Ontario Businesses Brace for Major Changes to Labour Laws

Legislation affecting every corner of Ontario’s business landscape is imminent - what does it mean for employers and employees?

Unveiled in May by Ontario Premier Kathleen Wynne, The Fair Workplaces, Better Jobs Act 2017 promises the most significant changes to the province’s labour laws in decades. The Act follows the Changing Workplaces Review, which found that, in 2014, more than 30% of Ontario’s workers were in ‘precarious employment’ - a situation which made it difficult for them to earn a sustainable income, and even put them at risk thanks to poor working conditions.  

Having passed its second reading in the provincial legislature in mid-October, the Fair Workplaces, Better Jobs Act will significantly amend the Ontario Employment Standards Act 2000, with the intention of creating a more secure and rewarding environment for employees. If it eventually passes (in part or in its entirety) the Fair Workplace, Better Jobs Act will affect hundreds of thousands of businesses, of every shape and size, in every corner of the province.

In its current form the act proposes the following changes to Ontario’s labour laws...

Minimum Wage Rates

The Act, if passed, would change Ontario’s minimum wage to $14 per hour by January 1, 2018 - and to $15 per hour by January 1, 2019. Similarly, the various special minimum wage rates in place for students under 18 years of age, alcohol servers, hunting and fishing guides, and workers employed in their own homes (domestic workers), would also rise by the same percentage.

Equal Pay for Temporary Workers

Workers employed on a non-permanent basis, including part-time, casual, temporary, and seasonal employees (known as Temporary Help Agency employees) also stand to benefit from the Act - with relevant changes coming into effect from April 1, 2018:

  • Under the new rules, temporary employees would be paid the same amount as permanent employees doing the same job.
  • Temporary employees would also receive a degree of additional  job protection, including at least one week’s notice when an employment assignment scheduled to last three months or more is terminated early.
  • The act also protects temporary employees from repercussions should they ask their employers about equivalent ‘permanent’ wage rates for the job they are doing.

Scheduling and Location Changes

From January 1, 2019, the Act would give employees new rights regarding shift scheduling, and changes to shift location. Although collective agreements between employers and unions would supersede the Act, the changes would be as follows:

  • After three months’ working at a business, employees would have the right to request changes to schedules and location from their employers.
  • Employees regularly scheduled to work for more than three hours a day, but who are given a shift of less than three hours, would receive three hours pay at their normal rate.
  • Employees would have the right to refuse a shift offered with less than four days’ notice.
  • An employee who has their shift cancelled within 48 hours of its start time, would receive three hours pay at their normal rate.
  • ‘On call’ employees not called into work during their on-call shift would receive three hours pay at their normal rate.

Overtime Rates

From January 1, 2018, the Act would ensure that employees holding more than one position with the same employer would be paid overtime at the rate of the role in which they are working the overtime hours. 

Misclassification of Employees

The Act brings changes to the way employee classification issues are handled:

  • Under the new legislation, employers who misclassify employees as ‘independent contractors’ would be subject to a range of penalties - from fines, to prosecution and even public disclosure measures.
  • In classification disputes, the proposed rules would shift the onus to employers to prove a worker is not an employee - rather than having the worker prove that that they are.

Vacation and Public Holiday Pay

In effect from January 1, 2018, the proposed legislation would bring Ontario employees’ vacation time in line with the national average, by granting employees three weeks of paid leave, after five years with their business. Similarly, public holiday pay would be calculated using employees’ daily rates.

Personal Emergency Leave

The Act would, from January 1, 2018, bring a number of changes to the way Personal Emergency Leave (PEL) is implemented by Ontario businesses:

  • The threshold for PEL, currently set at 50 employees, would be eliminated under the introduced legislation. Instead, all employees would be entitled to 10 days PEL per year, with two days paid leave.
  • The qualifying reasons for taking PEL would be expanded to include employees suffering domestic or sexual violence - or under the threat of such violence.
  • Employers would be prohibited from requesting a sick note from employees taking PEL. 

Compassionate Leave

The Act would, from January 1, 2018, bring changes to the categories of compassionate leave available to employees in Ontario:

  • A new category of leave would be created, applicable in the event of the death of an employee’s child, or the child’s disappearance as the result of a crime.
  • In both cases, the employee would be entitled to up to 104 weeks of leave - details of whether that period would be paid or unpaid are yet to be finalised.
  • Similarly, employee's’ Family Medical Leave allowances would see an increase - from 8 weeks within a 26-week period, to 27 weeks in a 52-week period. 

Electronic Agreements

The proposed legislation would change the status of electronic agreements between employers and employees. These types of agreement - which may concern issues like longer work hours, or shift scheduling - would, from January 1, 2018, be as valid in electronic format they would be in writing.

Unions

The Fair Workplaces, Better Jobs Act also affects Ontario’s labour unions, by proposing certain changes to the Employee Relations Act, which are as follows:

  • Employers would have to provide a full contact list of employees in a bargaining unit, if 20% of that unit’s employees support a union.
  • Previously separate bargaining units franchised from the same company, within an administrative region, would now be required to bargain as a single entity.
  • A wider variety of occupations would be entitled to unionize, - including those in architectural, legal, medical and dental, domestic work, hunting and trapping, and land surveying fields.

ESA Violations

The new legislation would remove a requirement to establish proof of ‘intent or effect’ in situations where the Employment Standards Act has been circumvented - and would treat related businesses which violate the act as one liable entity. Essentially this means related businesses would be jointly liable for financial penalties incurred by ESA violations - with the change coming into effect on January 1, 2018.

Formal ESA investigations would also be affected by the Act, in the following ways:

  • Employees would be able to contact the ESA directly, rather than going through their employer, in order to file a claim.
  • In the event of a claim, the Director of Employment Standards would not be allowed to refuse to assign an investigating officer for reasons of insufficient information provided by the claimant.
  • Employment Standards Officers would be able to order any monies owed to employees (temporary or permanent) to be paid to them directly by their employers.

ESA Non-compliance Penalties

The Fair Workplaces, Better Jobs Act would change the potential penalties for employers who fail to comply with the legislation:

  • The maximum penalty levied against employers for non-compliance with ESA rules would rise across the various categories of severity - that is, from $250 to $350, $500 to $700, and $1000 to $1500 respectively.
  • Interest could be awarded on unpaid wages, and on fees which were charged to employees unlawfully.

What Happens Next?

Most of the changes introduced by the Fair Workplaces, Better Jobs Act are set to come into effect on January 1, 2018 - with other parts pending Royal Assent. To shoulder the burden of an increased need for administration and enforcement, Ontario is hiring 175 additional employment standards officers - signaling an intention to implement the new legislation effectively.

While it goes without saying that lawmakers will continue to fine-tune the Act until its eventual implementation, whatever form it eventually takes will have transformative consequences. Practically, this means Ontario’s business owners should - if they have not already begun doing so - take steps to adapt, preparing both HR and Payroll teams for the more complex implications of the new laws, and any potential disruption they will create.

To find out more about Canada’s employment laws, visit activpayroll’s Canada Insight Page, for advice and information.