Canada: New Labour Standards Legislation (Qc) : Detailed Study Of A "New" Distinction

The Act to amend the Act respecting Labour Standards and Other Legislative Provisions Mainly to Facilitate Family-Work Balance1 (the "Act"), which came into force on June 12, 2018, has sparked extensive dialogue between human resource specialists, labour relations experts and lawyers. So far, the changes to the Act respecting Labour Standards ("ARLS")2 that have been targeted by in-depth analysis revolve around family-work balance and sexual harassment in the workplace — i.e., amendments aligned with the lawmakers' goal of improving workers' quality of life and in tune with the global #MeToo movement.

Amendments that impose restrictions on employers who use the services of personnel placement agencies or that entitle employees to three weeks of continuous vacation after three years of service instead of five have so far generated less debate.

One of the amendments that warrants a closer analysis is the change brought to section 87.1 of the ARLS aimed at prohibiting certain differences in treatment ("distinctions"), particularly with regard to the right to participate in pension plans offered by employers.

Under the revamped section 87.1 of the ARLS, an employer may no longer alter the right of employees hired after a given date to participate in the pension plan offered by the employer or to avail themselves of certain rights flowing from such participation, without the changes also being applicable to employees hired before that date who perform the same tasks within the same establishment.

In taking the example of an employer who currently offers only a defined benefit pension plan and wants to soften the plan's financial impact by creating a defined contributions plan, we would firstly assume that the employer cannot oblige its current employees to sign up for the new plan without their consent, and that they have expressed their refusal to see their pension plan modified. The employer still wants new employees hired after a given date to be subject to the new defined contributions plan, without also allowing them to participate in the existing defined benefits plan. Current employees who perform the same tasks in the same establishment keep their right to participate in the defined benefits plan, as the employer recognizes that this a vested right.

Until the recent legislative amendments, this situation was not considered to constitute a differential treatment prohibited under section 87.1 ARLS3. The amended section 87.1 ARLS, however, is clear: Any distinction made solely on the basis of a hiring date, in relation to pension plans, that affects employees performing the same tasks within the same establishment, is now prohibited.

The above-described situation is now considered to be a violation of the amended section 87.1 ARLS. Pursuant to new section 121.1 ARLS, employees who believe that they have been victims of a prohibited distinction may avail themselves of a new remedy and file a complaint to the Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST) within 12 months of their knowledge of the existence of said distinction. The Act also provides for a series of orders aimed at remedying this different treatment.

Thus, although in 2015 the Court of Appeal4 found that the notion of "wages", considered under section 87.1 ARLS as grounds for a prohibited distinction, did not include the right to participate in a pension plan, the lawmakers have since changed the rules with the recent legislative amendments, and in so doing have adeptly circumvented the findings of Quebec's highest court.

It should also be noted that under the Act, the new rule does not apply to any change to the right to participate in a pension plan made prior to June 12, 2018. Employers are hence protected from any retroactive application of the amendment. "Grandfather clauses" that already existed on that date are thus maintained and considered valid, despite criticism raised during the parliamentary debates leading up to the adoption of the Act, during which the Opposition underlined the contradictions between the above-indicated decision and the purpose of the Act, as well as the prior decision to impose amendments retroactively, not just prospectively, with regard to certain modifications brought in the past to existing municipal pension plans.

This being said, employers who wish to make changes to new employees' right to participate in a pension plan but failed to do so before the Act came into force, are bound by the new provision and may not treat employees who perform the same tasks in the same establishment differently with regard to their right to participate solely on the basis of their hiring date.

Employers are not, however, powerless when it comes to amending or transforming an existing pension plan. They may proceed with the desired amendments or transformation in compliance with the Supplemental Pension Plans Act5, which sets forth the required terms and conditions, and with respect to the provisions of any current plan ruling or agreement.

Informed employers will nevertheless have to keep in mind that they may not treat newly hired employees differently solely on the basis of their hiring date when it comes to eligibility for the employer's existing pension plan. Any changes must also apply to the other employees performing the same tasks within the same establishment. The same applies to employee benefits.

Footnote

1     Act to amend the Act respecting labour standards and other legislative provisions mainly to facilitate family-work balance, 2018, chapter 21 (referred to in this article as the "Act").

2     CQLR, chapter N-1.1 (referred to in this article as the "ARLS").

3     See the decision regarding Syndicat des employées et employés professionnels et de bureau, section locale 574, SEPB, CTC-FTQ c. Groupe Pages jaunes Cie, 2015 QCCA 918. The Court of Appeal found that pension plan accessibility did not constitute a prohibited distinction within the meaning of section 87.1 of the ARLS (as formerly worded). The Court confirmed the decision rendered by arbitrator Harvey Frumkin and found that pension plan rights did not constitute "wages" within the meaning of the provision in question.

4     Idem.

5     CQLR, chapter R-15.1.

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