Canada: Proposed Amendments To The Canada Labour Code

Bill C-45, bearing the short title "Jobs and Growth Act, 2012" (the Act), passed its second reading on October 30, 2012, and was referred to the Standing Senate Committee on National Finance.

We are continuing to monitor the progress of this important bill.  In the interim, this update highlights potentially significant changes in the content and administration of the Canada Labour Code (CLC).  

Division 10 of Part 4 of the Act would amend the CLC in the following ways. It would:

  • Create a date by which an employer would be required to pay vacation pay;
  • Alter the method by which holiday pay is calculated;
  • Create a date by which complaints relating to Part III of the CLC (Standard Hours, Wages, and Vacations and Holidays) would have to be made;
  • Set out the circumstances under which an investigator could suspend or reject complaints made under Part III of the CLC;
  • Limit the recovery of wages or monies owing to a 12-month period and the recovery of vacation pay owing to a 24-month period;
  • Create a system of review for payment orders and notices of unfounded complaints, and;
  • Amend various provisions of the CLC to ensure gender-neutral phraseology.

Timeline to pay vacation pay

Currently, the CLC contains no timeline within which an employer is required to pay unpaid vacation pay to an employee after his or her termination.  The proposed amendments to the CLC would require unpaid vacation pay to be provided to the employee within 30 days from the date he or she is no longer employed.

Calculating holiday pay

The CLC would be amended to include a definition and method of calculating "holiday pay."  The amendment would also introduce the term "holiday with pay," which is a holiday on which holiday pay would be payable.

Holiday pay would entitle most employees to a payment of at least one-twentieth of wages earned in the four weeks prior to the week in which the general holiday falls, excluding overtime.  Where an employee's earnings are, at least in part, commission-based, the employee would be entitled to one-sixtieth of wages, excluding overtime pay, in the 12 weeks prior to the week in which the general holiday falls, provided that he or she had completed 12 weeks of continuous employment.  

An employee would not be entitled to receive holiday pay in the first 30 days of his or her employment.

Timelines to make complaints under Part III of the CLC (Standard Hours, Wages, and Vacations and Holidays)

Employees would be required to file complaints pursuant to Part III of the CLC within six months of the date the complaint arose.  In the case of non-payment of wages or other entitlements, the six-month period would begin on the last day the employer was required to pay those amounts.  The amendments contemplate some discretion to extend the time limits where a complaint was initially made to the wrong forum or where prescribed by regulations to the CLC.

It is notable that introducing a limitation period for filing complaints may discourage the type of class action litigation that has been gaining prominence in the federal jurisdiction.

Ability to suspend or reject Part III complaints

As a result of the proposed amendments, inspectors with carriage of Part III complaints would be able to hold complaints in abeyance if it was his or her view that the employee should be required to take other measures to have his or her complaint dealt with.  Where the inspector suspends a complaint, he or she must notify the employee in writing, specifying the measures that the employee must take and setting a deadline for taking those steps.  

The proposed amendments would also provide an inspector with the authority to assist in settling a complaint.

In addition, the amendments would grant inspectors the power to reject complaints on the basis of reasons enumerated in the Act.  Enumerated reasons for rejecting a complaint include the complaint is outside the inspector's jurisdiction, it is frivolous, vexatious or in bad faith, or there are alternate means available to resolve the dispute.  

Employees would be entitled to request reasons for an inspector's decision, and a review by the minister of the inspector's decision would be available.

Limit on payment orders

The amendments would limit payment orders in respect of wages or other monies owed to the 12-month period beginning on the day a complaint was made, an employee was terminated, or an inspection occurred that prompted an investigation by an inspector.  

Where the complaint is in respect of vacation pay, the order to pay would be limited to the 24-month period immediately prior to the complaint, the termination or the investigation.

Review mechanism

The proposed amendments create a system for the review of a payment order or a notice of unfounded complaint.  Reviews would be made by application within 15 days.  Upon review, the minister could confirm, rescind or vary the decision subject only to a right of appeal on a question of law or jurisdiction.  

Reviews would be heard by a referee appointed by the minister and, in order to participate in the review process, employers and/or directors would be required to pay the amount indicated in the payment order.

If passed, these amendments would come into force on a date to be fixed by order of the Governor in Council.

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