Changes to Ontario’s Employment Standards Act (ESA) coming into effect in 2015 could have a big impact on employers when it comes to areas such as ESA claims and wage recovery, working with temp agencies and record-keeping.
“They’re certainly something that employers need to pay attention to and it’s going to affect their administration of their employment relationship. It’s not just HR, it’s also the payroll folks given some of the issues related to records that are going to flow from these changes,” said Carl Cunningham, a partner at Bennett Jones in Toronto.
With the Stronger Workplaces for a Stronger Economy Act, 2014, the $10,000 cap under the ESA on the recovery of wages through a Ministry of Labour order to pay has been lifted. Before, the $10,000 limit stopped a lot of employees from filing under ESA.
“In that scenario, (employees are) probably not going to go that way because you’re taking a huge discount in what you’re entitled to, so you have to go to court,” said Doug MacLeod, principal at MacLeod Law Firm in Toronto. “With the elimination of that $10,000 cap… it’s going to make the Employment Standards Act look more appealing in some circumstances.”
It’s easier for a person to file a complaint with the ESA than go to court — people do not need a lawyer, said MacLeod. The Ministry of Labour just assigns a person to investigate who then decides if the employee is entitled to the notice of termination or pay in lieu of notice or severance pay.
From an employer’s perspective, this could mean more ESA claims, said Cunningham.
“Because of that cap, you would have people going into courts, the civil system… small claims court.”
There might also be larger claims, he said, citing as an example the issue of overtime.
“Even if it’s not a class-action, I think people are paying more attention to overtime because of that, so now you don’t have a cap on that… the employer doesn’t have the safety net of saying, ‘Under the ESA, my worst case is 10 grand.’
“And you can easily exceed $10,000 once you get into severance pay. So Ontario, unlike other provincial employment standards legislation, doesn’t just have the termination pay component of up to eight weeks, it has this severance pay which can go up to 26 weeks. So… for those individuals who are looking for a low-cost, quick access to justice mechanism, this may be material for them.”
The changes to the act also allow employees to bring claims up to two years after the date wages became due. Previously there was a six-month time limit.
The other big changes coming into effect in November concern temporary help agencies. The act introduces “joint and several liability” between temporary help agencies and client employers for regular wages, overtime pay, public holiday pay and premium pay for working on a holiday.
This has huge implications, according to MacLeod.
“Basically what it means is an employer can be ordered to pay an employee wages twice for the same work,” he said.
“Employers are going to be very careful about the kinds of temporary help agencies they use. So they’ll want reputable companies who’ve been around for a long time. They may need to put something in their contracts about personal liability as directors of a temporary help company so they can go after them.”
It’s important for an employer to make sure it’s dealing with a reputable temporary help agency because the reputable ones will always ensure the burden of
responsibility falls on their own shoulders — not their clients, said Marina Butler, president of Employment Professionals Canada in Fort Erie, Ont.
“You always have to protect yourself from those unscrupulous people and, unfortunately, the clients get hit as a direct result. Saving a penny doesn’t necessarily mean you’re choosing the right agency, unfortunately, and that’s the bottom line. Some clients will choose to look the other way and then it’ll catch up with them, rather than to pay the proper fees to ensure that you’re getting the best agency to represent you.”
The revised act also requires clients of temporary help agencies to boost their record-keeping, in recording the number of hours worked by each temporary employee, retaining or arranging for someone else to retain the records for three years, and ensuring the records are readily available for inspection by an employment standards officer.
But good agencies will have the due diligence in place, said Butler.
“And they can share that recordkeeping with the client and it takes that responsibility or the onus of responsibility off the client completely... The agency should be able to share the access to the information... (otherwise) it is doing the work twice, it’s cumbersome.”
It would be ideal if the agency shared its recordkeeping so efforts aren’t duplicated, said Cunningham.
“From a diligence or best practice point of view, it’ll be important for employers using temporary workers to make sure that they have their own records of all of those, or maybe it’s copies of the agency’s records, because they ultimately want to be in a position, if it comes to it, to deny that they have any additional liability.”
The Employment Standards Act already required a slew of employment records to be kept for three years, so employers should have been holding on to certain records already, he said.
“But the extension of that limitation period and the removal of the cap just reinforces that you should be keeping those records because it may now take longer for these claims to come out of the woodwork.”
Another change, effective May 20, concerns posters displaying rights and obligations around Ontario’s act.
While previously employers were required to display an updated version, they now have to provide each employee with a copy of the poster.
“What this does (is) increase employee education about their rights, and so... in workplaces that aren’t complying with the Employment Standards Act, you’re going to see more complaints,” said MacLeod.
“It’ll have quite an impact, particularly on places where there’s vulnerable workers… having these posters distributed, the penny’s going to drop in a lot of workplaces and change workplaces’ practices so they come into compliance.”
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