Employment standards first order of business for new Alberta government

Alterations to overtime, holiday pay, minimum wage put payroll in spotlight

Employment standards first order of business for new Alberta government
Employers in Calgary (pictured) and across Alberta will soon be operating under refreshed employment standards, following the passage of Bill 2: An Act to Make Alberta Open for Business.

August will be no holiday for payroll professionals in Alberta.

Policy review and alterations are in order following the passage of Bill 2: An Act to Make Alberta Open for Business — the first piece of legislation for the newly elected United Conservative Party, led by Premier Jason Kenney.

The bill has passed third reading and only requires royal assent before becoming provincial law.

Combined with a decrease to the youth minimum wage rate, changes to overtime and general holiday pay will ultimately benefit employers, but they may burden payroll professionals in the short term — particularly those using manual processes, says Karima Balfoul, payroll compliance adviser at the Canadian Payroll Association in Toronto.

“It’s going to be less cost to the employer, but it’s more work in terms of compliance,” she says of the changes, most of which are slated for implementation on Sept. 1.

The current bill undoes changes ushered in by the previous New Democratic Party government in 2018 via the Fair and Family-Friendly Workplaces Act. 

A new $13 minimum wage rate for students aged 17 or younger was already implemented on June 26.

Banking overtime

Changes to the way overtime is banked will be significant for employers, says Janet Salopek, president and senior consultant at Salopek Associates, an HR consultancy in Calgary.

Presently, employees can bank 1.5 hours of time off with pay for every hour of overtime worked. As of Sept. 1, that will revert to one for one.

“Overtime will impact everybody,” she says. “It’s going back to our old legislation that says time for time. Right now, many employers can’t afford to pay the overtime at 1.5 times.”

The change may also benefit employees, as employers could be more likely to offer overtime in a one-to-one banking scenario, says Tommy Leung, a lawyer at Borden Ladner Gervais in Calgary.

“[It may] incentivize employers to use the system more often, which would benefit employees that would rather have time off versus more pay,” he says. “So, it might help both sides in that sense.”

A written overtime agreement between employer and employee (or employee group) is required before a worker can receive time off with pay, rather than overtime, says Leung.

But the change will sting for those employees who are willing to work more hours — but also want to get paid accordingly, says Balfoul.

“In terms of overtime, I wouldn’t work overtime if it’s going to be banked just regular time,” she says. “Sometimes, you want to work overtime because you’re going to make time and a half.

“They are the only province that will start banking it as of Sept. 1 at regular. All other provinces are banked at time and a half.”

The 2018 changes to overtime were a major cost to small and large businesses alike, says Salopek.

“Knowing where we are, relative to our recession, this is definitely intended to help employers out.”

Employers can continue to offer banked overtime at a 1.5 rate, but such a move could become an escalating cost as business grows, she says.

“This could have significant dollar impact for businesses if they decide not to follow legislation and stay with status quo.”

The effect on business will vary widely by sector, says Salopek, as office employees typically have fewer overtime opportunities than trade workers.

General holiday pay

Rules surrounding holiday pay eligibility will also revert back to pre-2018 standards, with employees required to have worked for 30 days with the same employer in the 12 months preceding the general holiday in question in order to receive pay.

“Under current legislation, an employee is entitled to general holiday pay immediately, as soon as they start employment,” says Salopek.

“That was a pretty big hit when current legislation came into effect, because that’s expensive for employers.”

Calculation of general holiday pay will also revert to regular/irregular workday distinctions, affecting employee eligibility for pay as of Sept. 1.

“Whether or not you get holiday pay — and how much you get — depends on whether it’s a regular working day for you or not and whether you’re working that holiday or not,” says Megan Kheong, an associate at MLT Aikins in Edmonton.

In 2018, all employees became eligible for holiday pay — at the very least, earning their average daily wage, she says.

“A lot of employers were not happy with the 2018 amendments for holiday pay because what it effectively did is it did away with the distinction between whether it was a regular workday or not for an employee.

“It was a substantially bigger load for some employers to bear,” says Kheong. “For some employers, it was an increase of thousands of dollars per year.”

The changes will have a wide impact on Alberta employers as of Sept. 1, she says.

“Regardless of what area they work in, regardless of the type of employee they hire and, really, regardless of their kind of pay structure, that’s going to be something that employers are going to see an immediate impact on.”

Student minimum wage

Reductions to minimum wage by council order saw the base rate fall two dollars for students aged 17 and under.

The reduced wage applies to the first 28 hours worked in a week by a student — while school is in session or during a vacation break recognized by the educational institution. Any more time worked while school is in session would be compensated at $15 per hour.

“They’re trying to look at it through two lenses,” says Salopek of the government’s choice to support a $15 minimum wage for adults.

“Helping businesses coming out of the recession but also staying true to the fact that, for some people, that minimum wage needed to go up.”

Employers now have the option to reduce students’ wages, but they are required to provide one pay period of notice, she says.

“What they should do is give as much notice as they can to their people if they are going to reduce it,” says Salopek.

“It depends on the business. If they can afford to hold the rate and not reduce it, that’s optimal, but, honestly, there’s some businesses here where the margins just won’t allow it.”

Giving as much consideration to employee morale as possible can help ease the blow to staff, while meeting one-on-one with workers to share the news is optimal, she says.

“If they’re going to reduce it — and they can — they need to help their employees understand that it’s for business reasons.”

Continuing to pay the $15 minimum wage could help with retention, says Balfoul.

“Employers may want to keep the $15 that they are paying right now because they feel maybe that it’s going to have an effect on the workplace.”

Advice for HR, payroll

Employers and payroll administrators would be wise to keep good records in terms of general holiday pay eligibilities and overtime to ensure calculations are precise and accurate, says Leung.

Attention must also be paid to the rules and qualifications regarding regular/irregular work days, as noted in the new legislation (available at www.alberta.ca/open-for-business.aspx), he says.

And more changes may be coming — potentially to hours-of-work averaging agreements, for example — so payroll professionals will need to continue monitoring the legislature with due diligence, says Kheong.

“I was expecting there to be more of a major overhaul,” she says. “The changes, in my view, are relatively minor.”

In terms of legalities, any changes to employee compensation frameworks can bring up the concept of constructive dismissal, says Kheong.

“In this case, I don’t think that the changes to the general holiday provisions and to banked overtime agreements would be so substantial as to create that kind of reduction to compensation. But, of course, it does depend on how much an employer relies on a banked overtime agreement.”

While the legislation also deals with changes to the Labour Relations Code surrounding union certification and employee support programs, the employment standards changes deal strictly with compensation, says Leung.

“All of these changes do deal with pay,” he says. “We’re just kind of reverting back to what it was a couple years ago. I don’t think it’s anything that’s very surprising or new that HR professionals wouldn’t have dealt with already.”

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