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Ontario's "Changing Workplaces Review" – Options outlined in Interim Report – Final Report expected in spring

February 1, 2017

The Interim Report of the Special Advisors to Ontario's Changing Workplaces Review was released on July 27, 2016. Over 220 written submissions by businesses, employer associations, trade unions and employee associations, and community groups, as well as other stakeholders, have since been filed in response to the Interim Report. The Interim Report and Public Submissions may be accessed here (Interim Report) and here (Public Submissions to the Changing Workplaces Review). In addition, the Special Advisors have received and considered a number of academic research papers which were prepared for the Ontario Ministry of Labour to support the Changing Workplaces Review, and which may be viewed here. The public consultation period is now closed, and it is anticipated that the final report of the Changing Workplaces Review will be released in the first half of 2017.

What follows is a summary of the Special Advisors' Interim Report and the options for reform.

Background:

Focusing on issues relevant to the evolving nature of Ontario workplaces, on July 27, 2016 the Ontario Ministry of Labour published the Interim Report of the Special Advisors conducting the Changing Workplaces Review. Based on 12 days of public hearings and over 300 written submissions, the 312-page Interim Report – prepared by two government-appointed experts, Michael Mitchell, a former union-side labour lawyer, and John Murray, a retired judge of the Ontario Superior Court and former management-side labour lawyer – sets out options for legislative changes to the Employment Standards Act, 2000 (ESA) and the Labour Relations Act, 1995 (LRA), aimed at better protecting "vulnerable workers in precarious jobs."

The process leading to the Interim Report began almost two years ago, with the announcement by the Ontario government on February 17, 2015 of its intention to hold public consultations on possible amendments to the ESA and the LRA (see Lancaster's Labour Law, April 25, 2016, eAlert No. 395), with a view to updating these statutes to reflect changing workplaces. Known as the Changing Workplaces Review, the initiative has its genesis in the Speech from the Throne that followed the June 2014 provincial election, in which the government proposed to "engage with Ontarians to consider what it can do in the context of our labour and employment law regime to continue to protect workers while supporting business in today's modern economy."

The growth in non-standard, precarious employment relationships has been acknowledged as a cause of social and economic problems. In February 2013, the research group Poverty and Employment Precarity in Southern Ontario released a report, entitled "It's More than Poverty: Employment Precarity and Household Well-being," reviewed in Lancaster's Labour Law, September 3, 2013, eAlert No. 353. Considering the scope and impact of precarious employment, it found that, while around half of workers in the Greater Toronto Area and surrounding region were in permanent, full-time employment, the rest of the workforce was employed in some form of non-standard employment, including temporary, casual, short-term or fixed-term employment, or self-employment. The proportion of the workforce in such employment had increased by 50 percent in the previous 20 years, and such employment tended to have a detrimental effect on workers' health, well-being, and family life.

This report was followed by a research study completed for the Law Commission of Ontario, released on April 3, 2013, entitled "Vulnerable Workers and Precarious Work." The Commission called on the provincial government to implement a range of new measures, including changes to the ESA and the Occupational Health and Safety Act, in order to improve conditions for the hundreds of thousands of workers in Ontario engaged in "precarious work." For a detailed discussion of the Law Commission's report, see Lancaster's Labour Law, September 16, 2013, eAlert No. 356.

The Changing Workplaces Review is the first independent review commissioned by the Ontario Government seeking recommendations for legislative changes to the ESA and LRA in more than a generation. The Interim Report notes that "[t]he fact that this Review is taking place is strong evidence of a broad societal concern over the changes that have taken place in the workplace and the fact that for many there has been a long-standing trend of deteriorating working conditions for a growing number of workers."

Stating that proposals and recommendations will be released later in a final report after further stakeholder submissions have been received, the Interim Report provides that its listed options should not be construed as conclusions or recommendations and that its purpose is "to advise Ontarians of the range of issues that have been identified and the options for change that we are being asked to consider." The Final Report is expected in the spring of 2017.

Emphasizing that its focus is "on vulnerable workers in precarious jobs in the context of employment standards and labour relations," the Interim Report identifies two "overarching themes" directing its research, signaling "the importance of work to all Ontarians" and "the inherent power imbalance and inequality of bargaining power between employer and employee."

Considering factors such as globalization, trade liberalization, technological change, growth of the service sector, and changes in the characteristics of employment relationships, the Interim Report points out that its focus on "vulnerable workers in precarious jobs" requires it to take into account Ontario workers whose employment "makes it difficult to earn a decent income; interferes with their opportunities to enjoy decent working conditions; and/or puts them at risk in material ways."

Options for Labour Relations:

Calling on stakeholders to submit opinions on the issues set out in the Interim Report with respect to the certification and decertification of unions, collective bargaining, and the regulation of legal strikes and lock-outs under the LRA, the Special Advisors list numerous potential options, including maintaining the status quo. Some of these options are briefly summarized under the following five broad headings:

a) Scope and Coverage of the LRA

Observing that the LRA does not apply to certain types of workers, including domestic workers employed in a private home, agricultural employees covered by the Agricultural Employees Protection Act, 2002 and, generally, persons employed in horticulture, the Special Advisors request submissions on the elimination of some of these exclusions in order to extend access to collective bargaining to "the broadest possible spectrum of employees." Specifically, the Interim Report discusses the option of extending access to collective bargaining to domestic workers employed in private homes through use of a novel system of sectoral bargaining involving multiple employers. As well, it explores the option of allowing employees who are members of architectural, dental, land surveying, legal, or medical professions in Ontario the opportunity to bargain collectively. [See Interim Report, section 4.2.1]

The Special Advisors also seek submissions on the options for proposed legislative changes concerning related and joint employers, noting that the use of temporary help agencies and labour brokers as well as the subcontracting of staffing responsibilities and franchising in Ontario's changing workplaces can make it difficult to determine whether numerous entities are related or joint employers. Observing that the Ontario Labour Relations Board (OLRB) can treat related businesses as a single employer under s.1(4) of the LRA, the Special Advisors seek input on an addition to s.1(4) that would provide:

that the OLRB may declare two or more entities to be 'joint employers' and specify the criteria that should be applied (e.g., where there are associated or related activities between two businesses and where a declaration is required in order for collective bargaining to be effective, without imposing a requirement that there be common control and direction between the businesses). [Interim Report, section 4.2.2]

b) Access to and Maintenance of Collective Bargaining

Addressing proposed changes to the certification process under the LRA, the Special Advisors cite research supporting the contention that a mandatory vote model, as opposed to a card-based process, results in a statistically significant reduction in certification application activity, based in part on the greater opportunity for delay and employer unfair labour practices. Against this backdrop, the Interim Report seeks submissions on the following options for change:

  • Resume the card-based system that existed in Ontario between 1950 and 1993.
  • Utilize the current construction industry model of card-based certification.
  • Allow some type of electronic membership evidence.
  • Grant unions access to employee lists in the event certain thresholds have been met.
  • Allow alternative voting procedures that take place outside of the workplace and/or permit increased use of off-site, telephone and internet voting. [Interim Report, section 4.3.1]

Observing that some form of remedial certification is available federally and in seven provincial jurisdictions, the Special Advisors further ask for input on the option to "[m]ake remedial certification more likely to be invoked by removing the requirement to consider whether a second vote is likely to reflect the true wishes of the employees."

The Interim Report also notes that, pursuant to the LRA, first contract arbitration is available in Ontario in certain circumstances, and suggests the following options for change: allowing for "automatic" first contract arbitration when a party has applied to the OLRB after a certain time period has elapsed; allowing first contract arbitration in the event the OLRB has ordered remedial certification without a vote; utilizing a "mediation-intensive" model similar to that used in British Columbia; and disallowing decertification or displacement applications while an application for first contract arbitration remains pending. [Interim Report, section 4.3.2.]

Noting that the successor rights provision of the LRA does not apply to contracting out or contract tendering situations, the Interim Report considers as options whether successor rights should be expanded to cover certain classes of service contracts, such as building services and home care services, or whether any requirements or prohibitions should be imposed on the successor employer in a contract for service situation. [Interim Report, section 4.3.3]

Questioning whether the OLRB should have "an explicit power to revise, amend and consolidate bargaining units for the rationalization or modernization of bargaining unit structures in circumstances where the original bargaining structure is no longer appropriate, where bargaining units are overly fragmented, or for other industrial relations reasons," the Interim Report provides options for discussion, including the introduction of a consolidation provision, with or without requiring that it be established that the existing bargaining unit structure is no longer appropriate or, alternatively, the amendment of s.114 of the LRA to grant the OLRB the power to change a bargaining unit in a certificate or collective agreement. [Interim Report, section 4.3.4]

c) The Bargaining Process

Options regarding replacement workers, defined in the Interim Report as "workers hired to fulfill some or all of the functions of workers who are either engaged in a legal strike or who have been locked out by the employer," include a prohibition on the use of replacement workers or an approach similar to that taken in the Canada Labour Code, which permits the use of replacement workers except when utilized for the "purpose of undermining a trade union's representational capacity." [Interim Report, section 4.4.1]

Noting that an employer's refusal to reinstate employees at the end of a legal strike or lock-out can be a contentious issue, the Special Advisors present several options for change, including: providing for arbitration of the refusal to reinstate an employee; providing that the refusal to reinstate an employee is an unfair labour practice, except in certain defined circumstances; and providing that an employer is required to reinstate striking employees. Also on the topic of strikes and lockouts, the Interim Report considers whether the LRA should be amended to remove the six-month time limit for an employee on strike to bring an application to return to work, thereby allowing striking employees to make an application to return to work at any time during the currency of a legal strike. [Interim Report, section 4.4.2]

The Special Advisors also seek input with respect to renewal agreement arbitration, noting that possible options include providing a "mediation-intensive dispute resolution process" with tools to facilitate dispute resolution as opposed to interest arbitration, or allowing access to interest arbitration following a finding of bad faith bargaining or the expiration of a set time limit after the commencement of a strike or lock-out – all in the event that established conciliation/mediation steps have been followed, the applicant for interest arbitration has bargained in good faith, and it appears that the parties are unlikely to reach a settlement. [Interim Report, section 4.4.3]

d) Remedial Powers of the OLRB

The Special Advisors list options that would expand the OLRB's power to make interim orders and grant interim relief. Additionally, the Interim Report calls on stakeholders to make submissions respecting the option that all bargaining unit employees have protection against unjust dismissal after certification but prior to the effective date of the first collective agreement. Also canvassed are options to increase penalties for breach of the LRA, and to remove the requirement for consent to prosecute or eliminate prosecutions while giving the labour board power to impose administrative penalties. [Interim Report, sections 4.5.1, 4.5.2, 4.5.3]

e) Other Models

The Special Advisors discuss "broader-based bargaining" as an alternative to the traditional industrial relations model, noting that the default arrangement in Ontario "is for collective bargaining to take place between a union representing a group of employees at a particular workplace and their employer, particularly in the private sector (with the exception of the construction industry…." Referencing the bargaining approaches in the construction industry and in some parts of the arts sector, the Special Advisors set out an expansive range of broader-based bargaining models for consideration, all of which would appear to increase access to collective bargaining, including, for example, options that would allow for extension of collective agreements to a sector, certification of units of franchise operations, multi-employer certification and sectoral bargaining, etc. [Interim Report, section 4.6.1]

The Interim Report also speaks to "employee voice" within the workplace or "the right to participate in decision-making in some dimension, be it through the right to speak, or to be consulted…," noting that: "The absence of employee voice disproportionately impacts those social groups who face greater vulnerability in the labour market, including racial and ethnic minorities, recent immigrants, women, and youth." In an attempt to enhance "employee voice," the Special Advisors seek comments on options that include some form of minority unionism, that allow for the expression of employee interests in employer plans and policies, and that protect concerted activity where the employees are not unionized. [Interim Report, section 4.6.2]

Options for Employment Standards:

Requesting that stakeholders make submissions on the issues set out in the Interim Report with respect to potential changes to the employment standards provisions of the ESA, the Special Advisors list various potential options, including maintaining the status quo. Below is an overview of options for change discussed in the Report.

a) Scope and Coverage of the ESA

The Special Advisors set out two primary concerns relating to the definition of an "employee" under the ESA, the first being "the misclassification of employees as independent contractors," the second involving the scope of the definition of "employee" under the ESA. Observing that the misclassification of employees as independent contractors allows businesses to avoid complying with the ESA, the Interim Report further states that Ontario common law has provided for a category of worker, referred to as a "dependent contractor," who falls somewhere between a traditional employee and an independent contractor, with work relationships that are exclusive and result in economic dependency.

The Interim Report references the presence of the category of "dependent contractor" in the LRA, which provides that an "employee" includes a "dependent contractor," defined as "a person who performs work or services for another person for compensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, and under an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of an independent contractor." The Interim Report notes that there is currently no provision in the ESA which is equivalent to the "dependent contractor" provision of the LRA. [Interim Report, section 5.2.1]

The Interim Report provides options for change with respect to the misclassification of employees and the definition of "employee" in the ESA, some of which include:

  • Increasing the education of workers pertaining to their rights and obligations.
  • Placing the burden of providing that a person is not an employee under the ESA on the employer.
  • Inserting a provision in the ESA regarding dependent contractors, subject to regulations that would exempt particular dependent contractors who have greater control over their working conditions.

With respect to employers and their scope of liability, the Special Advisors seek input on suggestions that include: making employers and/or contractors responsible for the compliance of their contractors or subcontractors with employment standards legislation; making franchisors liable for the employment standards violations of their franchisees; creating a "joint employer" test; enacting a remedy similar to the "oppression" remedy applicable under corporation law where the interests of creditors or security holders are prejudiced. [Interim Report, section 5.2.2]

Stating that "[p]rima facie, exemptions are inconsistent with the principle of universality – which is that minimum terms and conditions set out in the [ESA] should be applicable to all employees," the Interim Report notes that the ESA contains more than 85 exemptions and special rules, pointing out that "a significant number of employees are denied the protection of important provisions of the [ESA] – typically limitations on hours of work and the payment of overtime." As opposed to seeking input, however, the Special Advisors explicitly recommend that the government "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." Indeed, with respect to certain exemptions, the Interim Report does not even wait for a new process; instead it lists a number of exemptions that do not warrant a review and should be maintained, as well as other exemptions that should be eliminated or varied without a review.

The former include:

  • public transit;
  • mining and mineral exploration;
  • live performances;
  • film and television industry;
  • automobile manufacturing;
  • ambulance services.

The latter include:

  • information technology professionals;
  • pharmacists;
  • managers and supervisors;
  • residential care workers;
  • residential building superintendents, janitors and caretakers;
  • minimum wage rates for students under 18 and liquor servers; and,
  • student exemption from the "three-hour rule." [Interim Report, section 5.2.3]

The Special Advisors seek submissions on these specific exemptions before arriving at their final recommendations. They also seek submissions on whether the exclusion of interns/trainees and Crown employees should be maintained, altered, or eliminated under the ESA.

b) Employment Standards

The Interim Report presents a wide range of options for change regarding the minimum rights and responsibilities set out in the ESA, which are set out below.

i) Hours of Work and Overtime Pay

The Special Advisors note that the ESA imposes limits on employees' daily hours and weekly hours, as well as rules regarding rest periods and overtime; however, work may be permitted beyond certain limits either by an agreement between the employer and employee or with the approval of the Ministry of Labour. The Interim Report canvasses a wide range of potential reforms in this area, some of which include:

  • Eliminating the requirement for employee written consent to work longer than eight hours per day or 48 hours per week, but spelling out in the legislation the specific circumstances in which excess daily hours can be refused.
  • In industries or businesses where excess hours are required to meet production needs, replacing the need for individual consent with collective secret ballot consent of a majority of all those required to work excess hours.
  • Eliminating the daily maximum hours, and the weekly maximum hours of work of 48, but maintaining the current requirement to provide an employee with a minimum of at least 11 consecutive hours in each day free from performing work.
  • Eliminating the requirement for Ministry approval for weekly work hours between 48 and 60 hours, but maintaining the requirement for an employee's written agreement.
  • Reducing the weekly overtime pay trigger from 44 to 40 hours.
  • Limiting the scope of overtime averaging agreements. [Interim Report, section 5.3.1]

ii) Scheduling

Observing that the ESA does not include provisions regulating scheduling of work, except for minimum reporting pay requirements, the Special Advisors note that uncertainty in scheduling practices may contribute to making work precarious. Accordingly, they discuss a number of options for change, including: increasing the minimum reporting pay from three hours at minimum wage to three or four hours at regular pay; providing employees a job-protected right to request schedule changes at certain intervals; enacting provisions that would make employees' schedules more predictable, such as requiring employers to post schedules in advance, to compensate employees for last-minute scheduling changes, and to offer more hours to part-time employees before hiring new workers; and adopting a sectoral approach that would encourage certain sectors to come up with their own scheduling regimes in accordance with overall policy guidelines set by the Ministry. [Interim Report, section 5.3.2]

iii) Public Holidays and Paid Vacations

With respect to statutory holidays, the Special Advisors note that the proper calculation of public holiday pay is a common problem for employers and is often pointed to as an example of unnecessary complexity in the Act. They present several options for change in this area, including reverting to the former calculation method under the ESA, in which employees whose hours did not vary were paid their regular wages on public holidays, or setting a specified percentage for public holiday pay that would be paid in each pay period. [Interim Report, section 5.3.3.1]

Noting that Ontario has the least generous provisions with respect to vacation time and pay of any Canadian jurisdiction (two weeks after each completed year of service), the Special Advisors also seek feedback on whether employees' paid vacation entitlement should be increased to three weeks, and, if so, whether the entitlement to three weeks should become available only after an employee has completed a specified period of employment with the same employer (e.g. five or eight years). [Interim Report, section 5.3.3.2]

iv) Leaves of Absence

With respect to the personal emergency leave provisions under the ESA, which provide that employees whose employer regularly employs 50 or more employees are entitled to up to 10 days of unpaid leave for illness, bereavement, or urgent family matters, the Special Advisors note that Ontario's approach differs from other Canadian jurisdictions, which typically provide a specific number of days for leaves such as bereavement, illness, and/or family emergency rather than one general leave, and which do not have an employer size eligibility threshold. Accordingly, the Interim Report considers whether the 50-employee threshold for emergency leave should be removed, and whether the 10 days of leave should be separated into different categories with separate entitlements, possibly with different entitlements for different sized employers. [Interim Report, section 5.3.4]

Citing research indicating that "workers who come to work when sick are not likely to be productive and can infect others with that associated cost," the Interim Report also considers whether paid sick leave provisions should be introduced – either as a set number of days per year or earned at a rate of one hour for every 35 hours worked – and whether employers should be required to pay for doctor's notes if they require them. [Interim Report, section 5.3.5]

Regarding the other leaves of absence under the ESA, the Special Advisors note that Ontario, like other provinces, typically provides for job-protected leaves that are closely aligned with federal income support programs. Options under consideration in this area include introducing new leaves, such as paid or unpaid domestic/sexual violence leave or death of a child leave, and consolidating some of the leaves. [Interim Report, section 5.3.6]

v) Part-time and Temporary Work

Observing that "employment in part-time and temporary work has grown considerably and is a prominent feature of the modern labour market," the Special Advisors note that "it is still common to find part-timers being paid less than comparable full-time employees, and without equitable access to benefits." In light of concerns regarding the treatment of such employees in comparison to full-time employees, and the number of individuals working on fixed and limited term contracts, the Interim Report discusses imposing a requirement that part-time, temporary, and casual employees be paid the same as full-time employees in the same establishment, unless differences in qualifications, skills, seniority, experience or other objective factors justify the difference. This requirement could apply to pay or benefits or both, or could be limited to lower-wage employees. [Interim Report, section 5.3.7]

vi) Termination, Severance, and Just Cause

Although dismissed employees may be entitled to wrongful dismissal damages under common law, the Special Advisors observe that "[b]ecause of the costs and delays surrounding suing for wrongful dismissal and the unpredictability of the result, many employees settle for their ESA entitlements even though what they are entitled to under the ESA may be less – sometimes substantially less – than the damages they would be entitled to receive at common law." The Special Advisors outline several options for change regarding termination and severance, including: increasing or decreasing the eight-week cap on notice of termination; eliminating the three-month eligibility requirement for notice of termination; requiring employers to provide notice based on the total length of employment for employees with recurring periods of employment; requiring employees to provide notice of termination; reducing or eliminating the conditions required to trigger an employee's right to receive severance pay; and amending the ESA to provide protection against unjust dismissal. [Interim Report, section 5.3.8]

vii) Temporary Help Agencies

Noting that temporary work has grown significantly in the last 10 years, and that "the temporary staffing sector disproportionately comprises lower-skilled and lower-wage workers," the Special Advisors canvass a number of options for reform of the rules regarding temporary help agencies. Some of these include: expanding joint and several liability to clients for all employment standards violations; providing the same pay to an assignment worker who performs substantially similar work to workers directly employed by the client; limiting clients' use of assignment workers; promoting transition to direct employment with a client; and extending termination and severance pay provisions to assignments. [Interim Report, section 5.3.9]

c) Other Standards and Requirements

Noting that the ESA does not permit employers and employees to contract out of its standards, but that it does contemplate an employer providing employees greater rights or benefits than the standards in the ESA, the Special Advisors request opinions on allowing "employers and employees to contract out of the ESA based on a comparison of all the minimum standards against the full terms and conditions of employment in order to determine whether the employer has met the overall objectives of the [ESA]." The Interim Report also considers whether the ability to enter into agreements for alternative standards should be removed from the ESA, in whole or in part, as such agreements may not always be entered into voluntarily by employees. [Interim Report, sections 5.4.1, 5.4.2]

With respect to pay periods, the Special Advisors seek input on whether the ESA should be amended to impose a requirement on employers to harmonize pay periods with work weeks. [Interim Report, section 5.4.3]

d) Enforcement

Emphasizing "that there is a serious problem with enforcement of ESA provisions," the Special Advisors set out a number of options in hopes of promoting "a culture of compliance with ESA standards." Some of these include:

  • Setting up an internal responsibility system under the ESA for non-unionized workplaces, as an extension of the Joint Health and Safety Committee, to review employers' audits of compliance with the ESA.
  • Removing the provision requiring an employee to first contact the employer prior to submitting a complaint to the Ministry of Labour.
  • Allowing anonymous complaints, protecting the confidentiality of the complainant, or allowing third parties to file claims on behalf of an employee, with the understanding that the employer must be made aware of facts surrounding the alleged violation.
  • Focusing inspections on workplaces where "misclassification" issues are present.
  • Increasing the number of inspections in workplaces in which "migrant and other vulnerable and precarious workers are employed."
  • Providing more legal assistance for employees in the settlement process. [Interim Report, sections 5.5.1-5.5.4]

In light of concerns that the penalties under the ESA are inadequate for protecting employees in a precarious labour market, the Special Advisors also set out a number of options for changes to the penalties for non-compliance with the ESA, including: increasing prosecutions under the Provincial Offences Act for repeat or intentional violators; requiring employers to pay a financial penalty as liquidated damages to the employee whose rights have been contravened; increasing administrative monetary penalties; requiring employers to pay interest on unpaid wages; and granting the Ontario Labour Relations Board jurisdiction to impose, where appropriate, significant administrative penalties on non-compliant employers, which would be in addition to any other remedial authority. [Interim Report, section 5.5.5]

Comment:

The Interim Report contains an extensive review of the legislative options available to the Ontario government, ranging from those which involve tinkering with the status quo to those which call for far-reaching reform, with a view to relieving against precarious employment while supporting business in a modern economy. Similar reviews are underway in other jurisdictions, such as the UK, where Prime Minister Theresa May has commissioned Mathew Taylor of the Royal Society of the Arts to review employment practices.

Once the Final Report is issued, it can be expected that battle lines will be drawn between advocates for reform and supporters of the status quo. No doubt the recommendations of the Special Advisors will carry significant weight, representing as they do the consensus of industrial relations experts who have consulted, widely and at length, stakeholders in the broader labour and management communities in Ontario.

It should be noted that eminent labour law professor Harry Arthurs, formerly President of York University, undertook a similar process with respect to labour standards in industries within federal jurisdiction. His report, entitled Fairness at Work, commissioned by a Liberal government but (following an election) delivered to a Conservative administration, is now, ten years later, under active consideration by the current Liberal government.

Read the Interim Report, the Guide to the Interim Report, the Public Submissions to the Review, and Reports filed by the experts retained by the Review.