Canada: Ontario's Changing Workplaces Review Interim Report: Last Chance To Provide Your Input

Interim Report released

Last year the Ontario government initiated the Changing Workplaces Review (Review), which it intends as the first step towards identifying potential reforms of the Employment Standards Act, 2000 (the ESA) and the Labour Relations Act, 1995 (the LRA) to better protect workers, while supporting businesses in our changing economy. Two government-appointed special advisors – C. Michael Mitchell, formerly union-side labour lawyer at Sack Goldblatt Mitchell LLP, and the Honourable John C. Murray, former justice of the Ontario Superior Court and before that management-side labour lawyer – are responsible for carrying out public consultations and preparing an interim report and a final report, with recommendations to the Minister of Labour in relation to both the LRA and the ESA.

On July 27, 2016, the Minister of Labour released the much-anticipated Interim Report, which is based on 12 days of initial public consultation, over 300 written submissions from a variety of stakeholders including employer, labour, employee-advocacy and other groups and individuals, and research papers commissioned by the Review itself.

In the Interim Report, the special advisors consider the changing nature of the workforce, the workplace and the economy itself, particularly in light of relevant trends and pressures including the increase in temporary jobs, part-time work and self-employment; the rising prominence of the service sector; the effects of globalization and trade liberalization; and accelerating technological change. They conclude that these various trends and pressures on the workplace "highlight the need for reform of employment standards and labour relations legislation, and especially to provide protection to vulnerable workers and those in precarious work situations."

View the Interim Report

The Interim Report identifies approximately 50 issues affecting Ontario's workplaces and over 225 options of differing size and scope for addressing these issues in the LRA and ESA. Although maintaining the status quo is listed as an option for each issue, some of the other options, if enacted, would usher in significant change, including, for example, providing "just cause" protection for all employees covered by the ESA and creating a model for certification that applies specifically to franchisors and franchisees.

The following summarizes a number of the key issues and options.  

Employment standards

Definition of Employee

The special advisors note that two issues were raised consistently by unions and employee advocates: the misclassification of employees as independent contractors and the current definition of employee in the ESA.

Employee advocates suggested that misclassification occurs because of ignorance of the law by both employers and employees, the perceived benefit of being able to deduct business expenses from income as an independent contractor, and intentional avoidance by employers of their legal obligations. With respect to the second issue, employee advocates submitted that the ESA should be amended to apply to dependent contractors. Employers commenting on these issues stressed the need to use independent contractors whose unique expertise, cost, efficiency and availability cannot be duplicated by their own employees.

Options identified by the special advisors include:

  • Include a dependent contractor provision in the ESA, making it clear that regulations could be passed, if necessary, to create a different standard for dependent contractors in some circumstances.
  • In the case of a classification dispute, place the burden on the employer to prove that the person is not an employee and adduce relevant evidence in that regard.
  • Increase education of workers and employers with respect to rights and obligations.
  • Focus on proactive enforcement activities on the identification and rectification of misclassification cases.

"Joint" Employer Issues

Employee advocates argued that lead companies or employers who contract out should have some liability and responsibility for employment standards of employees in the business from which they benefit. Likewise, they argued that it would be appropriate for franchisors to have responsibility for compliance with employment standards legislation, together with their franchisees. Accordingly, employee advocates suggested that additional provisions are required to create obligations on businesses higher up the chain of contracting or the supply chain, to address non-compliance by subcontractors or employers lower down the chain.

By contrast, employers argued that wide-ranging legislative provisions making all businesses liable for the employment standards violations of their contractors would be too great an interference in the market, where contracting is a legitimate business tool for organizing the production of goods and services. Representatives from the franchising industry strongly argued that making franchisors liable for franchisee ESA obligations is unnecessary, would be costly and burdensome, and could threaten the entire franchise model.

Options identified by the special advisors include:

  • Make franchisors liable for ESA violations of their franchisees: (a) in all circumstances; (b) where the franchisor takes an active role; (c) in certain industries; or (d) in no circumstances.
  • Hold employers and/or contractors responsible for compliance with the ESA, requiring them to insert contractual clauses requiring compliance.
  • Introduce a provision that would allow the Ministry of Labour to place a lien on goods that were produced in contravention of the ESA.

Hours of Work and Scheduling

The special advisors note that during consultations they heard most about scheduling hours of work and that the limitations on hours of work "were not at the forefront of the debate". Options identified by the special advisors with respect to hours of work and scheduling include:

  • Eliminate the requirement for employee written consent to work longer than the daily or weekly maximums, but spell out the specific circumstances in which excess daily hours can be refused.
  • Eliminate daily maximum hours, but maintain the daily rest period requirement of 11 hours and the weekly maximum hours of work of 48.
  • Eliminate or decrease the daily rest period below 11 hours, which would potentially increase the potential length of the working day above 12 hours.
  • Eliminate requirement for ministry approval for excess hours above 48 in a week, but maintain the requirement for employee written consent.
  • Reduce the weekly overtime pay trigger from 44 to 40 hours.
  • Require all employers to provide advance notice in setting and changing work schedules to make them more predictable. This may include requiring employers to: post employee schedules in advance (for example, at least 2 weeks); pay employees more for last-minute changes to their schedules; offer additional hours of work to existing part-time employees before hiring new employees; and get consent from workers in order to add hours or shifts after the initial schedule is posted.

Personal Emergency Leave

Employee advocates expressed concern about the 50+ employee threshold for entitlement to personal emergency leave (PEL), and made recommendations to extend PEL to employees working for smaller employers, so that all employees could have access to this benefit. Employers asserted that PEL should be assessed in the context of the other leaves that are provided for under the ESA. Many employer stakeholders pointed to the difficulty of navigating the various ESA leave provisions. Some employers said that the nature and scope of the current PEL make it difficult to establish that their generous paid sick leave and bereavement leave policies provide a greater right or benefit than PEL.

Options identified by the special advisors with respect to PEL include:

  • Remove the 50-employee threshold for PEL.
  • Break down the 10-day entitlement into separate leave categories with separate entitlement for each category, but with the aggregate still amounting to 10 days in each calendar year.
  • A combination of the above options with different entitlements for different sized employers.

Termination, Severance and Just Cause

The special advisors heard a number of submissions about eligibility requirements and quantum of termination notice and severance pay. Employee advocates submitted that the ESA should be amended to provide protection against unjust dismissal, whereby employees could not be dismissed without just cause and could be reinstated by a government-appointed adjudicator if dismissed without cause.
Options identified by the special advisors with respect to termination of employment, severance and just cause include:

  • Provide just cause protection (adjudication) for all employees covered by the ESA.
  • Change the eight-week cap on notice of termination either up or down.
  • Eliminate the three-month eligibility requirement for notice of termination.
  • Reduce or eliminate the five-year condition for entitlement to severance pay.
  • Increase or eliminate the 26-week cap on severance pay.
  • Reduce or eliminate the $2.5 million payroll threshold.
  • Clarify whether payroll outside Ontario is included in the $2.5 million payroll threshold.
  • Require employees to provide notice when they are terminating their employment.

ESA Exemptions and Exclusion

In February 2016, the special advisors provided the Ministry of Labour with an Interim Update, indicating that a comprehensive review of the 80+ exclusions and exemptions was, in practical terms, beyond the scope of the Review. In the Interim Report they note there has been sustained criticism from many sources about the number and scope of exemptions in the ESA, suggesting that the exemptions are out-dated, inconsistent, complex and often lacking in rationale.

Accordingly, the special advisors have stated they are likely to recommend that Ontario establish a new process of review to assess the merits of many of the exemptions, to determine whether the exemptions are warranted or whether they should be modified or eliminated.  

Labour relations

Related and Joint Employers

Unions submitted that the LRA needs to be amended to ensure that bargaining structures reflect who funds and controls the work, and to ensure that bargaining takes place with the parties that have primary economic interest and ultimate control over the business, particularly in the context of franchise operations and temporary help agencies. By contrast, proposals from employers and employer associations advocated maintaining the status quo for bargaining under the LRA and establishing clear statutory criteria for a related employer declaration, particularly in a franchise context.

Options identified by the special advisors include:

  • Instead of a general or joint employer provision, enact specific joint employer provisions regarding temporary help agencies and their client businesses, and create a model for certification that applies specifically to franchisors and franchisees.
  • Add a separate general provision in addition to section 1(4), providing that the Ontario Labour Relations Board (OLRB) may declare two or more entities to be "joint employers" and specify the criteria that should be applied.
  • Amend or expand the related employer provision by: (a) providing that the OLRB may make a related employer declaration where an entity has the power to carry on associated or related activities with another entity under common control or direction, even if that power is not actually exercised; and (b) stating which factors should be considered when determining whether a declaration should be made.

Card-based Certification

The special advisors note that the appropriate model for certification is a "polarizing issue." In the consultation process unions strongly favoured card-based certification, arguing that in this era of declining unionization in the private sector, it is necessary to make it easier for employees to have access to collective bargaining and to remove measures that would ensure an ongoing decline in unionization rates. Employer stakeholders strongly opposed card-based certification and asserted that the secret ballot vote is the most democratic.

Options identified by the special advisors include:

  • Return to a card-based system, possibly adjusting thresholds to 65%.
  • Permit some form of electronic membership evidence.

Access to Employee Lists during Organizing Drives

Labour groups have proposed that if the union meets a threshold of, for example, 20% of employees having signed union cards, the union could apply to the OLRB for an order requiring the employer to provide a list of employees in the proposed bargaining unit, including names, job information and contact information. Employers have raised concerns about such proposals, including with respect to privacy implications for employees, the potential for unions to "game the system" in order to obtain information that would help them organize, and the possibility of extensive litigation related to these issues.

Options identified by the special advisors include, subject to certain thresholds or triggers, providing unions with access to employee lists with or without contact information (the use of the lists could be made subject to rules, conditions and limitations).

Applications for bargaining unit reviews and consolidation

While provisions permitting bargaining unit reviews and consolidation are included in the Canada Labour Code and in labour statutes in some other provinces, they are notably absent from the LRA. The special advisors note that from a union perspective, the goal of having a consolidation provision is to ensure that smaller units, once certified, can be combined into more rational, long-term bargaining structures. At the same time, however, unions expressed concern that giving the OLRB the power to merge and reconfigure bargaining units, especially where different unions are involved, could force change against the wishes of a significant number of employees. While employers generally opposed a consolidation provision, describing it as simply boosting union bargaining power in situations where the union's presence is weak, they also recognized that giving the OLRB the authority to restructure and rationalize bargaining units is an effective way to modernize, particularly where the existing bargaining structure may be fragmented or antiquated.

Options identified by the special advisors include:

  • Reintroduce a consolidation provision from the previous LRA where only one union is involved.
  • Introduce a consolidation provision with a narrow test (for example, allowing consolidation only in cases where the existing bargaining unit structure has been demonstrated to be no longer appropriate).
  • Amend section 114 of the LRA to provide the OLRB with the explicit general power to alter a bargaining unit in a certificate or in a collective agreement.

Interim Orders and Expedited Hearings

Submissions from union stakeholders supported expanding the OLRB's power to issue substantive interim orders on "such terms as the Board considers appropriate" where unfair labour practices are alleged, and provided that the applicant adduces evidence establishing a factual foundation sufficient to meet the test for interim relief. Employers tended to oppose broader substantive interim order powers on the basis that interim orders grant a remedy before a finding of a violation of the LRA.

Options identified by the special advisors include:

  • Restore the OLRB's power to issue interim orders and decisions pursuant to section 16.1(1) of the Statutory Powers Procedure Act.
  • In cases of alleged unfair labour practices, provide the OLRB with the ability to grant interim relief on "such terms as the Board considers appropriate."
  • Eliminate the requirement to prove that interim relief is necessary to prevent irreparable harm or is necessary to achieve other significant labour relations objectives; and/or substitute less demanding standards.
  • Require the OLRB to expedite hearings for interim relief by establishing prescribed statutory time limits so that hearings proceed without unnecessary delays.

What's next?

Given the breadth of the Changing Workplaces Review and the number and variety of submissions during the initial consultation process, the Ontario government has launched a second phase of public consultations seeking feedback on the special advisors' Interim Report. Following these consultations, the special advisors will provide the government with a final report and recommendations to help inform changes to modernize Ontario's labour and employment laws.

Feedback on the Interim Report may be provided via e-mail or mail-in submissions. Submissions specifically related to the subject of personal emergency leave must be completed by August 31, 2016. The deadline for submissions on all other issues is October 14, 2016.

A Guide to the Interim Report lists issues canvassed by the special advisors, including issues that have not yet been the subject of significant public debate or discussion, and gives additional information about how you can provide input on the Interim Report.

View the Guide to the Interim Report

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