Worker rights in need of clarity in gig economy

Protections needed, say experts
By Sarah Dobson
|Canadian HR Reporter|Last Updated: 08/29/2017

By Sarah Dobson

With the growth of the gig economy — where employers hire workers for short-term engagements —  people are working outside of the traditional employee-employer relationship and often cobbling together multiple part-time jobs, making for precarious work.

Worker rights and employer responsibilities are not clear — but answers and solutions are needed, and soon, according to labour experts speaking at a conference hosted by the Centre for Labour Management Relations at the Ted Rogers School of Management at Ryerson University in Toronto.

It’s important to distinguish between the “unstoppable” digital platform economy — where companies such as Google, Facebook, Uber and Netflix transform the way people work, shop or vacation — and the gig economy, said Ethan Phillips, independent policy analyst and editor of Canada Fact Check in Toronto.

“These digital platforms have the potential to improve our lives and be a source of equitable economic growth,” he said. “In contrast, the growth of the gig economy — or on-demand — represents an increase in the kind of non-standard, precarious work that’s driving increasing inequality and economic instability.”

While Ontario’s Employment Standards Act (ESA) makes a distinction between independent contractors and employees, many employers have figured out how to exploit this, he said, so they avoid the direct financial costs of compliance with the act and other employment-related legislation. 

These include vacation pay, public holiday pay, overtime pay, termination pay, severance pay and premiums for employment insurance and the Canada Pension Plan, along with health benefits.

Ontario’s recently released Changing Workplaces Review argues that the stark distinction between employees and independent contractors “no longer captures the reality of the Ontario labour market,” he said.

Many of these companies or apps in the gig economy are actually employers within the meaning of the ESA, according to Joshua Mandryk, associate at Goldblatt Partners in Toronto.

“When you get past the amazement of this modern technology, really, the traditional indicia of employment appear here,” he said. “You can’t always see the employer but that doesn’t mean the employer’s not there — sometimes we’ve got to peel behind the curtain.”

In looking at the ESA, some of these apps are actually temporary help agencies, involving people who “perform work,” he said.

“In many cases, many of these apps actually structure their fee arrangements so they’re not taking it from the client because the client doesn’t want to pay, they’re actually taking it from the worker. In many cases, this might be up to 20 per cent, and this would be banned by the ESA.”

When it comes to pay equity, Ontario’s Pay Equity Act does not define employer or employee, according to Emanuela Heyninck, commissioner of the Ontario Pay Equity Commission.

“We have to look at the facts and circumstances of the structure and the relationship: Who’s got overall financial responsibility, who’s got responsibility for compensation, what’s the nature of the business and what is most consistent with achieving the purposes of the act?”

But in the gig economy, relationships are often centred on the individual, meaning a true independent contractor, and that is not covered by the act, she said.

As for the Ontario Human Rights Code, “employment” is not defined under the code and there are no exclusions, so it’s different from other employment legislation, according to Katherine Chau, associate at Van Kralingen Law in Toronto.

But recent decisions have provided more guidance in terms of the indicia considered, such as whether there’s control by the employer with respect to the work conditions and remuneration; and the sense of dependency of the worker.

“The code really applies to all workers in the gig economy, regardless if you’re an independent contractor, part-time, casual, a temp worker, freelance, volunteer or intern,” said Chau.

“It’s important for employers to be more mindful of the fact they have obligations to all of these workers, even if they don’t regard them as true employees.”

Potential solutions
The Changing Workplaces Review said Ontario common law has long-recognized the “dependent contractor” who is entitled to some of the protections of employees, such as reasonable notice of termination of employment, said Phillips. And while the Ontario Labour Relations Act contains a provision that states the definition of “employee” includes dependent contractor, “there is presently no provision in the ESA equivalent to the dependent contractor provision in the Labour Relations Act.”

“Clearly, there is a compelling case to be made for enshrining the notion of a dependent contractor in the ESA,” he said.

When it comes to helping people involved in precarious work, there are several solutions, according to Carmel Smyth, national president of the Canadian Media Guild. These would include better enforcement and an appeals process, along with guaranteed minimum standards so workers have the same basic pay and health and safety standards as all workers, she said.

Sectoral bargaining with multiple employers is another solution, she said, along with regulatory change and tax breaks or incentives tied to compliance with health and safety regulations.

“Surely, we can find ways to ensure technological change and globalization do not continue to tear away at fundamental gains Canadian workers have fought for, such as limits to working hours, fair pay and safe and healthy working conditions. “

On balance, the sharing economy or the gig economy is empowering for individuals, said Tim Hudak, CEO of the Ontario Real Estate Association and former Ontario MPP.

“(They) can be their own boss at their own time, charge their own course.”

But people need to be careful in how they approach this because, traditionally, there’s been the classic tension between capital and labour, and how to allocate resources between each, he said.

“That’s served us well, warts and all, over a number of decades. But I think we’re in a brand new area now, not really in terms of labour and management but a marketplace of buyers and sellers.”

Marketplaces aren’t regulated through the Employment Standards Act or the Labour Relations Act, nor should they be, said Hudak. “We need to resist the temptation to put a square peg among two round holes.”

One solution is to make benefits more portable for individuals as small businesses, “to actually set up a one-stop shop where you can register your business, understand what your benefits are, sign up for a portable pension plan, knock down those walls, make it easier to run a small business and plan for eventuality if it falls through the cracks,” he said.

“The solution is to make the economy stronger through board-based policy initiatives and to recognize people are going to choose to be entrepreneurs in the workplace, so how do you actually make the Canadian small business owner as successful as possible and ensure there’s a safety net?”

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