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Changes to Employment Standards Act Imminent
Citing the need to "cut through years of accumulated red tape", encourage parties' self-reliance and make the legislation more relevant to today's workplace, the Ontario government has recently introduced a series of wide-ranging amendments to the Employment Standards Act. Bill 49, the Employment Standards Improvement Act, 1996, which has received second reading, is the first part of a planned two-phased overhaul of the ESA. Negotiation of Employment Standards Allowed Generally, the ESA has served to set a series of minimum entitlements for employees. Except in very limited circumstances, parties are not permitted to contract out of any of these standards if the effect is to drop the entitlement to a right or benefit below that available under the Act. Under the Bill, however, unions and employers will be able to negotiate their own standards for hours of work, severance pay, overtime pay, public holidays and vacation pay. These standards will prevail over those set out in the Act, but only if the negotiated standards, viewed as a package, confer greater rights or benefits than those provided in the Act. 4(3) (Note: all section numbers refer to the Act.) Avenues of Complaint Narrowed The Bill contains several measures that appear aimed at reducing the burden on the Ministry of Labour of administering the Act. Under the current legislation, the Director of Employment Standards has a general discretion, rarely invoked, to refuse to institute proceedings where a remedy is available under the collective agreement. Under the Bill, employees covered by a collective agreement will no longer have the right to file a complaint under the Act, unless allowed to do so by the Director. They will have to pursue their claims at arbitration. 64.5(2) For this purpose, the Bill specifies that the Act is enforceable against the employer as if it were part of the collective agreement. 64.5(1) Employees are bound by the decision of the union whether or not to seek the enforcement of the Act, but this would not prevent them from filing a fair representation complaint with the Ontario Labour Relations Board challenging the union's decision. 64.5(4),(5) The avenues for pursuing claims are narrowed for non-union employees as well. They will have to decide at the outset whether to proceed under the Act or use the courts. 64.3, 64.4 Employees who file complaints under the Act will have two weeks to consider their options before losing their right to pursue a court claim. 64.3(4) ESA Claims Capped Possibly the most attractive reason for a terminated employee to opt for a court action is the fact that, in many instances, a wrongful dismissal claim can yield greater rewards. This incentive to go to court will now be strengthened by the fact that the Bill places a $10,000 maximum on awards made to employees under the Act. 65(1.3) This limit will not apply in certain specified situations, such as where the employer violates the pregnancy and parental leave provisions of the Act or the provisions concerning Sunday work by retail workers. 65(1.4) As well, arbitrators hearing employment standards complaints by unionized workers will not be bound by the $10,000 limit. 64.5(7) The Bill gives the Minister of Labour the option of setting a minimum amount for claims. The Ministry has stated that, if such a limit is set, its staff will endeavour to help claimants below the minimum reach a settlement without an investigation. The minimum, if set, will not apply in cases where more than one employee makes a claim for the same violation, and the claims total more than the minimum amount. 65(1.5), (1.6) Private Collection Agencies Involved The Ministry of Labour will contract out the collection of money owed by employers to private collection agencies. Collectors will be granted certain powers under the Act. For example, private sector collectors may be empowered to issue a certificate of an order made to pay money owing to employees, and to file the certificate in court. 73.0.2(1)1, 73.0.2(6) Collectors may be authorized to charge the person owing money a "reasonable fee or reasonable disbursements or both", and the Director of Employment Standards may determine what constitutes a reasonable fee or disbursement. 73.0.2(2) With the consent of the person to whom money is owed, collectors will be able to negotiate a settlement or compromise with the employer owing money. 73.0.3(1) However, if the settlement is less than 75 per cent of the amount to which the person owed is entitled, the Director will have to provide written approval. 73.0.3(2) The Ministry of Labour has stated that handing this work over to the private sector will allow it to make better use of its own resources, as collection is said to be time consuming and to require specialized expertise. The Ministry claims that collection will also improve and that this will help deter non-compliance with the Act. It adds that it will select collection agents through competitive bidding and monitor their performance once selected. Pregnancy and Parental Leave Clarified The ESA currently provides that seniority continues to accrue during pregnancy or parental leave. This has created some uncertainty in the determination of rights under an employment contract. The Bill clarifies that time spent on pregnancy or parental leave is to be included not only for the purposes of calculating seniority, but for length of employment and length of service as well. 42(4) Similarly, the current Act states that every employer must give employees at least two weeks paid vacation upon the completion of twelve months of employment. This will be changed to clarify that the employment need not be active employment. 28(1) In other words, under the Bill, time spent on pregnancy or parental leave will be counted towards an employee's paid vacation entitlement. The paid vacation provision will be further amended to specify that vacation pay must not be less than 4 per cent of the wages, excluding vacation pay, earned by the employee during the twelve months for which the vacation is given. 28(3) Limitation Periods Changed Employees have two years to file a claim under the current Act. Under the Bill, with certain exceptions, employees will have six months from the date money owing to them came due to file a complaint with the Ministry. 82.3(1), 82.4(1)1 After six months, however, claims can still be heard at arbitration or in court. 82.1(4) Where there is more than one violation of the same provision of the Act or a contract of employment, and some money came due less than six months before the complaint is filed, the employee can claim money owed up to a year before the date of the complaint. 82.3(4) Employers and employees will now have up to 45 days to apply for review of an order or refusal to issue an order. The ESA currently requires that the application be made within 15 days. 67, 68 In Our View Much of Bill 49 appears to be a response to budgetary restrictions placed on the Ministry of Labour. Not only private collection agencies, but arbitrators and courts will take up a good deal of the work previously performed by Ministry personnel. The burden on employers will be eased as well, given the Bill's reduced scope for duplicate proceedings. Employers with unionized workforces may soon have the option of negotiating their own standards on a variety of issues, provided the negotiated package, considered as a whole, provides greater rights and benefits than the statutory minimum. This initiative is intended to grant flexibility to parties in unionized workplaces to structure their relations in a manner more responsive to the changing nature of work. However, because a negotiated package will consist of different types of standards, it is not clear how the issue of whether it exceeds the statutory minimum will be determined. Presumably, this task will fall to arbitrators and, possibly, the Ontario Labour Relations Board in the event of a duty to bargain complaint. Public hearings on the Bill are being held between August and mid-September. Third reading is expected soon after. We will keep readers informed of developments. (For a description of more recent developments, see the following articles: "Controversial provision withdrawn from ESA amendments" and "Emond Harnden's view on the proposed ESA amendments" on our What's New page, and "ESA amendments receive royal assent" and "Red Tape Commission urges key amendments to Ontario employment statutes"on our Publications page). For more information on this subject, please contact Lynn Harnden (613) 563-7660, Extension 226.
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