The Ministry of Labour (MOL) conducts inspections to ensure
compliance with the Employment Standards Act,
2000 (ESA). The MOL targets employers in (as they put
it) "sectors where there is a history of employment
standards violations and where vulnerable workers are
employed." Thankfully, at least the MOL announces the
targeted sector so that employers can prepare. This time, the
target is the retail industry.
The "blitz" (as the MOL terms it) will take place
from October – December 2013 and will deal with such
issues as record keeping, deductions from pay, hours of work,
eating periods, overtime pay, minimum wage, public holidays and
vacation pay. As someone who advises many retailers, and to
assist retailers in passing any inspection (in the unfortunate
event the MOL comes knocking), here are five employment standards
violations I see with retailers:
Not all "managers" are overtime
exempt. As I noted in a
previous post, only true managers are excluded from overtime
pay. In other words, the employee must have actual authority
over workers (e.g., direct, supervise, hire, fire, performance
manage, schedule, etc.) or, alternatively, participate in
substantial policy making or budgetary decisions. In
addition, the employee must only perform
non-managerial/non-supervisory tasks on an irregular or exceptional
basis. Employees who are paid a salary or who merely have the
title of manager/assistant manager will not be excluded on that
basis alone. Non-compliance with overtime pay can lead to
Careful in calculating holiday pay. The
ESA rules around holiday pay are technical (and confusing). As
such, some retailers do not properly calculate statutory holiday
pay for employees. For example, if an employee agrees to works on a
holiday (instead of receiving a substitute day off with pay), the
employee is entitled to "public holiday pay" +
"premium pay" for the hours worked on the holiday.
Sometimes I see retailers pay the "premium pay"
(time-and-a-half) but forget to pay the "public holiday
pay" (which is based on a a formula of the last 4 weeks'
wages divided by 20). This could equal 2.5 x the
employees' pay if the formula comes out to a day's
pay. The MOL has a useful public holiday pay calculator.
Time off in lieu of overtime pay. Some
retailers allow employees to take paid time off work in lieu of
overtime pay. This is permissible under the ESA. However, just
as overtime pay must be compensated at "time-and-a-half",
time off in lieu of overtime must be as well. In other words, for
each hour of overtime worked, the employee is entitled to 1.5 hours
off work with pay. As an example, if an employee works 2 hours of
overtime in a week, that employee should receive 3 hours off (2 x
1.5) with regular pay (not 2 hours off).
"Use it or lose it". A common policy
in many workplaces forces employees to take vacation or else the
vacation entitlement disappears at the end of the year. This is
especially common when a retailer adopts a U.S. vacation policy.
While providing an incentive to take vacation is laudable, such
policies can be contrary to the ESA. The ESA provides that
employees must receive 2 weeks' vacation and take such vacation
within 10 months of earning it. In addition, employees must receive
at least 4% of wages as vacation pay each year. Depriving
employees of these entitlements on the basis of a "use it or
lose it" policy is not only offside, but potentially
Service accrual during maternity leave.
Many retailers understand the general rule that an employee on
maternity leave has job protection in the sense that, upon
returning to work, she is either entitled to her job back or a
comparable position if her job no longer exists. However,
sometimes retailers do not properly recognize the
employee's service during the leave. Under the ESA, an
employee on leave is generally entitled to have his or her service
recognized for rights/benefits under an employment
contract. An example would include an employee who, under an
employer policy, requires 2 years of service to receive 3
weeks' vacation. If an employee spends 1 year on maternity
leave and 1 year actually working, the employee should
generally receive the 3 weeks' vacation.
The ESA is very technical legislation. It is designed for the
protection of employees and is interpreted against the employer.
MOL Inspectors have a wide array of powers in the event of a
violation, including issuing orders to pay wages to affected
employees. There is also potential prosecution. They have not been
shy to use these powers and the MOL has even hired more inspectors
recently. As such, now is as great a time as ever to review
your employment standards compliance.
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