouble by adopting a very “loose” application of the employment standards legislation or assuming it doesn’t apply to them.
Many employers do not have a standard 9 to 5 workday. For example, contracting, gardening and similar industries may be very slow at times and overwhelmingly busy at others. They typically expect their workers to be available as needed, and to stay until the work is complete.
In some cases, they develop informal agreements whereby, for example, employees will simply be paid for 35 or 40 hours every week, regardless of the number of hours they actually work. The theory, which may be true, is that the hours will even out over the course of the year. However, this would contravene the applicable employment standards legislation in several ways.
First, the law requires individuals be paid for time worked within a short timeframe. If an individual works some hours but is not, effectively, paid for those hours until seven months later, that would be a breach of employment standards. Furthermore, there is no automatic right to average hours over multiple weeks.
In Ontario, if an individual works more than 44 hours in a week, she will be entitled to overtime, pay or time off in lieu (unless she falls within one of the exempt categories). It is possible to agree to average hours over several weeks, but this agreement must be in writing and approved by the Ministry of Labour.
Such an agreement could, for example, contemplate that hours will be averaged over two-week periods. In that case, an individual who works 50 hours in one week and 30 in the next would not be entitled to overtime pay. However, in the absence of such an agreement, he would be entitled to six hours of overtime pay (at time and a half) for the week in which he worked 50 hours.
Another common mistake is the failure to allow employees statutorily required breaks during the day. In Ontario, no worker can work more than five hours in a row without a break. It is a contravention of legislation to agree, for example, that workers will “work through their lunch” and finish early or even be paid extra. Again, employees may be happy with such informal arrangements, but that does not mean the employer does not expose itself to potential liability.
Unfortunately, while many small employers seem to think employment standards do not apply to them, they apply to all employers. And while employees may be happy with the arrangement at the moment, that may not always be the case.
If an employee makes a complaint to the Ministry of Labour, then the employer will have a difficult time explaining the fact that it has been breaching the employment standards legislation for a lengthy period of time, with all of its employees. It is far better to use contracts and policies and ensure compliance, rather than face penalties and potential damages awards to unhappy employees.
Furthermore, even if the employees are happy, it is always possible that a Ministry of Labour representative will carry out an inspection of employment practices and discover the transgressions.
The bottom line is all employers, whether they have thousands of employees or a handful of casual workers, must ensure they are compliant with the applicable legislation. While they may think that doing so is cost-prohibitive or unrealistic, the reality is that if the Ministry of Labour determines they are in breach of the applicable legislation, the repercussions will be far worse than the cost of complying. It is a mistake to assume that just because you are small, or casual, that the law is different for your company.
Stuart Rudner is a partner in the Labour & Employment Law Group of Miller Thomson LLP. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at 416.595.8672 or firstname.lastname@example.org. You can also follow him on Twitter @CanadianHRLaw and join his Canadian Employment Law Group on LinkedIn.