Possible alterations to work standards have implications for payroll administration
Payroll professionals looking after Ontario employees will have new employment standards rules to follow next year if provincial legislators pass proposed changes to the Employment Standards Act, 2000.
The amendments are part of Bill 148, the Fair Workplaces, Better Jobs Act, 2017, which Labour Minister Kevin Flynn tabled in the legislative assembly in June. The bill proposes to make widespread changes to employment standards law, as well as the Labour Relations Act, 1995, which governs collective bargaining. Many of the changes would take effect Jan. 1, 2018.
The government announced the amendments shortly after it released the final report of the Changing Workplaces Review, which it set up two years ago to examine workplace laws in light of issues such as globalization, technological advances, and the growth of non-standard employment and precarious work.
The proposed amendments would affect many payroll-related employment standards requirements, including those for public holiday pay, vacation pay, overtime pay, call-in pay, wages, and unpaid leaves of absence.
One of the biggest changes would simplify the way payroll professionals calculate public holiday pay by moving it from what the Changing Workplaces Review called a “pro-rated average of recent earnings” to a payment of an employee’s average daily wage.
Payroll would calculate holiday pay by totaling the amount of regular wages an employee earned in the pay period right before the holiday and dividing it by the number of days the employee worked in that period.
The current rules require employers to add up the total amount of regular wages that an employee earned, plus vacation pay payable, in the four work weeks before the week of the holiday and divide it by 20.
“The proper calculation of public holiday pay is a common problem for employers. It is often pointed to as an example of unnecessary complexity in the act,” the special advisors overseeing the review stated in an interim report last year.
The bill also proposes to change the way employers compensate employees who work on a holiday. If employees agree to work on a holiday that would ordinarily be a work day, the employer would have to pay them public holiday pay plus premium pay of at least 1.5 times their regular rate for each hour worked.
Right now, employers can choose whether to pay the employees public holiday pay plus premium pay for the hours worked or pay them their regular rate for the hours worked and give them another day off with holiday pay.
Similar changes would apply to holiday pay calculations for employees working in a hospital, a continuous operation or a hotel, motel, tourist resort, restaurant or tavern who work on a holiday.
The rules for substituting a holiday that falls on a day that is not ordinarily a working day or on a day when an employee is on vacation would also change. Employers would have to provide the substitute day off on either the first day that would ordinarily be a working day for the employee right after the holiday or the most recent day that would ordinarily be a working day for the employee right before the holiday.
The law currently allows employers three months to provide the day off, or up to a year if the employer and employee agree.
Vacation rules would also change to give employees more time off. Employees with at least five years of employment with the same employer would be entitled to three weeks’ vacation and vacation pay of six per cent of their wages, excluding vacation pay. Currently, the act only requires that employers provide employees with two weeks’ paid vacation after one year of employment.
Amendments to overtime rules would require employers to pay employees who have multiple regular wage rates because they hold more than one position within the organization at an overtime rate that applies to the position for which they are working the overtime. Currently, employers may pay them a blended rate. Ontario is the only jurisdiction to require a blended rate.
“In other jurisdictions, the employee is entitled to overtime pay based on the rate of pay for the work done in the overtime period,” said the final report. “The Canadian Payroll Association asked that this be changed and we agree that the blended rate concept is needlessly complex and overtime should be paid based on the rate for the work performed.”
Other pay-related amendments would require employers to pay employees a minimum of three hours’ pay at their regular rate in certain situations. These include cases where on-call employees are not called into work or work fewer than three hours, an employee’s shift is cancelled within 48 hours of its start, and where employees who regularly work more than three hours a day are given fewer than three hours when they arrive at the job.
The bill would also give the labour ministry the authority to allow employers to pay employees in ways other than by cash, cheque or direct deposit. The bill does not specify what the other methods might be.
The bill also proposes to raise the general minimum wage rate to $15 an hour as of Jan. 1, 2019. The increase would be phased-in, with the rate rising from $11.40 an hour to $11.60 on October 1 and to $14 on Jan. 1, 2018 before climbing to $15 the following year. Annual indexation would return as of Oct. 1, 2019.
The bill would also require employers to pay casual, part-time, temporary and seasonal employees equally to their full-time staff when doing the same job. Exceptions would apply for factors such as a seniority system, a merit system, or a system that measures earnings by quantity or quality of production.
The amendments would also affect some of the unpaid leaves permitted under the act. The biggest changes concern personal emergency leave, which allows employees to take up to 10 days off work each year for personal illness or for injuries, illnesses, deaths or other urgent matters affecting family members.
Currently, employers are only required to provide the leave if they regularly employ at least 50 employees. The bill proposes to eliminate the threshold.
In addition, employers would be required to pay employees for two of the 10 days. Employees would have to take the two paid days before taking any of the unpaid days.
For the paid days, workers would be entitled to receive their regular wages for the day. Those paid by commission or piece work would be entitled to their regular hourly rate or the applicable minimum wage rate, whichever was higher, for the time off.
The reasons for taking the leave would be expanded to include domestic or sexual violence. In addition, employers would be prohibited from asking employees for a sick note for taking personal emergency leave.
The bill would also increase the maximum amount of time off for family medical leave from eight weeks to 27 weeks and lengthen the maximum leave for a crime-related disappearance of an employee’s child from 52 weeks to 104 weeks.
In addition, employees would be allowed to take up to 104 weeks off work, without pay, if their child died from any cause. Currently, the leave is restricted to employees whose child died because of a probable crime.
Before the legislative assembly passes the bill (expected in the fall), one of its committees is reviewing the amendments over the summer. Business groups had asked the government to go beyond the legislative review and look at how the bill could affect the province’s economy.
“(W)e are urging the government to take time this summer to have an independent third party conduct a comprehensive economic impact analysis on the proposed reforms to consider the unintended consequences to employers,” said a group of business representatives called the Keep Ontario Working Coalition.
So far, the government has not announced such a study.
While workers’ rights groups, such as the Ontario Federation of Labour, say the amendments provide a much-needed update to Ontario’s labour laws, there are more amendments they would like to see added, including seven paid sick days apart from personal emergency leave, 10 paid days of leave for survivors of domestic and sexual violence, and a removal of all exemptions to the minimum wage.
