Canada: Recordkeeping For Employers That Use Placement Agency Personnel Will Be More Burdensome

Introduction

Better protection of placement agency personnel is the ostensible objective of the amendments to the Regulation respecting a registration system or the keeping of a register that were published in draft form in the Quebec Official Gazette in September 2015, but this is to be achieved by increasing the recordkeeping burden for employers that use agency personnel.

A few groups, such as the Conseil du patronat du Québec (Quebec's employers association), submitted comments on the draft regulation, but the proposed amendments appear not to have attracted much attention. We can expect the amended regulation to come into force on March 2, 2016.

Unfortunately, in addition to adding to employers' recordkeeping burden, the draft regulation raises a number of issues: What information will employers that use the services of employees from a third person to fill their needs have to keep? How will the recording of such information help to improve the protection of placement agency personnel?

Content of the draft regulation

The draft regulation introduces a new section into the current version of the Regulation respecting a registration system or the keeping of a register. The new section reads as follows:

"1.2. An employer using the services of employees from a third person to fill the employer's needs for personnel, in particular the services of a placement agency, must also enter in the registration system or register for each employee, the employee's full name, address, social insurance number, employment and the date the employee starts to work as well as the following particulars, as the case may be, for each pay period:

  1. the number of hours of work per day;
  2. the total number of hours of work per week;
  3. the number of overtime hours paid or compensated for by a day off with the applicable premium;
  4. the number of days of work per week;
  5. the amount paid to the third person.

The employer must also enter the name, name of the representative, address, email address, telephone number and fax number of the third person."

(our emphasis)

Thus, not only will employers have to keep records containing most of the information listed in s 1.2 for their own employees, but they will also have to keep the same information for employees of third persons, including payments made to such third persons.

In a document published on August 31, 2015,1 the research unit of the Commission des normes du travail (CNT) (Quebec's labour standards board) indicated that the purpose of the proposed amendments is to protect workers against fly-by-night placement agencies that leave unpaid employees in their wake.

According to the CNT, these amendments will encourage employers that use placement agencies to assume their responsibilities by being more careful to avoid contracting with agencies that are of doubtful solvency or that operate illegally.

Although the regulation gives the example of placement agencies, it does not define the term "third person". Could it apply to the employees of a subcontractor? In our opinion, if the employees of a subcontractor "fill the employer's needs for personnel," such an argument could be made, given the broad and generous interpretation of "third person" that the courts are likely to apply in such circumstances.

Impact of the draft regulation

An employer who uses the employees of a third person incurs solidary liability

Why would the requirement for employers to keep a detailed record of employees of third persons, including placement agencies, be sufficient to cause employers to choose third persons that are "solvent" and respect their employees' rights?

In our opinion, the answer may be found in the employer's obligation under s 95 of the Act respecting labour standards (LSA), which provides that the employer is responsible jointly and severally with the contractor or subcontractor for the pecuniary obligations of the contractor or subcontractor to its employees.

Why would companies be more likely to assume their responsibilities in choosing a placement agency if not because they would be liable? The answer is self-evident.

In this context, it is worth noting that the Commission des lesions professionnelles (CLP) has not hesitated to conclude that the term "contractor" in s 316 of the Act respecting industrial accidents and occupational diseases (LATMP) also applies to placement agencies.2 Like s 95 LSA, s 316 LATMP provides that the Commission de la santé et de la sécurité du travail (CSST) can require an employer to pay the contributions owed by a contractor with whom it is doing business.

For example, in the leading 2008 case Industries Pro-Pals,3 the CLP said that s 316 must be interpreted broadly and generously: "(...) in order to permit its purpose to be achieved, namely, "inducing" the employer, the prime contractor, to ensure that its subcontractors pay their CSST assessments."

Although some distinctions can be made between the LSA and the LATMP,4 the legal syllogism applied by the CLP in its decisions could actually influence adjudicators who must consider the scope of the term contractor or subcontractor as used in s 95 LSA.

In other words, it is very likely that the CNT will claim that sums recorded in the registration system of a company that has used a fly-by-night agency should be paid by the company.

The extent of the information recorded about the value of the contract

While it is clear that the purpose of the proposed amendments will require employers to record the names of those hired from placement agencies, their hours, contact information, etc., one is entitled to wonder why it is necessary to record amounts paid to the third person.

This information is, to say the least, rather sensitive business information that many companies will be reluctant to record and there is not necessarily a direct correlation between the value of the contract with the placement agency and the hourly rate paid to the employees the government is trying to protect.

Moreover, in theory, the hourly rate agreed between the employee and the placement agency is information that the CNT can easily obtain from the employee. So why does the amount paid to the third party have to be recorded without any clarification?

We hope that the draft regulation will be amended to reflect this concern.

Conclusions and recommendations

In our opinion, the proposed amendments draw attention to the need for employers to ensure that the third persons with whom they contract are responsible corporate entities that respect their obligations under the LSA and the LATMP. Failure to verify this could be costly, as a company paying a third person may also have to pay arrears owing to the third person's employees or to the CSST.

We strongly recommend that you take steps immediately to protect yourself from the consequences of doing business with an unscrupulous agency. For example, you can ask the CSST for a letter attesting that the "contractor "has paid its assessments as required under s 316 LATMP, you can negotiate an arrangement with the third person whereby the third person guarantees that the employees concerned have been paid, or you can arrange for the sums owing to be paid weekly and only upon receipt of proof that the employees concerned and the CSST assessments have been paid.

We will inform you as soon as the regulation comes into force.

Footnotes

1. https://www.travail.gouv.qc.ca/fileadmin/fichiers/Documents/etudes_d_impact/AIR_CNT_version_publique_31_08_15.pdf

2. Poissonnerie Cowie (1985) inc. et Commission de la santé et de la sécurité du travail, 2014 QCCLP 6957 (Application for review pending); Armoires Fabritec ltée et Commission de la santé et de la sécurité du travail, 2008 QCCLP 1932; Plats du Chef inc. 2010 QCCLP 8347.

3. Industrie Pro-Pals ltée et Commission de la santé et de la sécurité du travail, 2008 QCCLP 4044.

4. In particular, the fact that the LSA does not include, as s 5 LATMP does, a presumption that an employer who uses the employees of a third person is their employer for purposes of s 95 LSA.

Norton Rose Fulbright Canada LLP

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