New regulations take effect for federally regulated employers

They might not seem like huge areas of concern – employee expenses and employee information – but HR will want to be on top of new changes coming out of Ottawa to avoid penalties, and prepare for an increase in staff queries.

As of July 9, these amendments to the Canada Labour Code took effect for federally regulated employers. They concern reimbursement for “reasonable work-related expenses paid out-of-pocket by the employee” and “a written statement of employment within the first 30 days of employment.”

The new rules are part of the budget Implementation Act that first started back in 2018.

“They've been on the books for a long time, but have only become effective recently,” says Brent Matkowski, a partner at MLT Aikins in Saskatoon

“That’s five years ago, so those can fall off your radar — and now it's time to come back on for sure.”

Written statements for all employees

When it comes to employee information, employers are now required to provide a written statement to all employees that includes several items, such as: job title and a description of duties and responsibilities; the probationary period; required training; the rate of wages or salary; any mandatory deductions; and the reimbursement of work-related expenses.

If any changes are made to the statement, another copy must be provided to the employee within 30 days; and if an employee is terminated, the employer must give them a copy of the most recent version of the materials that relate to terminations of employment.

“The government has kind of a template and it just goes through ‘Who's the employer? What's your job title? Where are you going to work? When does your employment start? Are you a term employee? What's your wage?’ — all those very standard terms, but now it's a requirement to have it all written down and communicated with the employee,” says Matkowski.

“It’s basically trying to remove the guesswork and make sure that what people talk or spoke about is actually recorded somewhere.”

That should help prevent certain things from falling through the cracks, he says, such as discussions with managers that were never formally written down.

“One thing to watch out for, with this one in particular, is sometimes managers on the floor will… make little adjustments, you know, give employees certain things or change certain things, but they might not necessarily know that's the type of thing that has to get documented as well. So I think for employers, it's going to be about training the managers so that they're aware of this requirement.”

As a result, going forward, “we should be able to look at an employee's file and follow the bouncing ball and see all of the changes and know the history — rather than have to track down and talk to a manager because it was all verbal,” says Matkowski.

In the grand scheme of things, most sophisticated employers would likely already those sorts of details included in employment contracts, says Clifton Yiu, a lawyer at Filion Wakely Thorup Angeletti in Toronto, and the amendments are just about providing employees with a complete picture of their employment.

“It gives a little checklist for employees to see the rights and obligations from both themselves and their employers, and how to potentially to address any potential deviations from those terms.”

Potential disagreements around written statements

But that’s not to say there might not be disagreements over the terms, says Yiu. For example, when it comes to “ordinary place of work,” if a person is working remotely, they might not like how that’s defined.

“It definitely could cause some issues.”

Or slight adjustments to an employee’s working schedule that were made by a manager might not necessarily reflect what HR says.

“You can end up in situations where it's like, ‘OK, have the terms of employment changed over time without us knowing that?’ And that can snowball,” he says.

Also notable for HR: If a person was employed via a verbal contract, the written statement “won't necessarily supersede any sort of verbal contract, because [the written statement is] not an agreement that was signed by or necessarily agreed upon by the employee,” says Yiu.

“It's not as if the employer is presenting these terms to the employee and asking him to accept, but rather it's the employer’s characterization and codification of what they believe are the existing terms. And the employee doesn't necessarily need to, let's say, agree or disagree and bind themselves to it.”

Employee information requirements

As for the employee information change to the Canada Labour Code, a federally regulated employer must, within the first 30 days of a person’s employment and when employment is terminated, provide a copy of any materials — and updates — that the Minister makes available respecting employers’ and employees’ rights and obligations. These must be posted “in readily accessible places where [they are] likely to be seen by employees.”

This is the government taking a “know your rights” approach, says Matkowski. “I think it's meant to just keep employees updated on any of the changing rights — employers have human resource departments that keep track of changes, [but] employees might not be keeping track of changes themselves.”

However, from an employer's perspective, this could potentially lead to an increase in unjust dismissal complaints, he says.

“If, for whatever reason, the employer didn't give the information at termination, I can also see that impacting the deadlines to make certain complaints... So it's just something to make sure that [employers] do,” says Blue, citing the 90-day time limit for unjust dismissal claims in the Canada Labour Code.

While the federal government does post federal labour standards on its website, many employees may not be aware of these, says Yiu, and termination of employment for federal employees is so much more so different than provincially — “arguably much less because you really only get two weeks, plus an extra day or two per year of service. So it could catch some employees by surprise, to realize that their termination entitlements are less than what they thought.”

But employers will definitely want to stay on top of the new rules, given the penalties.           

“It will take quite a bit of analysis for employers to figure out what they need to do moving forward because if you are looking at the potential fines — $200 or $2,000, for each violation, for failure to provide the required employment information… [if] employers with 100 employers do that, that’s a $200,000 fine, potentially — so it could be substantial,” he says.

Employee expenses under Canada Labour Code

When it comes to employee expenses, the new rules require employers to reimburse employees for “reasonable work-related” expenses.

In looking at work-relatedness, several factors should be considered for the expense, according to Ottawa, such as the connection to the employee’s performance of work, whether it’s related to an occupational health and safety standard, and whether it was incurred for legitimate business purposes, rather than personal use.

“I see this as more codifying a lot of the same existing practices that employers might already have,” says Matkowski.

“The difference is now it's part of the code. So rather than just an internal matter where the employee says, ‘Hey, I think I should have been reimbursed,’ and the employer says no, and the employee’s recourse at that point was to file a civil claim for recovery — now it falls within the code.”

The government has provided specific regulations and a guideline document which provide examples, and it’s very discretionary, he says.

“But when I look at the guidelines, I view it as almost what most employer policies are already doing… I don't see it as this expansion of what would be covered, just kind of a codification of what is probably the practice in most workplaces.”

Some collective agreements might already exclude what might be reasonable work-related expenses, such as a driver medical exam every two years, says Matkowski, “so there could be little carve-outs and exceptions in the existing collective agreements and individual agreements. And then going forward, if there's an expense that an employer is suddenly saying, ‘All this falls within a reasonable work-related expense, but it's just not our practice,’ they could look at trying to get it excluded in the future — but they have to do that by agreement.”

The consideration shouldn’t come as too much of a surprise to employers, says Yiu, as many already cover these costs.

“In the grand scheme of things, I don't think it's totally new or unexpected or going to be potentially particularly onerous. But that will depend on the employer, because definitely more sophisticated employers would be in a better position to contemplate these sorts of things than be caught by surprise by these things.”

Unionized employee expenses

When it comes to unionized workplaces, employment standards legislation — which includes the Canada Labour Code — is automatically read into the collective agreements, so they can’t provide less than minimum standards, says Yiu.

“That being said, if you have a collective agreement that provides a greater entitlement than the minimum standard, the greater entitlement would apply instead,” such as reimbursement in 15 days instead of 30.

“On the flip side, if collective agreement says, ‘We'll reimburse expenses within 60 days, that would be, in my mind, a lesser benefit than what is mandated by statute, and therefore it has to be the statutory deadline that will be applied,” he says.

Ultimately, the legislation is trying to protect employees, says Yiu.

“If the greater benefit is codified not in the statute but in the contract, the union or employee would still have a recourse, saying, ‘Hey, you're providing me not less than what I'm owed at by statute, but less than what you promised me at contract.’ So an employer... can't avoid their contractual obligations simply because there's a lower minimum standard.”

Enforcement around employee expenses

If an expense is found to be acceptable, employers must reimburse the employee within 30 days of when the employee submits the expense for reimbursement. If not, employers may be liable for $500 to $6,000 in fines for each time they fail to reimburse reasonable work-related expenses.

But it’s not likely the government will be enforcing the amendments through proactive methods, says Yiu, where they go in and do inspections.

“I would anticipate it'd be like a complaint, is probably the way that they would enforce it. And, of course, the complaint only goes forward, typically speaking, if it's brought forward by an employee.”

There could be a lot of leeway here, meaning sometimes payroll issues arise, such as people going on vacation, which leads to delays, he says.

“Those factors could end up with an employee being reimbursed after 30 days, but I would hope that in these cases… enforcement officers would take this into consideration when determining whether fines should be levied.

“Given how these are complaints are typically dealt with and enforced, I anticipate that there would be some leeway for reasonable reasons.”