Review looking at payroll-related issues
The deadline is fast approaching for Ontario employers and payroll professionals who want to provide input on possible changes to the province’s employment standards and labour relations laws.
Special advisors tasked with reviewing the Employment Standards Act, 2000 and Labour Relations Act, 1995, have set Oct. 14 as the final date for submitting comments on options for reform
presented in their Changing Workplaces Review Special Advisors’ Interim Report.
Last year, the Ontario government appointed lawyer Michael Mitchell and former Justice John Murray to review the acts and make recommendations on changes that would “better protect workers while supporting businesses in our changing economy.” The government says it is the first comprehensive review carried out for both acts.
The advisors held consultations across the province in the summer of 2015, hearing from over 200 presenters and receiving about 300 submissions, before releasing their interim report this summer. Before preparing a final report for the government, the advisors say they want more feedback.
“The breadth of the review and the number and variety of submissions made in the consultation process have led us to conclude that Ontarians should not only be informed of the issues and options for legislative change that have been identified and discussed, but also they should have an opportunity to comment before we make our final report with recommendations,” the interim report states.
The interim report provides background information on the need for a review of the laws, including a look at how factors such as globalization, trade liberalization, technological change, demographic change and the growth of the service sector are affecting employers and workers.
“Employers come to this discussion having to compete in a new, highly competitive, dynamic and changing economy. This economy and the changes in it move at lightning speed, and in this environment, employers have to adapt and be flexible,” it says.
The report also states that unions, employee advocates and some academics and policy institutes believe precarious work is a growing problem for workers.
“There is widespread agreement in this group that significant and growing numbers of workers — particularly women (but also increasing numbers of men), members of racial and ethnic minorities, immigrants, youth — are working in low-wage jobs, many of them temporary, many of them unstable with little or no security, and mostly without benefits.”
The report also notes that non-standard employment, such as temporary work, part-time work, holding multiple jobs at once, and self-employment without paid help, is growing faster than standard employment in Ontario.
From 1997 to 2015, the report says non-standard employment grew at an average annual rate of 2.3 per cent, compared to 1.2 per cent for standard employment. In 2015, non-standard employment made up 26.6 per cent of Ontario’s workforce, compared to 23.1 per cent in 1997.
Based on their consultations, the advisors put forward a number of options for reforming the two laws to ensure that they reflect these changes. For the Employment Standards Act, 2000, the report examines a wide array of provisions of interest to payroll professionals, including the following:
Pay periods: Other than for commission-based employees in the automobile sales sector, the act does not legislate limits on how long or short pay periods can be or the days of the week that they can start or end. In addition, an employer’s work week does not have to correspond to its pay period.
The report states that Ministry of Labour staff have expressed concerns about the act’s pay period requirements. In cases where an employer’s pay period is not the same as its work week, staff says it takes “substantially” more time for Employment Standards officers to determine if the employer has complied with work-week based requirements, such as overtime pay.
Ministry of Labour staff says it would be easier to determine compliance if the act required that pay periods and work weeks be harmonized (e.g., by permitting only weekly or bi-weekly pay periods). The report asks for feedback on these options.
Paid vacations: The report states that “compared to other Canadian provinces and the federal jurisdiction, Ontario has the least generous provisions with respect to vacation time and pay.”
It asks for feedback on whether the act should continue to require only a minimum of two weeks of paid vacation per year or whether it should increase to three weeks after a certain number of years or to a minimum of three weeks for all employees.
Public holidays: The report asks for comment on whether public holiday pay standards should be simplified. For example, it sets out the possibility of reverting to a previous public holiday pay calculation that required employers to pay employees their regular wages for a holiday to which they are entitled.
Current law requires employers to calculate holiday pay based on the total amount of regular wages earned and vacation pay payable to an employee in the four work weeks before the one in which the public holiday occurs, divided by 20.
For employees whose work hours vary, the report asks if the holiday pay calculation should be changed to use an average of the employee’s daily earnings (excluding overtime pay) over a period of 13 work weeks before the holiday or the method set out in a collective agreement that applies in the workplace.
Hours of work and overtime pay: The report sets out a number of options for changing the hours of work and overtime requirements, including reducing the overtime pay threshold from 44 hours to 40, putting a limit on the number of weeks that overtime averaging agreements can be in effect and eliminating a requirement for employers to obtain employees’ written consent to work longer than daily or weekly maximum hours.
The act allows employees to work a maximum of eight hours per day or the number of hours in the employee’s regular workday where their regular hours are more than eight per day and 48 per week.
The report states that if the employee consent requirement is eliminated, it could be replaced with a list of specific circumstances in which employees could refuse excess daily hours.
Scheduling: The act currently does not address scheduling and does not require employers to provide employees with advance notice of shift schedules.
The report puts forward options for possible change, including giving employees the right to request changes to schedules at regular intervals during the year; requiring employers to provide advance notice when setting and changing work schedules and to pay employees more for last-minute schedule changes.
Leaves: The report looks at the various unpaid leaves allowed under the act and asks whether the government should add new ones (e.g., domestic violence leave and leave for the death of a child when the death is not related to a crime).
It also asks whether the act should require that employers provide employees with paid sick days. Labour and employee advocates have long called for the act to include them.
The report also looks at the act’s requirements for personal emergency leave, which provides employees with up to 10 days off work, without pay, each year if they work for an employer who regularly employs at least 50 employees.
Employees may take the leave for a number of different reasons, including an illness, injury or medical emergency for themselves or specified family members, bereavement or other urgent matters.
The report sets out a number of options for changing personal emergency leave, including removing the 50-employee threshold and breaking down the 10-day entitlement into separate leaves (e.g., bereavement leave, sick leave, etc.) that total 10 days altogether.
Termination of employment: The report looks at notice requirements and severance pay. It asks whether the current maximum of eight weeks of notice for terminations should be increased or decreased.
It also wants feedback on whether the government should eliminate a requirement that employees be employed by their employer for three months before being entitled to termination notice.
In addition to termination notice, Ontario requires employers to provide severance pay if certain conditions apply. The act mandates severance pay if an employee has five or more years of service with an employer and either the employer has a total annual Ontario payroll of at least $2.5 million or is terminating the employment of 50 or more employees in a period of six months or less because all or part of the business is permanently closing. Employers have to pay severance pay for a maximum of 26 weeks.
The report asks for comments on whether the government should reduce or eliminate the 50-employee threshold, the $2.5-million payroll threshold, the five-year eligibility requirement and/or the 26-week cap.
Meaning of employee and employer: The report looks at issues such as how to deal with employers who misclassify workers as independent contractors rather than employees and whether a new category of employee, called a dependent contractor, should be added to the definition of employee in the Act.
In addition, the report discusses whether there should be obligations placed on businesses that contract out work to make them liable for employment standards violations by sub-contractors or franchisees.
