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Discussion paper: Fall 2021 Labour Program external consultations - Regulatory initiatives under the Canada Labour Code

List of acronyms and abbreviations
AMPs
Administrative Monetary Penalties
BIA
Budget Implementation Act
CLSR
Canada Labour Standards Regulations
Code
Canada Labour Code
CIRB
Canada Industrial Relations Board
ESDC
Employment and Social Development Canada
LTD
Long-term disability

Introduction

This online consultation is to ensure that employer and employee perspectives inform the development of various regulations under Part III of the Canada Labour Code (the Code).

The Code is an Act of Parliament which covers industrial relations (Part I), occupational health and safety (Part II), and labour standards (Part III) for federally regulated employers and their workers. A new administrative monetary penalties (AMPs) system (Part IV) came into force on January 1, 2021. The Labour Program also provides services and information, such as guides to assist employers and employees in understanding their rights and obligations under the Code. Annex A lists federally regulated industries and workplaces.

Part III of the Code sets out standards regarding employment conditions including hours of work, payment of wages, leaves, vacation, holidays and rights on termination of employment. Recent changes to the Code include:

  • new rules on breaks and rest periods
  • changes to rules on annual vacations, general holidays and existing leaves, and
  • new leaves of absence such as personal leave and leave for traditional Indigenous practices

There are roughly 955,000 employeesFootnote 1 subject to Part III of the Code who are employed by approximately 18,500 federally regulated private sector employers and Crown corporations.

This online consultation will inform regulatory development on the following initiatives:

  • equal treatment and temporary help agencies
  • service of documents and regular rate of wages

This paper also includes a short note describing proposed changes to regulations that will affect rules concerning Long Term Disability Plans. These regulations will primarily affect Crown Corporations, however input from non-Crown employers is welcome.

This paper also addresses consequential changes needed to align the Administrative Monetary Penalties (Canada Labour Code) Regulations (AMPs Regulations) with Code and regulatory changes. The AMPs Regulations designate and classify violations of rules under the Code, making violators potentially subject to AMPs in cases of non-compliance. Only designated violations can be subject to an AMP. When changes are made to Parts II or III of the Code and their associated regulations, the AMPs Regulations may also be amended to reflect any updates to obligations.

Respondents should feel free to provide comments on some or all of the questions, or on other related issues that they consider relevant. Responses should be provided to the following email address no later than February 21, 2022: EDSC.DMT.ConsultationNTModernes-ConsultationModernLS.WD.ESDC@labour-travail.gc.ca

Feedback to this discussion paper must be accompanied by a signed Privacy Notice Statement (Annex C). This feedback will be analyzed prior to when proposed regulations are pre-published in Canada Gazette, Part I as per the Labour Program Forward Regulatory Plan. Additional feedback may also be provided at that time.

Equal treatment and temporary help agencies

The 2006 report Fairness at Work: Federal Labour Standards for the 21st CenturyFootnote 2 reviewed Part III of the Code. The report indicated that there may sometimes be differences in pay between full time employees and workers with less secure employment, such as part time or temporary employees.

The BIA 2018 amended the Code to include rules that are not yet in force, requiring employers to provide equal pay to employees performing similar work regardless of their employment status (i.e. part-time, casual, etc.). These new rules will also allow employees to have their pay reviewed if they believe that they are being paid less than someone with a different employment status.

The equal treatment rules will apply when two workers perform similar work. There are four criteria that will be used to determine whether the work performed by employees is similar. Both employees must:

  • work in the same industrial establishment, defined as any workplace or subdivision of a workplace
  • perform the same kind of work
  • require the same or similar skill, effort and responsibility, and
  • work under similar conditions

The changes will prevent employers from punishing a worker for requesting a review of their own pay. They also prevent employers from lowering the pay of other workers to follow the rules.

There are exceptions to the new equal treatment rules. Once in force, an employer may pay two employees with different employment statuses at a different rate because of differences in seniority, merit, or the quantity or quality of an employee’s work.

Temporary help agencies

The BIA 2018 also introduced new rules about temporary help agencies in the federally regulated private sector. Once in force, temporary help agencies will not be permitted to charge fees to an employee for hiring, assigning work, job preparation services such as interview preparation, establishing an employment relationship between an employee and client, and will not be permitted to interfere with an employee establishing an employment relationship with a client.

The equal treatment rules outlined above will apply to temporary help agency employees too. An employee should not be paid less than an employee of the workplace where they are placed if they perform similar work. Similar exceptions will also apply, such as differences in seniority or merit.

Equal treatment regulations for discussion

Regulations may be made that:

  • define terms
  • add to the situations in which the new rules apply
  • add to the factors justifying exceptions from the application of the new rules, and
  • exempt classes (groups) of employees from the rules, or modify the rules as they apply to certain classes of employees

Define any terms used in the section

The Labour Program is proposing for the purpose of the equal treatment and temporary help rules only, to define the terms “seniority” and “employment status” in regulations.

It is proposed that the definition of “seniority” be based on the time served since the date of employment and not the number of hours worked. This definition would:

  • ensure parity between temporary and permanent employees, and between part-time and full-time employees
  • allow for breaks in service of up two months without impacting an employee’s seniority, and
  • provide that breaks in employment related to what would be maternity, parental, or other forms of protected leave shall not impact an employee’s seniority

It is proposed that the definition of “employment status” include the following elements:

  • active employment
  • employment tenure (for example, casual or permanent)
  • average hours per week (part time vs. full time)

More terms could be defined in the regulations if they are unclear, or if the common definition would harm the intention of the legislation

Situations in which the new rules apply

Regulations may be introduced if the current criteria established in the legislation is insufficient to identify when two employees are performing similar work that must be compensated equally. The criteria established in the Code covers work performed in the same industrial establishment, perform the same kind of work, same skill, effort, and responsibility, and work under similar conditions.

Factors justifying exceptions from the application of the new rules

Similarly, if the exceptions (merit, seniority, quality of work) established in the legislation do not cover all factors that may cause a legitimate and desired difference in pay between workers performing similar work, then regulations may be proposed.

The Labour Program is proposing a location-based exception: employers should be able to offer different wages to employees located in different geographical locations. This would allow for justifiable differences in pay due to differences in cost of living or labour shortages.

Exemptions or modifications for certain classes of employees

Finally, regulations may be made to exempt classes of employees from the requirement to pay workers equally for similar work regardless of their employment status. Regulations may also be made to modify this requirement for certain classes of employees.

Temporary help agency regulations for discussion

The regulatory authorities in the new Temporary Help Agency rules are similar to those included in the Equal Treatment rules. The regulations may:

  • define terms
  • add to the situations in which the new rules apply
  • add to the factors justifying exceptions from the application of the new rules, and
  • exempt classes (groups) of employees from the rules, or modify the rules as they apply to certain classes of employees

The Labour Program is proposing in regulations the same location-based exception for temporary help agency employees as the exception provided under the employment status section above, and to define the same terms as those defined for equal treatment (seniority and employment status). This would allow temporary help agencies to pay employees at different rates of pay if they work in a different physical location compared to similar employees at the client (host) company.

Administrative Monetary Penalties (AMPs)

Rules related to worker pay will be classified as type B violations for the purposes of AMPs. Rules related to charging fees to temporary help agency employees, and those related to the process by which workers may have their pay reviewed on request, will be classified as type A violations. For further details, please see Annex B.

Questions for discussion

  1. Should any terms used in the legislation be further defined in the proposed regulations? Definitions may be proposed if the terms are unclear or the common definition of a term would harm the intent of the legislation.
  2. Should the criteria used to determine when two workers are performing similar work be expanded? For reference, the criteria are that the employees work in the same industrial establishment, perform the same kind of work, require the same or similar skill, effort, and responsibility, and work under similar conditions.
  3. Should factors in addition to seniority, merit, quality/quantity of work be added to the regulations to justify exceptions from the application of the new rules?
  4. Should any classes of employees be exempted from the new requirements, or should the requirements be modified for any classes of employees? What is the rationale for any requested exemptions or modifications?
  5. Are there any other considerations you would like to highlight that are not addressed?
  6. Are there any other issues you would like to highlight that were not raised in this document?
  7. Do you have any comments on the designation of the new rules and any potential regulations as violations in the AMPs Regulations, or their proposed classifications (see Annex B for specific classifications)?

Service of documents and regular rate of wages

Current rules relating to the service of documentsFootnote 3 under Part III of the Code allow the Labour Program to only serve documents in person or by registered mail. The rules do not allow for service by electronic means and they also do not set out how documents should be served if the Labour Program cannot reach an individual or other person.

The Labour Program proposes to introduce new modes for the service of documents under Part III of the Code. The new modes would be similar to those included in the new Part IV of the Code (Administrative Monetary Penalties) which came into force on January 1, 2021. It is proposed that these new modes of service include

  • electronic delivery
  • leaving documents at the last known address or usual place of residence of the person being served
  • substitutional service
  • new forms of proof of service, and
  • rules clarifying when and how service is deemed to have been carried out

Proposed rules would also clarify how employees who are paid on a basis other than a regular hourly rate (e.g. piece rates, haulage, commission) are to be paid for appearing before the Canada Industrial Relations Board (CIRB) for appeals under Part II and Part III of the Code. Additional rules would clarify when these employees would receive at least a minimum wage, when types of pay or work would be excluded from the calculation of a rate of pay, and the role that collective agreements play in these rules.

As part of this package, two changes to the AMPs Schedules are proposed that will align the classification of Part II rules related to pay with the classification of similar rules under Part III. These Part II rules would be classified as B type violations rather than their current C type (see Annex B for a list).

Service of Documents Regulations for discussion

Manner of service

Proposed rules would clarify that the Labour Program may serve documents to individuals by:

  1. leaving a copy of the document with the individual at any place or with someone who appears to be an adult member of the same household at the individual’s last known address or usual place of residence
  2. sending a copy of the document by registered mail or courier to the individual’s last known address, usual place of residence, place of business or workplace, or
  3. sending a copy of the document by fax or other electronic means to the individual

In addition, proposed rules would clarify that the Labour Program may serve documents to any other personFootnote 4 by:

  1. leaving a copy of the document with the person’s authorized representative or with an officer or other individual who appears to direct or control the head office or place of business of the person or the authorized representative
  2. sending a copy of the document by registered mail or courier to the person’s authorized representative or to the head office or place of business of the person or the authorized representative, or
  3. sending a copy of the document by fax or other electronic means to an individual referred to in a)

Substitutional service

Proposed rules would also clarify the way in which the Labour Program may serve documents if the modes laid out above have been tried and the individual or person still cannot be reached. Substitutional service would allow the Labour Program to effect service by leaving a copy of document at the person’s last known address or place of business or, in the case of an individual, at their usual place of residence or workplace.

Proof of service

For substitutional service and, indeed, any other manner of service, new proof of service rules are also proposed. These rules would establish that service may be proved by:

  1. an acknowledgement of service signed by or on behalf of the person served, specifying the date and location of service
  2. a certificate of service signed by the person who effected the service, stating that service was made on the person named in the certificate and indicating how and when service was completed, or
  3. a record of electronic transmission setting out the date and time of transmission

Date of service

Proposed rules would also clarify when service will be understood to have been completed or effected in the case of either registered mail, courier or electronic service.

  • In cases where service was effected by registered mail or courier, and in the absence of an acknowledgement or certificate of service, service would be deemed to have been effected on the seventh week day (as opposed to business day) after the day on which notice was sent (as indicated on the receipt from the post office or courier)
  • In cases of service by fax or other electronic means, service will be deemed to have been effected on the day of the week on which it was sent (as indicated on the record of electronic transmission – for example, the date and time on an email)

Regular Rate of Wages Regulations for discussion

Proposed regulations would clarify how employees who are paid on a basis other than an hourly rate (for example, piece rates, haulage, commission) would be paid for appearing before the CIRB for appeals relating to both Part II and Part III of the Code.

Proposed regulations would clarify that an employee would be paid for appearing before the CIRB at a rate of wages calculated by dividing the wages the employee earned in the preceding 4-week period divided by the amount of hours they worked, excluding overtime. Their pay would be determined based on the time spent before the CIRB multiplied by this rate of wages.

Alternative 4-week periodFootnote 5

If an employee did not work any hours during the 4-week period preceding a CIRB appearance, but did work at least one hour during the 4-week period prior to that one, their rate of wages would be determined based on that previous 4-week period, that is, starting 8 weeks prior and lasting 4 weeks.

Employee paid on commission

If an employee is paid on the basis of commission, it is proposed that a different formula apply. If an employee has completed at least 3 months of continuous employment with their employer, their rate of wages would be calculated by dividing the amount of wages earned in the 12-week period preceding the week of their appearance before the CIRB divided by the number of hours worked, excluding overtime.

Collective agreement

New rules are proposed to clarify that where a collective agreement sets out a regular rate of wages or method for calculating it, the rate or method in the collective agreement would apply.

Minimum wage

In some cases, instead of calculating an employee’s regular rate of wages, the federal minimum wage would apply as their rate of wages.

First, if the employee’s rate of wages could not be calculated because the employer is not required to keep records of hours workedFootnote 6 and the employer cannot otherwise determine the number of hours worked, the minimum wage would apply. Second, if a calculated rate of wages is less than the minimum wage, the minimum wage would prevail as the rate of compensation for the employee.

Exclusions

Some elements of an employee’s pay would not be included in calculations to determine the regular rate of wages set out above. These would include pay for vacation, general holiday, personal leave, leave for victims of family violence, bereavement leave, and overtime.

Questions for discussion

  1. Do you agree with the proposed rules for service of documents? Are these rules reasonable and appropriate? Why or why not?
  2. Should the proposed rules for the service of documents be changed in any way?
  3. Do you agree with the proposed rules concerning regular rate of wages for employees who appear before CIRB for appeals under Part II and Part III of the Code? Why or why not?
  4. Do you agree with the re-classification of the Part II AMPs rules related to pay to make sure they align with similar classification of the Part III rules related to pay?

Long term disability plans

Under Part III of the Code, employers who offer a long-term disability (LTD) plan must independently insure that plan in order to guarantee their workers would continue to receive their LTD benefits if the employer becomes insolvent and is unable to continue to pay these benefit.

The Labour Program is exploring the possibility of proposing regulations that would in limited circumstances specify situations and conditions in which an LTD plan may be offered without being independently insured.

While proposed regulations are anticipated to be targeted to Crown corporations, who are at very low risk of insolvency, input on the following questions is welcome from all stakeholders offering LTD plans to their employees:

  1. Do you wish to request that your corporation be excluded from the requirement to independently insure LTD plans?
  2. If so, is your corporation at no or negligible risk of insolvency? If so, please provide reasons and evidence to support that assessment.
  3. Are there any other circumstances or conditions under which a private employer could be excluded from the requirement to independently insure LTD plans?

The Labour Program is also interested in obtaining any information you might have on the following issues relevant to the cost-benefit analysis related to any new LTD regulations:

  1. What are the costs of independently insuring your LTD plans (per employee and as a total amount, over the period of one year)?
  2. Are there any benefits to employees or employers associated with independent insurance other than protecting employees’ benefits in case of insolvency?
  3. Are there other mechanisms for securing an LTD plan from insolvency? Could a plan be protected without independent insurance even if the issuing company were to become insolvent?

Concluding remarks

Thank you in advance for your participation in this consultation. The Labour Program looks forward to hearing your views.

Please provide any written feedback accompanied with a signed copy of the privacy notice statement provided on the final page of this document by February 21, 2022. Please note that mailed feedback must be post marked at least five days prior to February 21, 2022.

By e-mail to:

EDSC.DMT.ConsultationNTModernes-ConsultationModernLS.WD.ESDC@labour-travail.gc.ca

By mail to:

Labour Standards – Wage Earner Protection Program
165 rue Hôtel-de-ville, Phase II du Portage, 10th Floor
Gatineau, Quebec, K1A 0J2

Annex A – List of federally regulated industries and workplaces

The Canada Labour Code (the Code) regulates the following industries and workplaces:

  • Federally regulated private sectors (parts I, II, III and IV of the Code):
    • air transportation, including airlines, airports, aerodromes and aircraft operations
    • banks, including authorized foreign banks
    • grain elevators, feed and seed mills, feed warehouses and grain-seed cleaning plants
    • first Nations band councils (including certain community services on reserve)
    • most federal Crown corporations, for example, Canada Post Corporation
    • port services, marine shipping, ferries, tunnels, canals, bridges and pipelines (oil and gas) that cross international or provincial borders
    • radio and television broadcasting
    • railways that cross provincial or international borders and some short-line railways
    • road transportation services, including trucks and buses, that cross provincial or international borders
    • telecommunications, such as, telephone, Internet, telegraph and cable systems
    • uranium mining and processing and atomic energy
    • any business that is vital, essential or integral to the operation of one of the above activities
  • Federally regulated public sector (parts II and IV of the Code only):
    • the federal public service
    • Parliament (such as, the Senate, the House of Commons and the Library of Parliament)
  • Private-sector firms and municipalities in Yukon, the Northwest Territories and Nunavut (part I of the Code only)

Annex B – Classification definitions

The baseline penalty amount applicable to a violation varies depends on the classification of the violation. Each designated violation is classified as either Type A, B, C, D or E, in order of increasing severity, according to the level of risk and/or the impact and significance of the violation, as outlined here:

Annex B – Classification definitions
Type Part II Part III
A Related to administrative rules. Related to administrative rules.
B Related to low-risk hazards that may result in a minor injury or illness that requires medical treatment but that does not result in disabling injuries. Related to the calculation and payment of wages.
C Related to medium-risk hazards that may result in a serious injury or illness that prevents an employee from effectively performing their regular work duties. Related to leave or other requirements, which could have an impact on financial security, or health and safety, of an individual or group of individuals.
D Related to high-risk hazards that may result in serious injury or fatality. Related to the employment and protection of employees who are minors.
E Involves immediate life-threatening hazards or hazards known to cause latent occupational disease. These hazards give the employee little to no opportunity to avoid or minimize severe injury or death or occupational disease. N/A

The AMPs Regulations will need to be updated to include the new Code rules and their classifications as seen in Table 1a, 1b, and 1c, below.

Table 1a: Equal treatment
Item Rule Category
1 182.1 (1) B
2 182.1 (3) B
3 182.2 (1) A
4 182.2 (2) B
5 182.2 (3) C
6 182.3 C
Table 1b: Temporary help agencies
Item Rule Category
1 203.1(1)(a) B
2 203.1(1)(b) B
3 203.1(1)(c) B
4 203.1(1)(d) B
5 203.1(1)(e) B
6 203.1(1)(f) C
7 203.1 (2) B
8 203.2 (1) B
9 203.2 (3) B
10 203.3 (1) A
11 203.3.(2) B
12 203.3 (3) C
Table 1c: Regular rate of wages
Item Rule Current Category Proposed Category
1 135.1(11) C B
2 136(9) C B

Annex C – Privacy Notice Statement – Submissions

The submission you provide as part of this consultation is collected under the authority of the Department of Employment and Social Development Act. It may be used and disclosed by Employment and Social Development Canada (ESDC), including the Labour Program, for policy analysis, research and evaluation purposes. However, these additional uses and/or disclosures of your personal information will never result in an administrative decision being made about you.

Participation in this stakeholder engagement process is voluntary, and acceptance or refusal to participate will in no way affect any relationship with ESDC or the Government of Canada.

Your submission may be published – in whole or in part – on www.canada.ca, included in publicly available reports on the consultation, and/or compiled with other responses in an open-data submission on open.canada.ca. It may be shared throughout the Government of Canada, other levels of government, and non-governmental third parties. Your personal information is administered in accordance with the Privacy Act, the Department of Employment and Social Development Act, and other applicable laws. You have the right to the protection of, access to, and correction of your personal information, which is described in the Personal Information Bank ‘Outreach Activities’ [PSU 938]. Instructions for obtaining this information are outlined in the government publication entitled Information about programs and information holdings. Information about programs and information holdings may also be accessed on-line at any Service Canada Centre. You have the right to file a complaint with the Privacy Commissioner of Canada regarding the institution’s handling of your personal information at: https://www.priv.gc.ca/faqs/index_e.asp#q005.

If your submission includes unsolicited personal information for the purpose of attribution (for example, name, position), ESDC may choose to include this information in publicly available reports on the consultation and elsewhere.

I understand that by providing a submission to ESDC as part of this consultation process, I am consenting to its publication and dissemination.

 
 
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