Chapter 7: Changes to basic standards

7.1 Part-time, casual, temporary, seasonal and contract employees

7.1.1 Part-time employees

Part-time employment serves important needs of many employees for income and flexibility. Students, many seniors and others including a disproportionate number of women (two-thirds of part-timers are female) value and depend on the opportunity to earn income through part-time employment.

Employers rely on part-time employees for many valid reasons: to deal with fluctuations in customer demand for goods and services and to replace employees who are away because of illness, unplanned absences and vacations. Employer utilization of part-time workers dovetails with the preference of many in the workforce for part time work. We agree with Professor Gunderson^{footnote 248[248]} and the Keep Ontario Working Coalition that part-time employment is of value to both employees and employers.^{footnote 249[249]}

Overall, there is little dispute that Ontario would benefit from the creation of more full-time jobs. An estimated 5.6 % of the workforce would prefer full-time work to the number of part-time hours they currently have^{footnote 250[250]}, and an estimated 5.3% of the workforce hold multiple jobs where the primary job pays less than the median wage.^{footnote 251[251]} However, the creation of better more full-time employment is not likely going to occur as a result of legislative change but by employers who operate in a competitive labour market.

While part-time work is desirable for many employees, a significant portion of part-time work is low wage, without benefits, and has scheduling uncertainty which creates stress. There are some inequities that need to be addressed and our recommendations are designed to improve some basic terms and conditions of employment for part-time employees.

Historical attitudes towards part-time employment

It is useful to understand the development of part-time work historically and to reflect in this context on what accounts for the attitudes towards part-time employees that has countenanced distinctions in pay and benefits based on the number of hours worked.

The negative attitude towards part-time work appears to have been deeply ingrained in our society. The Report of the Special Commission on Part Time work in 1983 recorded that at least until that time, all parts of society had treated part-time workers unfairly:

The Commission found conclusive evidence to support the view that part-time workers in the Canadian labour force are treated unfairly compared to full-time workers. It also found that every group in the work place – employers, governments, unions, and even individual full-time workers – have been guilty of treating part-time workers unfairly.

Many employers, including governments, are paying part-time workers lower hourly rates than full-time workers, denying them access to pension and fringe benefits plans, and keeping them in low skilled jobs with little opportunity for promotion.

Governments, in their employment standards legislation, have ignored the existence of part-time workers or actively worked to prevent or reduce their participation in the workforce. Although the union attitude appears to be changing, unions, until the past few years, have deliberately ignored the existence of part-time workers or actively worked to prevent or reduce their participation in the work force. Some unions still curtail the job opportunities open to part-timers, their pay rates and their access to seniority lists. The result is that part-time workers, no matter how long their service to a company, are the first to be laid off. Even full-time workers in some work places treat part-timers as second class citizens.^{footnote 252[252]}

While there have been some improvements for both unionized and non-union part- time employees in efforts to reduce or eliminate differential treatment of part-time employees, inequality of treatment in pay and benefits remains lawful despite repeated recommendations to change the status quo.^{footnote 253[253]} Meanwhile concerns have increased in recent years over the insecurity created for part-time employees when the employer need for scheduling flexibility is not sufficiently accommodating of the employee need for predictability.

Between 1976 and 2015 part-time’s share of total employment increased from 13.5% to nearly 20% (19%) with almost all of that increase occurring in the earlier period between 1976 and 1993.^{footnote 254[254]} A little under a third of these (30% of part-time employees and 5.6% of all employees), referred to as involuntary part-time employees, had to compromise and to accept part-time jobs because they could not find the full-time positions they wanted.

This was a profound change in the composition and nature of the workforce. Some have suggested that since part-time work has not grown in proportion to the total workforce since the late 1990s and has remained stable or is a little lower than 25 years ago, it undermines claims of precariousness.^{footnote 255[255]}

The fact that the proportion of part-time employment has not grown in the past two decades after a period of significant growth is not material to an assessment of measures that need to be taken now to deal with some of the inequities faced by part- time employees. A substantial number of part-time employees are women, immigrants, youth, and older workers. It is relevant and timely to ask if there is justification for differential treatment. The fact that part-time employees may be paid lower wages than full-time employees doing the same work – ignoring calls for law reform over the years – provides support for a conclusion that this issue should not be ignored any longer.

There are several factors that may account for some historically entrenched attitudes towards part-time work. In the face of relatively quick growth, workers feared that the increase in part-time work would crowd out full-time jobs. Certainly, the Commission in 1983 recorded the historic opposition of unions to part-time employment while noting that the opposition was just beginning to moderate. This opposition may have resulted in unions deciding not to encourage the further growth of part-time work by agreeing to differential treatment.

In addition, the value of part-time work was seen as worth less than that of full-time employees because of the large percentage of young people, students and women who were performing it. In other words, the work was devalued because of discriminatory attitudes towards those who were largely performing it. There was an unfounded perception as well that part-timer employees were less committed to their jobs - partially a function of the fact that young people were performing a lot of the work, and there was also a perception that prime working age women were only working for pin money or to provide luxuries.^{footnote 256[256]} All of this was part and parcel of the discriminatory attitudes towards the work women perform which has resulted in lower wages for women and a factor contributing to the gender wage gap.

Symptomatic and reflective of the treatment of part-timers generally was the treatment of these workers by Labour Boards. When we began practicing law in the 1970s, it had already been the rule for a long time that part-timers were considered to have a lesser commitment than full-timers to the workplace and that part-time employees did not share a community of interest with full-time employees. The Labour Board facilitated both union and employers bargaining separately for these groups of employees by accepting the request of either side to separate full-time from part-time bargaining units on the basis that their interests did not coincide.^{footnote 257[257]} This was accepted practice apparently with little understanding or concern that, over time, it would contribute to inequitable treatment for part-time employees. Most acknowledge that part-time employees may have different interests necessitating different terms and conditions of employment, that does not justify unfair and\or discriminatory treatment.

The fact that the OLRB typically put students employed for the school vacation period in the same bargaining as part time employees^{footnote 258[258]} facilitated the negotiation of unwarranted inferior conditions for part-time employees. Students employed for the school vacation period were, and still are, viewed as having a limited commitment to the workplace and were often subject to terms and conditions of employment inferior to those of full-time employees. The standard bargaining unit configuration of part-time employees and students employed during the school vacation period also underscored the perception that part time employment was more transitory than that of full time employees – a perception that further served to justify differential treatment.

The generally negative consequence for part-timers resulting from government policies including the OLRB policy on separate bargaining units was noted and criticized in the Wallace Commission Report in 1983.^{footnote 259[259]}

The OLRB policy of separate certification for part-time and full-time units ceased in 1993 when the amendments^{footnote 260[260]} to the Labour Relations Act overruled such an approach and created a presumption in favour of combined full-time/part-time units.^{footnote 261[261]}Although this provision was quickly repealed in 1995, the policy of the Board towards appropriate bargaining units had changed by then and the Board moved away from focusing on questions of community of interest to focus instead on whether the unit which the union seeks to represent encompass a group of employees with a sufficiently coherent community of interest that they can bargain together on a viable basis without at the same time causing serious labour relations problems for the employer. The Board began to recognize that in many cases the old paradigm of part-time workers not having a long term attachment to the workplace and there not being a community of interest between full-time and part-time employees was no longer appropriate.^{footnote 262[262]}

7.1.2 Equal pay with comparable full-time employees

Many employers and unions treat their part time employees equitably by paying the same wage as to full time employees who perform the same or similar work. Many also provide employee benefits on a pro rata basis, by allowing a more liberal access to benefits if employees meet a threshold of income or hours to qualify for benefits, or with pay-in-lieu of benefits. However, differentiation in pay between part-time employees and comparable full-time employees in the same establishment persists.

An important question that needs to be addressed is whether the law should require that part-timers be paid the same as comparable full-timer workers. One of the options in the Interim Report was that part-time employees should be paid the same as full-time employees unless there were objective factors which justified the difference, such as qualifications, skills, seniority, or experience.

The option is responsive to the assertions of many employers that paying part -timers less is justified in circumstances where they are less skilled or less experienced. The option calls for equality unless objective factors justify a differential in pay.

In our view, this is one of the more important areas where changes in the law should occur, albeit with important limitations. There are several reasons why differential pay treatment of part-timers should no longer apply.

First, the principle that those who perform the same or similar work should be paid the same is a powerful equitable argument that accords with fairness and decency as it is grounded in equality of treatment. Absent objective factors that justify differential treatment, a differential is both arbitrary and discriminatory. When two people who are full-time perform work that is the same or similar and one person is male and the other person is female, the differential treatment is unlawful unless justified on objective factors.^{footnote 263[263]} The same is true where the basis for the differential treatment is race, or ethnicity, religion, age or other grounds of discrimination under the Human Rights Code. When the differential pay, treatment is based on part time status, it is neither fair nor reasonable. Rather, it is an arbitrary and unjustified distinction affecting up to one in five employees in Ontario, and if one includes temporary, casual and contract and seasonal employees, the potential percentage of people affected is even higher.

Not all groups in society are impacted equally by the differential treatment. Rather, it affects some groups more than others and likely amounts to adverse impact discrimination. The demographic composition of part-timers is different than the demographic composition of full-timers. Two-thirds of part-time employees were  women in 2015^{footnote 264[264]} and 36% are youth ages 15-24 . Increasing numbers of part-timers are over age 55. A disproportionate number of recent immigrants are part-time employees (16% as of 2008 when recent immigrants comprised 10% of the total employees.^{footnote 265[265]} Accordingly, the policy of different treatment is leading to adverse impact discrimination among women, youth, and increasingly, older workers and racial and ethnic minorities.

Another reason to end the differential treatment is that it impacts vulnerable workers in precarious work. Part-time workers are often low wage earners and are highly concentrated in the retail trades, accommodation and food services industries which have a high concentration of vulnerable workers in precarious work. In 2015, median hourly rates for part-timers were $12.50, which is only slightly more than half of the $24.04 for full-timers, although these are not comparisons between workers in the same job and same establishment (we lack the relevant data).^{footnote 266[266]} The C.D. Howe Institute recently reported that the differential in pay between full-time and part-time jobs has been rising in recent years, reaching a gap of $9.40 per hour in 2015, increasing from 31% to 35%.^{footnote 267[267]} Also a disproportionate number of part-time employees, 21.8%, earned minimum wage as compared to only 3.4% of full-time workers in 2013.^{footnote 268[268]} Finally, among full time employees, 56.2% of people who are permanent have an employer-sponsored pension-plan, compared to only 26% of those who are temporary, and among part-time employees, 25% of people who are permanent have an employer-sponsored pension plan, compared to only 11.5% of those who are temporary.^{footnote 269[269]}

It is the public interest to encourage growth in the workforce. The Ministry of Finance has pointed out^{footnote 270[270]} that Ontario, like the rest of Canada and other countries, faces the problem of a diminishing workforce as baby boomers age and leave active employment. It has pointed out that the adverse economic impact of a diminishing workforce could be mitigated by increased participation by baby boomers and by others. Policies that encourage greater workforce participation in part-time work, like paying part-time younger workers, female workers and older workers fairly and not discriminating against them based on the amount of time they work, could encourage labour force participation in line with the needs of the economy and serve the public interest.

Our recommendation is not new. A similar recommendation has been made by other commissions: in 1983 by the Wallace Commission on Part-time Work;^{footnote 271[271]} in 1984 by Rosalie Abella (now Justice Abella) in the Royal Commission on Equality Report;^{footnote 272[272]} and in 2006 by Harry Arthurs in his Report to the Federal Government on Federal Labour Standards^{footnote 273[273]}. Furthermore, it has been partially adopted by two provinces,^{footnote 274[274]} in Australia and has been in place in Europe for 20 years.^{footnote 275[275]}

Thirty-three years after this recommendation was first made in Canada, it is long past time for its adoption in Ontario and indeed it is unconscionable to ignore it any longer.

7.1.3 Casual, temporary, ^{footnote 276[276]} seasonal and contract employees

There is no reason to exclude casual, temporary and contract employees from the new rule we are recommending for part-time employees. Unless there are objective grounds such as seniority, experience, skill or qualifications which justify a difference in pay, temporary, casual, seasonal, and contract^{footnote 277[277]} employees should be treated in the same way as part-time employee’s vis a vis comparable full-time employees and have the same protection.

There is no principled reason to exempt these employees from the application of the rule. Employers can use part-time, casual, temporary, contract and seasonal employees interchangeably and to exempt some employees from the application of the rule would create loopholes and\or classification issues. These employees are also component parts of non-standard employment where there has been substantial growth and are just as deserving of equitable treatment as part time employees.

7.1.4 Casual and seasonal employees

There has always been a segment of the workforce that has provided their services on a casual or seasonal basis and issues of pay are the same as for part-timers. Also, there has always been a part of the workforce that works on a seasonal basis in certain industries such as construction and agriculture where precarious work and vulnerable workers are often found. Casual workers are generally included in EU countries with the same rules that apply to part-time employees applying to them.

7.1.5 Temporary and contract workers

Temporary employment, including limited-term contracts, has been the fastest growing component of non-standard employment, expanding at an annual rate of 3.5% between 1997 and 2015.^{footnote 278[278]} The share of temporary employment in Ontario in 2015 was 10.8%, more than doubling from just under 5% in 1989.^{footnote 279[279]}

Employees with temporary work arrangements generally experience lower wages as in 2015, median hourly rates for temporary employees were $15.00 in 2015, while permanent employees earned $23.00 per hour across the province.^{footnote 280[280]} These gaps may reflect differences in the types of jobs done by temporary and full-time/permanent workers, but they also reflect pay differences that exist when the jobs are the same or similar.

In 2012, 30% of minimum wage earners were employed in a temporary status, a figure that well exceeded the share of temporary status workers in the workforce at that time (12.9%). Thus, minimum wage workers were two-and-a-half times more likely to be employed in a temporary job category such as seasonal, contract and casual.^{footnote 281[281]} Similarly to part-time employees, typically they do not receive employee benefits available to full time employees on a pro rata or other basis and do to not receive compensation in lieu. Between 2000 and 2015, cumulative growth in temporary employment has outpaced that of permanent job growth (at 45% and 15%, respectively). As of 2015, there were 747,600 temporary employees in Ontario, comprising approximately 13% of total employees (temporary and permanent).^{footnote 282[282]}

Recommendation

85. We recommend the Employment Standards Act, 2000 be amended to provide that no employee shall be paid a rate lower than a comparable full-time employee of the same employer. The rule would not apply when there is a difference in treatment between employees on the basis of: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) another factor justifying the difference on objective grounds. Section 42 (1) of the Act should be amended to reflect this same approach.

The informing principle is that a part-time, casual, contract, temporary, or seasonal employee has a right not be treated less favourably than the employer treats comparable full-time workers, unless the less favourable treatment is justified on objective grounds.

7.1.6 Benefit and pension plan coverage

For practical reasons and because of our concern that there could be significant unintended impacts on full-time employees, we are unable to recommend that the government require equal treatment in the provision of benefits and pensions for part-time, temporary, contract, casual and seasonal employees. Instead, we recommend that government prioritize finding mechanisms to make basic insured health benefits such as drug,^{footnote 283[283]} dental, vision, and mental health services available not only to part-time, contract, and temporary workers, but to the many full-time employees who do not have benefits, the self-employed and small employers who also do not have access to cost effective health benefit coverage.

To be clear, we do not consider the lack of coverage for essential health care benefits to be decent or fair. The lack of access to benefit plans for drugs, dental, vision, hearing, and mental health services, and all other kinds of healthcare, is a significant problem because the absence of such benefits contributes materially to the ill health, vulnerability and precariousness of many employees and their families. Part-time employees are not the only employees without benefit coverage, as many full-time employees, independent contractors and small employers also do not have it. The provision of these kind of benefits mostly through the workplace shows the limits of this approach as when many employers can’t afford or don’t provide access to benefits, there is an significant vacuum which needs to be filled through some other kind of mechanism such as a basic public or combined public/private mechanism.

It is highly material that collective vehicles to deliver benefits are more efficient and less costly than individual benefit arrangements. Most health benefits are provided tax free when provided through a health benefit plan at the workplace. The denial of benefit coverage to large numbers of employees is one of the more obvious and inequities as it forces employees and their families either to go without the care, or, to pay for these benefits out of after tax dollars, when other employees covered by benefit plans get the value of the benefits on a tax-free basis. This has more impact on vulnerable workers in precarious work because it forces these employees either to go without necessary care for themselves and their families, or, if they can afford care at all, they are paying too much for their benefits when they are the least able to afford it.

Of course, some employees without benefit coverage will be covered by a family member who has family benefit coverage, and many youth will be covered by the same family plans. In addition, many employers in both non -unionized and unionized settings, including many unionized multi-employer benefit plans, provide benefits to part-time employees with certain restrictions such as thresholds for required hours worked or pro-rata entitlements. In Saskatchewan, an employer with 10 or more full-time equivalent employees must provide benefits to eligible part-time employees (i.e., part-time employees who work between 15 and 30 hours a week receive 50% of the benefits provided to comparable full-time employees, and those working 30 or more hours in a week receive 100% of the benefits provided to comparable full-time employees). It is certainly not an impossible task to provide part-time employment benefits through an employer benefit program.

That said, employers face many practical and financial issues in order to provide benefits to part-time employees. Providing benefits to any group of employees can be expensive, which is why many employers do not provide benefits to full-time employees, and drug plan costs, in particular, have been a significant cost issue for employers for some time. Pro-rating of benefits can be very difficult in benefit plans. It is unclear how one would pro-rate a fixed drug or dental claim and therefore employers usually create a different plan for part-time employees than for full-time employees. That practical requirement for a different plan pushes up the cost of establishing and administering a second benefit plan for part-time employees. In addition, in order to make the plan for part-timer employees financially affordable, there is often a requirement for mandatory participation of all part-time employees including those who already have benefit coverage through a family member. That can make the negotiation or provision of such benefits unattractive to those part-time employees who already have coverage through a family member leaving those without such coverage exposed.

We are unable to recommend that benefits must be provided by employers to part-time, contract, seasonal, casual and temporary employees because we are concerned about the cost and the impact on employers, particularly small ones. As we indicated above, benefit plans can be expensive and the costs of a drug plan in particular, can present challenges especially to small employers. We consulted with a variety of expert benefit plan consultants with extensive experience in the industry, including experience with the provision of benefits plans which included part-time employees. The thrust of the advice we received was that the mandatory coverage of part-time employees in benefit plans could well drive many employers out of providing benefits altogether. Faced with potentially having to set up another plan or substantially rethinking the application of the existing one to part-time and other employees, and the added costs, we are concerned they could just cease to sponsor a benefit plan at all. In short, faced with a choice between covering part-time employees and others, or not covering anyone, some employers could choose the latter as there is nothing which requires employers to provide full-time employees with benefit coverage. Without further careful study and analysis we are not prepared to make such a recommendation either.

Our conclusion leaves a vacuum in the provision of health care benefit coverage in our society especially for vulnerable workers in precarious work. Drug,^{footnote 284[284]} dental, vision, paramedical, mental health coverage, counselling and others benefits are obviously crucial to many working Ontarians. Some employees are vulnerable in precarious jobs precisely because their employment does not provide them with access to those essential non- taxable health benefits for themselves and their families. Our conclusion shows the limitations of relying on the workplace to be the source of benefit coverage. Senior Ontarians, and those on social assistance, and others depending on income through the Trillium Drug Program, have government support in obtaining some of these benefits . While group coverage is available in the private market, low income workers without benefit plans from their employer will find it difficult to obtain group coverage that is affordable, if only because there is no employer contribution to the cost of the plan and it is not tax effective. Such coverage may also be unaffordable for many of those who the new economy and the new workplace is driving to be self-employed, including small employers.

Recently the C.D. Howe Institute^{footnote 285[285]} focused on precisely this problem and pointed out that some provinces, notably Quebec, British Columbia and Alberta, have innovated with various programs to partially fill some of this gap. That study argues that this is a significant problem in our society and concludes that are many options available to governments for establishing better basic coverage in a fiscally responsible way, especially since it regards federal action in this area as highly unlikely.

Accordingly, we recommend that the government make it a priority to initiate a study as to how, at least a minimum standard of benefits, can be provided across all workplaces, especially to those full-time and part-time employees without coverage, the self-employed and including small employers. We must find a made in Ontario solution to address this issue. Unions in industries like construction and others with a large number of small employers have found effective ways to do this. These can provide models as to how this can be accomplished across workplaces either through a public or mixed public/private plan or through other means.

With respect to pension plans, a recommendation on eligibility for part-time and other similar employees is unnecessary because the existing situation is that part-time employees cannot be excluded now from coverage simply because they are part-time.^{footnote 286[286]} However, participation is not mandatory and for part-time and other non-full-time employees, participation is elective.

A pension plan may not require more than, the lower of, either 700 hours of employment or 35% of the Yearly Maximum Pensionable Earnings (YMPE) over 2 consecutive calendar years in order to qualify for membership. Then, as noted above, it is typical for non -full time employees to be offered elective membership. Unlike benefit plans, both defined benefit and defined contribution plans are relatively simple to pro-rate for non-full-time employees. The real issue appears to be for low income earners including many non-full-time employees. It is hard for them to have the funds to contribute when they qualify, and then their pension benefits result in a reduction of the guaranteed income supplement (GIS) they would otherwise receive in retirement from the Government of Canada. Our recommendation here is that the Provincial Government urge the Federal Government to review the working of the private pension system with public programs such as the GIS in respect of how they affect low earning Ontarians.

The recent agreement to broaden the Canada Pension Plan may also assist low earning employees.

Recommendations

86. We recommend that the government initiate an urgent study on how to provide at least a minimum standard of insured health benefits across workplaces, especially to those full-time and part-time employees currently without coverage, and to the self-employed, including small employers.
87. We recommend that the provincial government urge the federal government to review the operation of the private pension system, in conjunction with public programs, such as the Guaranteed Income Supplement, with respect to how they affect low earning Ontarians.

7.1.7 Contract employees – renewable contracts

Contract employment is much more commonplace than it was and is an important factor in the growth of temporary work in Ontario. Issues were raised with us and in the Interim Report related to the renewal of limited contracts^{footnote 287[287]} and how fixed term contract employment is reducing the amount of full-time employment. Project work and work for limited periods serve important purposes. The main concern related to situations where there are multiple renewals of fixed term contracts which has the effect of denying people security and permanency. The EU requires member states to introduce one or more of the following measures: objective reasons justifying the renewal of such contracts or relationships; the maximum total duration of successive fixed-term employment contracts; and the maximum number of successive renewals. We have considered provisions like those in the EU but we are not prepared to recommend their adoption without further monitoring and further study.

The most popular measure suggested for preventing abuse of fixed-term contracts is to impose a cap on the total duration of such contracts. We are not recommending a cap on duration because the impact is unforeseeable and the continuing employment of people on contract may be adversely affected. The CD Howe Institute recently reported on what it found to be the failure in the Netherlands of policies to restrict the renewal of contracts which it claimed led to greater precariousness and unemployment for contract workers.^{footnote 288[288]}

Our recommendation to government is to continue to monitor the use of fixed term contracts in Ontario and to assess the impact of legislation in other jurisdictions before legislative intervention.

Recommendation

88. The government should continue to monitor the use of fixed-term contracts in Ontario and to assess the impact of relevant legislation in other jurisdictions before engaging in legislative intervention.

7.2 Scheduling, right to request, and three-hour rule

7.2.1 Scheduling

The ESA does not include provisions regulating scheduling of work by employers. There is currently no provision in the ESA requiring an employer to provide advance notice of shift schedules or of last minute changes to existing schedules.

There is a three-hour rule providing that, when an employee who regularly works more than 3 hours a day is required to report to work but works less than 3 hours, he/she must be paid the higher of: 3 hours at the minimum wage, or the employee’s regular wage for the time worked.^{footnote 289[289]}

Despite the numerous and varied responsibilities of many in today’s workforce, there are workers who often have very little ability to make changes to their work schedules when those changes are needed to accommodate family and other responsibilities.

Many low-wage workers not only have very little or no control over the timing of the hours they are scheduled to work, but also receive their schedules with very little advance notice and they have hours of work that vary significantly. Uncertainty can also include: last-minute call-in where no schedule is maintained and, where there is a schedule, last-minute notice to employees of changes in work hours, and on-call shifts where employees are expected to be available for work on short notice (i.e., less than 24 hours’ notice).

Such practices make it difficult for employees to plan for child-care, undertake further training and education, maintain or search for a second job, make commuting arrangements, and plan other important activities. Consequently, uncertainty in scheduling practices may contribute to making work precarious.

In a paper published in the US by the Economic Policy Institute in April 2015, the author, Lonnie Golden, stated:

The plight of employees with unstable or unpredictable work schedules has become increasingly well-documented in the media and in the academic literature. There are drawbacks of erratic and uncontrollable work schedules for any employee, particularly those on nonstandard work times. They can be particularly acute among hourly paid workers, especially with lower incomes. Work times are most irregular for those hourly workers on part-time employment arrangements. Moreover, it is becoming recognized that when work hours and schedules generally are variable, it undermines elements of well-being, such as sleep time.

Work schedules or shifts that are irregular are consistently found to be associated with assorted adverse outcomes for workers. One such study examined the extent to which work demands, including irregular work schedules, are related to work-family conflict as well as life and job satisfaction among nurses. Irregular work schedules (along with work overload) are the predictors of work-family conflict, and that work-family conflict is in turn associated with lower job and life satisfaction. Generally, having to be constantly available for work, not just long hours per se, creates a daily struggle for workers to reconcile competing caregiving and workplace demands.^{footnote 290[290]}

Golden concluded; Employees who work irregular shift times, in contrast with those with more standard, regular shift times, experience greater work-family conflict, and sometimes experience greater work stress.

Other jurisdictions in Canada

Like Ontario, most Canadian and American jurisdictions have some reporting pay requirement that requires employers to compensate employees for a minimum number of hours when they report for work, but are sent home before the end of the scheduled shift. The amount of reporting pay required in such circumstances differs among jurisdictions, but generally ranges from 2 to 4 hours.^{footnote 291[291]}

There are examples in Canada of schedule posting requirements. In Alberta, every employer must notify the employee of the time at which work starts and ends by posting notices where that can be seen by the employee, or by any other reasonable method. An employer must not require an employee to change from one shift to another without at least 24 hours’ written notice and 8 hours of rest between shifts. In Saskatchewan, employers must give employees notice of the work schedule at least 1 week in advance and must provide employees written notice of a schedule change 1 week in advance.

United States (US)

Scheduling has been the subject of much discussion across the US, in response to the issues raised here. Recent developments have included: predictable scheduling laws (i.e., advance notice provisions); enhanced employee flexibility laws (i.e., right to request provisions); and non-legislative approaches (e.g., retailers re-evaluating and updating existing practices in response to external pressures).

In 2014, San Francisco became the first US jurisdiction to pass legislation^{footnote 292[292]} penalizing the use on-call shifts. The San Francisco Retail Workers Bill of Rights is intended to give hourly retail staffers more predictable schedules and priority access to extra hours of available work. It applies to retail chains with 20 or more locations nationally or worldwide and that have at least 20 employees in San Francisco under one management system. It is estimated that this law affects about 5% of the city’s workforce. The ordinances require businesses to post workers’ schedules at least 2 weeks in advance. Workers receive compensation for last-minute schedule changes, on- call hours, and instances in which they are sent home before completing their assigned shifts. Specifically, workers receive 1 hour of pay at their regular rate of pay for schedule changes made with less than a week’s notice and 2 to 4 hours of pay for schedule changes made with less than 24 hours’ notice.

The Retail Workers Bill of Rights in San Francisco has generated a larger discussion in the US about the need for predictable and stable schedules for part-time employees.

A number of state legislatures have introduced or enacted similar measures including Michigan in 2014, and Connecticut, California, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Oregon, and Indiana in 2015.^{footnote 293[293]}

Retailers are addressing scheduling issues on their own, with many publically speaking about existing or proposed changes. For example, Abercrombie & Fitch, Victoria’s Secret, and Gap Inc. and others pledged to make specific changes to their scheduling practices following inquiries by the New York Attorney General requesting information about their on-call scheduling practices questioning whether such practices were legal. Other large retailers in the US have voluntarily implemented predictable and stable scheduling regimes for part-time employees. In a unionized environment, Macy’s sets schedules for its employees as far as six months in advance for some of the shifts at its unionized stores in and around New York City.^{footnote 294[294]} Some companies have instructed their local store managers to consider requests for making schedules more stable or consistent week-to-week, such as Starbucks and Ikea, which provide up to 3 weeks’ advance notice of upcoming schedules.^{footnote 295[295]}

On December 20, 2016 the Toronto Star reported:

An estimated 50,000 workers nationwide for Disney, Aeropostale and four other U.S. retailers are expected to get an early holiday present from their employers — new agreements to end on-call work shift scheduling.

The agreements followed an April letter sent to retailers by the attorneys general of California, Connecticut, the District of Columbia, Illinois, Maryland, Massachusetts, Minnesota, New York and Rhode Island, all Democrats.

Workers assigned to shifts by call-in scheduling encounter obstacles in pursuing an education, and in general experience higher incidences of adverse health effects, overall stress and strain on family life than workers who enjoy the stability of knowing their schedules reasonably in advance, the letter said.

At least 10 per cent of the U.S. workforce has on-call or irregular work schedules and an additional 7 per cent work split or rotating shifts, according to a 2015 report by the Economic Policy Institute, a non-profit, non-partisan think tank focused on including the needs of low- middle-income workers. The lowest-income U.S. workers have the most irregular job schedules, the study found.

State and local officials in roughly a dozen jurisdictions across the nation have focused on the issue by introducing regulations that would restrict on-call shift scheduling, according to the National Retail Federation, the world’s largest retail trade organization.

Australia

In Australia, there are 122 industry and occupation awards (including retail and hospitality sectors) that cover most workers. Australia addresses scheduling practices (i.e., rostering) on a sectoral basis. For example, notice of schedule changes must be provided by advance written notice to part-time retail workers.^{footnote 296[296]}

Conclusion

Our experience and the approach taken in other jurisdictions reflect the fact that scheduling cannot be the same for all employees employed in all businesses. Scheduling can be a very complex and difficult subject. Trade unions and employers in collective bargaining often spend very significant amounts of time negotiating workable and fair scheduling arrangements. In sum, one size does not fit all.

7.2.1.1 Sectoral regulation of scheduling

However, there are sectors employing many part-time employees where some scheduling regulation is required. The fast food and restaurant sector is likely one sector requiring a scheduling regulation. The retail sector may be another. These sectors employ many part-time employees without any scheduling regulations and without the kind of voluntary scheduling implementation which we have seen from leading retailers in the United States.

Our consultations and representations from various unions and employee advocates have led us to conclude that lack of scheduling for part-time employees in particular often results in unwarranted hardship for employees who deserve some advance notice of their employer’s expectations with respect hours of work.

Recommendations:

89. The Employment Standards Act, 2000 should give the Ministry of Labour the authority to regulate the scheduling of employees by employers.
90. Recognizing the need for predictable schedules for employees in certain sectors and the variability of scheduling requirements, the government should adopt a sector-specific approach to the regulation of scheduling.
91. Scheduling regulation in some sectors, such as fast food and retail, should be a priority.
92. To the extent reasonably practicable, the Ministry of Labour should gather data and statistics related to other sectors to identify those sectors most in need of regulation and to determine priorities.
93. In accordance with recommendations made, herein, in relation to Sectoral Regulation and Exemptions, the Ministry of Labour will appoint sectoral committees to develop sector-specific scheduling regulations.
94. The Ministry of Labour should consider developing a policy framework for scheduling discussions by sector, describing issues, options and best practices.
95. In constituting sectoral committees for advising on sector-specific scheduling regulations, the Ministry of Labour should consider making available to the committees, experts on scheduling and/or others – for example, academics with the relevant employment standards expertise – who may help facilitate an educated discussion on the scheduling issues being considered.

7.2.2 Right to Request

Providing a right to request means providing employees the right to ask for such things as changes in work hours’ schedules, or location, with protection from retaliation by the employer. Right to request legislation recognizes that employees have home care, family, and other duties and responsibilities, but at the same time wish continuation of their employment and access to more flexible working arrangements.

The federal government has made a commitment that employees will be given the right to request flexible hours (in addition to an increased parental leave). For example, employees will have the legal right to ask their employers for flexibility in their start and finish times, as well as the ability to work from home.^{footnote 297[297]}

Other jurisdictions both in Europe and in North America have implemented right to request legislation.

An EU directive on part-time work includes provisions facilitating movement from full-time to part-time status and vice versa, where employers are required to give consideration to requests from workers to transfer from one status to another.^{footnote 298[298]}

1. requests by workers to transfer from full-time to part-time work that becomes available in the establishment;
2. requests by workers to transfer from part-time to full-time work or to increase their working time should the opportunity arise;
3. the provision of timely information on the availability of part-time and full-time positions in the establishment in order to facilitate transfers from full-time to part-time or vice versa;
4. measures to facilitate access to part-time work at all levels of the enterprise, including skilled and managerial positions, and where appropriate, to facilitate access by part-time workers to vocational training to enhance career opportunities and occupational mobility; and
5. the provision of appropriate information to existing bodies representing workers about part-time working in the enterprise.

Some European countries allow requests for transfers for all employees, but in many cases these are limited to those with caregiving responsibilities. A wide entitlement to request a change in status is often accompanied by the right to refuse for any reason although there may be a requirement that the employer meet employees to discuss the matter and provide a rationale in writing within a fixed period of time if the request is rejected. Reprisals cannot be taken against workers for making the request. While employers have a broad right to refuse requests, there is evidence that employers are more likely to permit adjustments between full and part-time work when a statutory right to request the change is in place.

The Netherlands passed the Part-Time Employment Act, which gives workers the right to periodically request a change in their weekly work hours (either requesting more or fewer hours). In July 2014, the UK extended the legal right to request flexible work arrangements for those with caregiving responsibilities to all employees.^{footnote 299[299]}

In the U.K., there is legal right to request allowing all employees to request flexible work arrangements, if they have been with a company for at least half a year. An employer can deny a request if it has a good business reason for doing so.

There are right to request provisions in numerous other jurisdictions including France, Germany and Poland. The legislation of some European countries, like the German legislation, contain  reversibility provisions enabling employees to be able to request moving back from part-time to full-time hours after having moved from full-time to part-time.

One example of right to request legislation referred to by Golden in his EPI paper referred to above is in Vermont. Golden describes the Vermont legislation as follows:

A law that took effect in January 2014 in the state of Vermont provides employees with a right to request. Versions of this right exist now in two other states—Montana protects an employee request for job sharing and Oregon protects a request for teleworking. The Vermont law establishes a process whereby an employee can request a flexible work arrangement for any reason (not just parenting duties), at least twice per calendar year, and the employer is required to discuss and consider such requests in good faith. Like the proposed federal legislation, it protects employees who request or use flexible work arrangements from retaliation or discrimination, a key component to prevent such arrangements from becoming a gender segregating practice (see Powell 2013). The law is also like the federal legislation in that there are at least eight factors for which the employer may deny the request, either completely or partially, as long as the denial of the request is put in writing. It may be denied as inconsistent with business operations or its legal or contractual obligations. It includes factors such as the burden of additional costs on business quality, performance, or restructuring; the effect on aggregate employee morale; an inability to meet consumer demand, recruit new staff, or reorganize work among existing staff; or an insufficiency of work during periods employee proposes to work instead. To date, there are no research studies documenting the experience of employees and/or employers regarding exercise of the right to request or its processes. In countries that have such a ‘right to request,’ the vast majority of requests are granted and the process appears to be without flaws.

San Francisco’s Retail Workers Bill of Rights contains a provision to promote what it terms, Full-Time Work and Access to Hours. The essence of that provision requires retailers with additional hours of work to offer to offer those hours of work first to existing (qualified) part-time employees before hiring additional part-time employees or before hiring through a temporary services agency, staffing agency, or any similar contractor.

Proposed legislation in Minnesota is described as the most far-reaching and promising among the states where legislation like San Francisco’s has been introduced (these states include Maryland, Massachusetts, and Connecticut). Each of the bills builds on and extends the provisions in the groundbreaking right to request law San Francisco enacted and is now enforcing. The Minnesota bill allows employees the right to request scheduling accommodation and to request a flexible working arrangement at any time, not just at the start of the employment relationship, and the employer must promptly evaluate and respond to the request, rather than just rejecting it. The Bill requires employers to grant such a request if the request is due to a serious health condition, caregiving obligations, educational pursuits, or requirements of a second job. The Bill also directs employers to offer hours to existing (not just part-time) employees before hiring new staff or temporary workers. Finally, protection against retaliation is stronger, placing the burden on employers to show that an adverse action against an employee who exercised his or her rights or assisted others to assert their rights, was not retaliatory in nature. Enforcement would include an individual right to pursue civil penalties, in addition to actions by an office of labor standards.^{footnote 300[300]}

In 2015, President Obama directed the federal Office of Personal Management (OPM) to initiate more flexible work and workplace options for the approximately 2 million federal employees. The directive includes a section with a Right to Request Work Schedule Flexibilities. The directive requires the employer to make federal employees aware, on a periodic basis, that they have the right to request work schedule flexibilities available to them under law, pursuant to an applicable collective bargaining agreement, or under agency policy, without fear of retaliation or adverse employment action as a consequence of making such a request. The agencies must facilitate conversations about work schedule flexibilities, including telework, part-time employment, or job sharing arrangements.

Conclusion

Right to request legislation can facilitate many objectives including the transition of workers from full-time to part-time and vice versa. It can facilitate scheduling of individual employees to help them with their outside obligations or transfer to another location. As we have seen from the above discussion, it can also obligate employers to provide work opportunities to part-timers or other employees prior to hiring more part-time employees or  using agency employees.

Professor Harry Arthurs in his Report to the Federal government recommended that after 1 year of service, employees should have a right to request, in writing, that their employer decrease or increase their hours of work, give them a more flexible schedule or alter the location of their work. The employer would be required to give the employee an opportunity to discuss the issue and provide reasons in writing if the request is refused in whole or in part. There would be no appeal of an employer’s decision on the merits. The employer’s obligation to respond to an employee’s request would be limited to one request per calendar year, per employee.^{footnote 301[301]}

Since Professor Arthurs made his recommendation, there have been more jurisdictions that have legislated and implemented right to request legislation. There is more experience therefore relating to workability, impact and employee utilization of such provisions. The trend to right to request legislation reflects a recognition that the flexibility created can be beneficial to employees and employers and to the health and welfare of both. However, the scope of rights and the restrictions on employees and employers in right to request law is varied reflecting the time of passage, the assessment of what is reasonable and perhaps, the nature of the community affected.

We agree with Professor Arthurs and the substance of his recommendation to the federal Government.

Recommendations

96. The Employment Standards Act, 2000 should be amended to provide that, after one year of service, an employee has a right to request, in writing, that the employer decrease or increase his or her hours of work, give him or her a more flexible schedule or alter the location of his or her work. The employer should be required to give the employee an opportunity to discuss the issue and provide reasons, in writing, if the request is refused in whole or in part. There should be no appeal of an employer’s decision on the merits. The employer’s obligation to respond to an employee’s request should be limited to one request per calendar year, per employee.
97. Any right to request legislation must include protection from reprisal or retaliation for an employee who exercised the right.

7.2.3 Three-hour rule

The Employment Standards Act, 2000 (ESA) does not include provisions regulating scheduling of work by employers. There is currently no provision in the ESA requiring an employer to provide advance notice of shift schedules or of last minute changes to existing schedules.

There is a three-hour rule providing that, when an employee who regularly works more than 3 hours a day is required to report to work but works less than 3 hours, he/she must be paid the higher of: 3 hours at the minimum wage, or the employee’s regular wage for the time worked.^{footnote 302[302]}

We agree with some employer submissions that the existing provision of the ESA should be changed to increase the minimum hours of reporting pay from the current 3 hours at minimum wage to 3 hours at the employee’s regular wage. This change will result in a clearer, fairer and easier to understand minimum entitlement.

Recommendation

98. The Employment Standards Act, 2000 should be amended to provide that, when an employee who regularly works more than 3 hours a day is required to report to work but works less than three hours, he or she must be paid three hours at the employee’s regular wage.

7.3 Temporary help agencies

7.3.1 Triangular relationship

The temporary help industry provides a broad spectrum of services to clients  ranging from executive search and recruitment, assignment of professionals and skilled workers to the assignment of less skilled and lower paid workers. In this review, we are primarily concerned with this latter group of staffing agencies and with the clients who use their services and benefit from the labour of these workers.

The triangular nature of the relationship between the employee, the agency and the client, and the temporary nature of the employment, results in some temporary help agency employees being among the most vulnerable and precariously employed of all workers.

The agency decides whether the worker will be sent to a client. The work with the client is temporary and the duration of an assignment often unknown and unpredictable. Employees can be removed without notice from their work at the instance of the client or the agency. The agency pays the employee his or her wages but the source of the funds is the client. The remuneration of assignment employees, at least in low skilled jobs, is generally below what the client pays its own workers doing the same job. The client generally directs and controls the work. The agency controls whether the worker will be sent to an assignment with subsequent clients. While work with a particular client is usually temporary, sometimes temporary lasts for a long period and the status of the employee more resembles that of a perma-temp.

Employment-related legislation allocates employer obligations, responsibilities and liability for non-compliance to one or both of agency and the client. For the purposes of the ESA, the worker is an employee of the agency which imposes primary obligations on the agency for payment of wages, vacation, and holiday pay while the client is jointly and severally liable for some - but not all - obligations. The status of being an employee of record of the agency, for the purposes of the ESA, makes sense because the agency assigns the worker to various clients and the agency is the paymaster. This is different from the approach taken under the Labour Relations Act, 1995 (LRA). For the purposes of the LRA, the Ontario Labour Relations Board (OLRB) has often found that the client is the temporary worker’s true employer, in the context of an application for union certification at the client workplace. The fact that there are different considerations under each act demonstrates that the allocation of employer obligations, responsibility and liability may differ depending on the issue. (See the discussion in Chapter 12 on Who is the Employer Under the Labour Relations Act, 1995.)

Background

We set out the background facts in the Interim Report but it is worthwhile to summarize some of them here in the context of our recommendations.

Temporary help agencies (THAs) recruit and assign people to perform work on a temporary basis for clients of the agency. The duration of the assignment can vary from one day to years. Such persons are termed assignment workers. Clients comprise diverse sectors and professions (e.g., manufacturing, administrative, support services, information and information technology), and as such require assignment workers with varying degrees of skill and education.

Businesses use THAs in a variety of ways. Some use temporary help to manage peaks and valleys in demand, to replace absences, and for short term projects, while others use assignment workers as an integral part of their regular staffing, using it as a device to vet workers in lieu of a probationary period, or because it is easier to terminate the assignment of an assignment worker than it is a regular employee of the client. Some use assignment workers because they can’t find enough permanent workers to work in their industry. Some businesses may use temporary assignment workers because it is more economical, having regard to lower Workplace Safety and Insurance Act (WSIA) premiums for agencies as compared to the client, particularly if dangerous work is involved. It is also said that economic uncertainty and volatility constrains new job creation and the use of THAs allows for leaner staffing.^{footnote 303[303]}

At the end of 2015, there were 962 temporary help services establishments in Ontario which comprised 47.3% of all temporary help service establishments in Canada.^{footnote 304[304]} These agencies are ubiquitous in many communities and constitute the major or sole entry point to employment into certain industries in some Ontario communities. Data suggests the employment services sector is growing quickly,^{footnote 305[305]} and especially in the US, while trends in Canada often follow somewhat later.

THA business model

The basic structure of the industry is that the agency recruits, refers and pays the assignment worker who performs his or her duties at the client’s place of business, subject to the direction of the client and for the benefit of the client’s business. The assignment worker can be removed from the client’s workplace at the discretion of the client with no requirement of any notice. After the assignment is terminated, the assignment worker then is commonly placed back on the referral list of the agency and may or may not be assigned to work for another client of the agency.

Assignment workers may comprise a large or small percentage of the client’s workforce and may work there for short or very long periods of time as circumstances vary from client to client, agency to agency, and worker to worker.

While the agency provides workers’ compensation insurance coverage for assignment workers, generally in client/agency contracts, the client agrees to provide all assignment workers with a safe worksite as well as safety information, training and equipment as required. Because the client controls the facilities in which workers work, the client and agency generally agree that the client is primarily responsible for compliance with all applicable occupational, health and safety laws.

Assignment worker profile

There are limited data on assignment workers in Canada although there tends to be more on the industry in the US. In Canada, according to 2004 statistics,^{footnote 306[306]} assignment workers are:

• most likely to work in processing, manufacturing and utilities jobs (43%) and in the management, administrative and other support industry (48%);
• far less likely to be unionized than direct-hire, permanent employees (recent estimates of union coverage rates among agency workers are as low as 3.4%);
• less likely than other workers to have completed high school or have a university degree; and
• are older than other types of temporary workers^{footnote 307[307]} (e.g., seasonal, contract or casual workers), with 32% being 45 years of age or older.

Although some assignment workers seek agency work because they desire flexible employment conditions, studies have found that many engage in this work for involuntary reasons – that is, they have been unable to find more stable employment.^{footnote 308[308]}

Other jurisdictions

Canada

Ontario, together with Manitoba, is in the minority of jurisdictions that specifically addresses THA employment.^{footnote 309[309]}

United States (US)

The ubiquity of temporary help workers in the US has led to significant criticism of the industry, much greater regulation by the US federal government, and new legislation in some states where THAs are very prevalent. Critics^{footnote 310[310]} argue that the greater use of temporary agency work is part of the decline of the middle class. The National Employment Law Project in the US (NELP) also argues that competition between staffing agencies causes significant downward pressure on wages. As noted in the Interim Report in the context of the joint employer liability doctrine under the Fair Labour Standards Act (FLSA)^{footnote 311[311]} and in the context of the joint employer doctrine recently applied by the National Labor Relations Board (NLRB) as set out in the case of Browning-Ferris,^{footnote 312[312]} the THA industry attracted the strong attention of regulators in the US in the last Administration. The thrust of this attention was, in effect, to make clients and THAs joint employers. Illinois, Massachusetts and California have all passed such laws in the last decade.^{footnote 313[313]}

European Union (EU)^{footnote 314[314]}

While there was strong antipathy to the industry in the early and mid-1900s in Europe, there was a change in attitude in the last part of the century. This change occurred in the context of a growing movement within the EU towards promoting flexible forms of work (including part-time and temporary work) as a strategy for better meeting the needs of employers and of employees.

This new attitude to temporary work through agencies was made possible by the adoption of the concept of flexicurity whereby flexible forms of work are promoted but in a context of the protection of, and the provision of, security for temporary help workers. Flexicurity is seen by the European Commission as an integrated strategy which promotes flexibility and security in the labour market concurrently. This includes policies which promote lifelong learning and training, adjustments to period of unemployment and transition, and comprehensive social security systems.^{footnote 315[315]}

The components of flexicurity are:

• Flexible and reliable contractual arrangements (from the perspective of the employer and the employee, of "insiders" and "outsiders") through modern labour laws, collective agreements and work organisation;
• Comprehensive lifelong learning (LLL) strategies to ensure the continual adaptability and employability of workers, particularly the most vulnerable;
• Effective active labour market policies (ALMP) that help people cope with rapid change, reduce unemployment spells and ease transitions to new jobs;
• Modern social security systems that provide adequate income support, encourage employment and facilitate labour market mobility. This includes broad coverage of social protection provisions (unemployment benefits, pensions and healthcare) that help people combine work with private and family responsibilities such as childcare.

The Directive on Temporary Agency Workers (2008/104/EC) legitimized agency work, defined private employment agencies as the employer^{footnote 316[316]} and provided equal treatment for assignment workers as that of workers directly hired by clients. One of the main objectives of the Directive was to correct the negative working conditions for temporary workers who suffered a pay gap with those hired directly by the employers, together with the gap in training and in working conditions, as well as greater exposure to physical risks, intensity of work and accidents at work.^{footnote 317[317]}

In most EU member states, the principle of equal treatment means that for the purposes of basic working conditions, the legislation, collective agreements, or other binding agreements (general company pay scales are included, as are company guidelines) applying to the sector of the user company or to the user company will apply to temporary agency employees. In a few member states, including in the UK, the working conditions that apply to the temporary agency employee are those that apply to a comparable employee at the same company.^{footnote 318[318]}

Exceptions, called derogations, from the equal treatment principle, are permitted but a country which opts for an exception must take measures to prevent misuse. One derogation is a qualifying period before equal treatment becomes effective. In the UK, agency workers are entitled to full equal treatment once they have completed a 12-week qualifying period.

The Directive also requires appropriate measures to prevent misuse in the application of any exception such as the qualifying period and in particular, successive assignments designed to circumvent the Directive. The risk of circumvention is particularly high in the case of a qualifying period, as it creates an incentive for the client to enter into successive short contracts with the agency to reset the qualifying period and therefore never face the obligation to pay equal wages.

The UK has adopted detailed measures to avoid circumvention of the law by providing that, in case of a break of less than 6 weeks by an agency worker on assignment at a user undertaking, the qualifying clock is not reset to zero. In Ireland, a gap must be at least 3 months.

Australia

In Australia, assignment workers must receive at least the minimum entitlements in the governing terms and conditions of employment for a sector or where the agency has its own enterprise agreement relating to wages and working conditions, that agreement.

Policy objectives

As difficult and vulnerable as the triangular relationship is for those who have to work in it, it has become increasingly commonplace. Industry makes use of it for many purposes, such as spikes in demand, seasonal fluctuations, and as a device for vetting a permanent workforce. In some extreme situations, the entire workforce is temporary.   While as a society we might strongly prefer that employers made less use of temporary help agencies, it is not practical for Ontario to regulate it out of existence, nor to overregulate the industry. Given the use which clients make of this device, and its growing usage globally, as a society we must decide which aspects of it are incompatible with decency and to be clear about the objectives and purposes we are attempting to meet through regulation.

What are the policy objectives that should drive regulation in this area?

7.3.2 Compensation, equality and job permanency

The first principle, that should be accepted, and the first objective, is that as a general proposition these workers should be paid the same as others performing the same work in the same establishment. In the section above regarding compensating part-time, casual, temporary and contract workers, we noted that the principle that those who perform substantially the same work should be paid the same is a powerful equitable argument that appeals to a fundamental sense of fairness and decency grounded in equality of treatment. Having recommended the application of that principle for those employees, it would be inconsistent to recommend something different here. At the same time, other jurisdictions have exceptions to the principle which should be considered as well.

One of the most criticized aspects of how assignment workers are treated by some clients is that they are kept in these positions for long periods of time, becoming in effect, perma-temps, where they are treated in an inferior, and, many believe, discriminatory fashion compared to someone directly hired by the client. We agree that the practice of permitting perma-temps is inconsistent with decency and the fundamental demands of equality of treatment. One primary objective then is ending the plight of perma-temps by requiring equality of treatment after a fixed period of time.

In this regard, the Europeans who accept the fundamental principle that assignment workers should be paid the same as the client’s direct employees also have a number of exceptions, one of which, as in the UK, is a qualifying period during which the assignment employee does not need to be paid equally. In the UK, the qualifying period is three months. We are attracted to the concept of a qualifying period, because it is an accepted practice in a jurisdiction which accepts the principle of equality, and because it broadly accords with notions of a starter or a probationary rate, which is quite common in workplaces generally.

We are not recommending a limit on the duration of the triangular relationship itself but we do seek to protect the employee from being unfairly compensated.^{footnote 319[319]}

There is a material difference between the part-time, casual or temporary worker hired by the client directly and assignment workers sent to the client by a temporary help agency. That difference is that the client using a temporary help agency must pay the agency for the service of finding the assignment worker, plus a profit margin for the agency on the labour of the worker, and pay for the labour of the worker.

In principle, we agree the assignment worker should be paid the same as the employees of the  client who perform the same job. In fact, assignment workers typically receive compensation that is significantly less^{footnote 320[320]} than the  client’s direct hires.

One of the major justifications given for the use of temporary help agency workers is that it is a gateway for some vulnerable workers in precarious work into permanent employment. How successful this is in practice is unclear and the data is conflicting.^{footnote 321[321]} Anecdotally, we do know that clients finding a good worker will be reluctant to let that worker go if they require a permanent employee, and will take steps to make those workers permanent. From a policy point of view, one major goal in regulating this work is to encourage and make possible the achievement of permanent employment for vulnerable workers in precarious work, even if this is for a relatively small group in the overall workforce. It is also the case, however, that some workers doing this kind of work do not want permanent employment, at least not with some particular clients.

If clients rely on a third party to refer people from whom they can potentially choose for a regular workforce, they will presumably accept workers they might not otherwise accept, and give people a chance to prove themselves who might otherwise have a more difficult time being hired. The potential to be considered and accepted for permanent employment by the client will be important for some agency employees.

If providing opportunities for permanent employment is a worthwhile goal, then that militates in favour of a longer qualifying period so that the client has a longer opportunity to assess the worker and can feel comfortable in making a decision to offer him\her employment. It is also important that during the qualifying period assignment workers be made aware of permanent openings and be able to apply. It should also be a requirement  that prior to terminating the relationship at the end of the qualifying period, the client must consider offering the assignment worker an available position  with the client which is compensated on the same basis as the client paying its own direct hires.^{footnote 322[322]}

One factor influencing the length of the qualifying period is the fee payable to the agency by the client when the client hires the assignment worker on its own payroll. Such fees are obstacles to the client hiring the worker into its own workforce. In order not to discourage the client from offering the assignment worker a permanent position, Ontario law now permits such a fee to be charged only for the first six months after the assignment worker is assigned to the client.^{footnote 323[323]} The temporary help industry argued forcefully and persuaded the government in 2009 that it requires a six-month period because otherwise it would not recoup its recruitment costs. We are uncertain whether this argument applies in the case of lower paid workers or whether it really only applies to higher paying jobs. In any event, a longer qualifying period is more likely to give more assignment workers a better opportunity to be permanently placed than would a shorter qualifying period. Clearly, if the qualifying period ended prior to six months, the fee would be payable and there would be an incentive for clients not to hire the assignment worker. Accordingly, the qualifying period should end just at or after the time the fee is no longer payable. In practical terms this should mean the client will at the end of the six month period turn its mind to offering the assignment worker a job directly with the client and will not have to pay the agency a fee if the assignment worker is hired. This should incentivize the hiring of assignment workers into permanent jobs at the end of the qualifying period.

A six month period corresponds to a reasonable probationary period for unskilled work and provides the client a reasonable opportunity to consider a permanent hiring.

A six month qualifying period means the long term placement of people in positions with the client who are paid on an inferior basis as perma-temps will become illegal. As stated above, the triangular relationship can continue past the qualifying period but the inferior treatment with the clients own employees would not be permitted.

A concern with our recommended approach is that it could unnecessarily restrict professional and skilled employees on longer assignments and projects, and the clients who use the services of such persons. Our mandate is generally to protect vulnerable workers in precarious work; there are higher paid workers who do not need the protection of the Act or for the agencies and clients who employ them, the regulation would be unnecessary and invasive. We think this concern can be met by placing an income cap on the operation of this recommendation such that it does not apply to higher earners. We recommend that the provision not apply to persons at or above a cap of 2.5 x the minimum wage (converted to a weekly or annualized salary based on a 40 hour week). This would be an annualized salary of $59,280.

The EU has pointed out that exceptions to such a qualifying period can be abused and what is required is a mechanism that prevents the client from simply stopping the relationship one day and starting anew the next, such that the requirement for equal treatment is never operational. In our view this requires a reasonable lengthy break before an assignment worker can be brought back without the protection of equality of treatment. The client should have to assume that the worker will be unavailable at a later period, and if they want the worker to remain, they would be well served by offering them permanent employment. We recommend a compulsory break of not less than three months.

Recommendations

99. Assignment workers should not receive less compensation than a comparable employee of the client performing similar work.
     

    This provision does not apply during the first six months that an assignment worker performs work for a client. Only a break in the assignment of longer than three months will negate the obligation to compensate the assignment worker equally to a comparable employee of the client performing similar work.

100. A client should make best efforts to ensure assignment workers are aware of all available openings for jobs with the client and should consider, in good faith, any assignment worker who applies for a position.
101. Prior to terminating the employment relationship with an assignment worker, the client should consider, in good faith, whether the assignment worker is suitable for an available position with the client.

     This provision does not apply to persons at or above a cap of 2.5 times the minimum wage (converted to a weekly or annualized salary, based on a 40-hour week).

7.3.3 Termination pay

Under the ESA, the agency is deemed to be the employer of record.   Once there is an employment relationship between an agency and an assignment worker, the relationship continues whether or not the employee is working with a client of the agency on a temporary basis. The fact that an assignment ends does not mean that the employment relationship with the agency ends.

Rights to notice on termination operate differently for an assignment worker working for a client, and an employee hired directly by the client working at that same workplace. If both employees do the same work at the client’s business for 4 months and both are let go without notice and without cause, the client would be required to pay its direct employee termination pay in lieu of notice of 1 week, but would have no payment obligations^{footnote 324[324]} to the assignment worker.

The agency also does not have such an immediate obligation to the assignment worker because the loss of work (i.e., assignment) is not technically the end of the employment relationship. The act currently treats this situation as though it is a temporary layoff, and no termination pay is payable by the agency to the assignment worker if the worker is referred to another client by the agency within 13 weeks (in any period of 20 consecutive weeks).^{footnote 325[325]}

The termination pay provisions of the ESA for assignment workers  are very complex and it is very doubtful if many assignment employees understand if they are entitled to termination pay, when, and how much.

Assignment workers are treated as if being told to leave the client workplace at the direction of either the client or the agency is a temporary layoff. In a temporary layoff, an ordinary employee is laid off for what might turn out to be a temporary period and there is not necessarily the intention to lay off permanently. The relationship between that worker and the employer is a direct one and employees are likely to have worked for that employer for varying periods of time, including some employees who will have worked for the employer for years. The reason for the 13 week period in a period of 20 weeks is presumably because that is the period without recall to work after which it makes sense to consider the employment at an end, and make termination pay payable.

In the case of assignment workers, there is likely no possibility of that client having the assignment worker back to work. The removal of the employee from work is not intended as a temporary layoff by the client but as the end of the relationship with the client. The question is not if there is a possibility that there will be more work with the client, but whether the agency will refer the worker to another client. Projecting that forward to 13 weeks in the next 20 is taking an existing rule not intended for this situation and applying it to a situation where it frankly makes little sense and has no real application. If a further referral is going to happen, it should occur within a reasonably short period of time after the assignment worker is no longer working for the client. The existing time period using the temporary layoff rules make no rational sense in the context of the likelihood of a future referral.

The purpose of notice and termination pay is to give workers a period of time to adjust and find other work. The ordinary rule for regular employees is an entitlement to one weeks’ notice after three months or more of employment, two weeks’ notice after one year and up to a maximum of 8 weeks’ notice or pay after 8 years of service.

The current state of the law permits the relationship with the client to end without any obligation by the client for notice or pay, and equally no obligation by the agency for notice or pay for the end of an individual assignment with the client (the agency is, however, responsible for providing notice or pay in lieu of notice if they end their employment relationship with the assignment worker).

In the triangular relationship between the agency, the client, and the assignment worker, who is called the employer is not as important as is the allocation of responsibility to be determined from a policy point of view by the statute. The point is not to determine rights based on the fiction that the employee remains employed, but to determine what rights ought to apply for notice or pay in these circumstances based on what makes sense and is fair and decent in the circumstances. It does not make any sense, and is not fair or decent given the precarity and contingency in the entire scheme for assignment workers to get virtually no notice and no pay because of the possibility of future assignments. The situation of an assignment worker is not equivalent to a temporary layoff in form or substance.

In our view, employees should receive the notice that the law requires of one week after three months of work in an assignment and otherwise as required by the ESA. If the client or the agency wants to terminate the assignment, the assignment worker should receive notice. If the agency is required to give the notice, it will likely, in turn, as a practical matter, require the client to provide the notice to it, in its contract with the client. There is no cost to the agency or the client if notice is given.

If notice is not given, pay in lieu of notice should be forthcoming unless the agency refers the assignment worker to other clients for the number of day’s equivalent to the period of the notice, within three months of the end of the assignment. In other words, if the assignment worker is not given notice of the end of the assignment, and is owed five days’ pay, the assignment worker should be paid, unless s/he is provided five days of work in the next three months with other clients and any days worked would lower the amount owing. Of course, if the assignment worker unreasonably refuses an assignment, the assignment worker will be deemed to have worked the assignment for purposes of calculating the amount owed.

These recommendations are not intended to affect the amount of notice or pay owing to an assignment worker if the agency terminates the employment of the assignment worker except if the end of the assignment and the end of employment by the agency coincide, there is only one payment owing, (the larger), not two.

Recommendation

102. The existing rules with respect to notice of termination and termination pay for assignment workers, which rely on the temporary layoff provisions of the Employment Standards Act, 2000 in relation to payment of termination pay, should be revoked and the following changes made:
      

     The agency should provide to the assignment worker notice with respect to the end of the assignment with a client, whether the termination was caused by the agency or the client, in an amount equivalent to the amount of notice currently required under the Employment Standards Act, 2000. If notice is not given, unless the employee is referred to work for other clients of the agency, termination pay is payable by the agency for the number of days equal to the amount of the notice, which amount must be paid within a period of 13 weeks following the end of the assignment. Each day of work reduces the amount of termination pay owing.

     This recommendation is not intended to have any impact on the amount of notice or termination pay owing by the agency if it terminates the employment of the assignment worker except that, if the end of the assignment and the end of employment by the agency coincide, only one payment is owing, the larger of the two payments.

7.3.4 Workplace safety for assignment workers

There appears to be little doubt that temporary workers are at a significantly increased risk of injury at work as opposed to the regular workers of the client. The United States Depart of Labour, Occupational Safety and Health Administration (OSHA) website states:^{footnote 326[326]}

As detailed in the documents posted on our website, temporary workers are at increased risk of work-related injury and illness. In recent months, OSHA has received and investigated many reports of temporary workers suffering serious or fatal injuries, some in their first days on the job. Numerous studies have shown that new workers are at greatly increased risk for work-related injury, and most temporary workers will be "new" workers multiple times a year.^{footnote 327[327]}

In 2014, the Director of OSHA,^{footnote 328[328]} said:

We’ve seen over and over again temporary workers killed or seriously injured on their first day at work. When we investigate, we see that most employers don’t treat temporary workers the way they treat their permanent employees — they don’t provide them with the training that is necessary.

In Ontario, research by the Institute for Work and Health over a 10 year time frame found that new workers face a higher injury rate than permanent workers and since temporary workers are by definition new workers, they have a much greater risk of injury. Risk is very high especially in the first month on the job.^{footnote 329[329]}

The issue here is whether the insurance system under the Workers Safety and Insurance Act (WSIA) is allocating risk and costs inappropriately such that it is in the economic interest of clients to assign more dangerous work to assignment workers. This is work for which assignment workers are the least suited because they are generally new to the workplace and therefore more susceptible to injury.

Background

The agency is deemed to be employer of record for purposes of the WSIA, including paying Workplace Safety and Insurance Board (WSIB) premiums, WSIB experience rating, and return to work obligations. The agency pays WSIB premiums for assignment workers as they move through assignments (i.e., clients do not pay anything to WSIB). These premiums presumably are charged back to the client directly or indirectly through fees (e.g., as part of the markup).

WSIB experience rating programs are meant to encourage employers to reduce injuries by providing refunds to safe employers and surcharges to employers with high injury rates. WSIA premium-based refunds or surcharges are based on an employer’s accident record. In the THA sector, experience rating costs and benefits currently are applied to the agency supplying and paying the worker, not to the client to whom the worker is supplied and is based on the THA industry rate, not on the particular client industry rate. This is the case even though injuries occur at the client workplace, which is controlled by the client who decides what work the assignment workers perform.

The WSIA premiums paid by agencies currently are often significantly less than those paid by the clients for direct hired staff doing the same work. This provides an incentive for the client to use assignment workers to perform more dangerous work. A client can save money by assigning work that is more likely to give rise to an accident or injury to assignment workers rather than to its direct hires. This is potentially a selling point for the temporary help industry to convince some clients to use their services as it can lead to significant savings to the client.

In Ontario, the Institute for Work and Health has set out its findings that temporary workers are at greater risk of injury, in part because of the financial incentives and disincentives in the WSIA, the vulnerability of temporary workers to management by temporary help agencies of workplace accidents, and the limitations on the responsibility for integration back into the workplace placed on clients.

Because temp agencies are the employers under Ontario’s Workplace Safety and Insurance Act, they are the ones subject to experience rating surcharges when worker injuries occur – not client employers who actually control the worksite.

Temp agencies, by and large, prefer to maintain responsibility for claims and costs because it increases business. And they can generally manage accident costs and consequences, as follows:

• some agencies (involved in this research) discourage injury reports by requiring extensive written accounts of the accident and/or questioning the injury’s legitimacy;
• agency workers are mostly short-term and rarely subject to the duty to rehire after a workplace injury,  and, in any case, rehiring only means putting workers back on the roster, not into jobs with clients;
• because temp agencies can operate with very little physical infrastructure – you can run one with a Blackberry, noted one workers’ compensation regulator – smaller agencies can close and reopen in the face of very high fines or experience rating surcharges, thus avoiding these costs if company directors have no identifiable assets; and
• because their workers’ comp premiums are sometimes lower than those of their client employers, temp agencies can build these premiums into their contract prices.^{footnote 330[330]}

The Stronger Workplaces for a Stronger Economy Act, 2014, provided the government with a regulation-making authority to require that the WSIB, under its experience rating programs, ascribe injuries and accident costs to the clients of the THAs where injuries to agency workers actually occur rather than to the agencies themselves.

On December 1, 2016, the government made regulation 470/16, which amended O. Reg. 175/98. The amendments related to THAs do not come into effect until January 1, 2019.

Under the amended regulation, THAs will be classified for premium rate calculations falling under the class of industry of the client to which they supply workers. This would ensure that a THA’s premiums reflect the business activity and risk of the industries to which it supplies workers. For example, if an employment agency supplies office workers to a plant that is part of the auto sector, the agency would have to pay the same manufacturing premium rate that the auto sector manufacturer pays for its own workers.

Under the new structure a THA will have a premium rate for each industry to which they supply labour, i.e. if they supply labour to clients in several industry classes, they would have a rate established based on that THA’s own experience in each particular industry class, as opposed to the current THA industry rate which is lower.

However, notwithstanding this change in the regulation, the premium rates would still be based on the claims experience of the individual THA that supplies labour to each respective client in that industry. For example, the particular manufacturing rate for a THA would be based on their own risk profile (not that of their client), and that cost would be a function of the THA claim costs in manufacturing. Therefore, it will be possible for the THA’s premium rate to be more expensive or cheaper than the client’s premium rate. As the THA is considered the employer of record under section 72 of the WSIA, their rate would be adjusted based on their own risk profile in each particular sector to which they supply labour, and not that of their clients. The only change from the status quo will be that the premium structure will be based on the industry of the client and not the lower THA industry rate.

Analysis

It is important that the risk of higher injury be properly allocated. There should be financial incentives and disincentives to discourage workplace practices that cause higher rates of injury. Businesses with workplaces that carry a high risk of injury ought to pay premiums and surcharges in accordance with that higher risk. At present, because WSIA treats agencies as the employers of assignment workers, the risk of injury to assignment workers is being allocated to agencies and not to clients and based on the THA industry rate not the client industry rate.

Risk should not be allocated on the basis that assignment workers are the employees of the agency. The provision in a statute that the agency or the client is the employer is simply a means of allocating liability, responsibility and risk, and is not a conclusion of status for all purposes. In fact, the allocation of liability and responsibility will vary according to the context. Accordingly, under the ESA, while the agency is the employer of record, clients have joint and several liability for many rights of assignment workers. In contrast, for the purposes of a union certification application under the LRA, the client is often found to be the true employer when determining whether temporary workers should be included in a bargaining unit at the client workplace. (See the discussion in Chapter 12 on Who is the Employer Under the LRA.)

In the WSIA context, the reality is that it is the business of the client that creates the higher risk and that workplace is controlled and work directed in most cases by the client. In the interests of safety and workplace responsibility, the client should be responsible for injuries sustained by its own staff and by assignment workers.

The government was obviously aware of the importance of this issue when it passed the Stronger Workplaces for a Stronger Economy Act, 2014. It explicitly provided a regulation-making authority to allow the WSIB, under its experience rating programs, to ascribe injuries and accident costs to the clients of the THAs where injuries to agency workers actually occur rather than to the agencies themselves. A new system will be implemented in 2019. It is unfortunate that this is delayed but it is preferable for the premium structure to be based on the industry to which workers are supplied and not the THA industry itself. The concern that we have, is that in the new system, it will still be possible for the THA rate to be more expensive or cheaper than the client rate, depending on the accident experience of the THA as compared to the client. This provides an incentive for clients to switch agencies from one with an expensive existing poor safety record to a new agency with a better accident record, perhaps because it has yet to supply many workers to that industry.

Entry of new agencies into the THA industry is easy, low cost with few barriers to entry and a new THA could offer clients cheaper rates than an incumbent THA with more expensive premiums. This may lead to a decision by the client to hire the new agency and reduce its costs, but at the expense of exposing workers referred by that agency to greater risk.

The key principle is that the cost of injuries occurring to assignment workers in the workplace should be borne by the client using their services and directing them in the workplace. Otherwise adequate steps may not be taken to protect such workers from injury. THA liability and accident experience independent of the client is a fiction. Using assignment workers should not permit a deviation from the principle of the client being fully liable and responsible for the risks it creates and manages and for the injuries that occur in its workplace.

Recommendation

103. With respect to the allocation of risk and liability, the government should accept the principle that the client, not the agency, is responsible for injuries incurred in a workplace by an assignment worker.

7.4. Hours of work and overtime

The major focus of those making submissions to us in this review regarding hours of work was not directly on the existing hours of work provisions of the Act but more on what was alleged to be missing in the Act, such as provisions relating to scheduling. The other major concern was with exemptions to the Act, many of which relate to hours of work and overtime. We deal with exemptions in Chapter 6 and with scheduling above.

On the remaining hours of work and overtime issues, no one issue surfaced that affects vulnerable employees and precarious work in a major way, except the averaging of overtime to which we have proposed some changes.

In terms of the impact on employers, overall, we found in our review that Ontario’s existing approach to hours of work is complex, somewhat unconventional, and some provisions could theoretically pose difficult issues for employers. However, we heard no serious complaints from the employer community that overall the existing system posed significant problems for their operations or flexibility. At a practical level, the existing system seems to work effectively. However, some small changes to the system are advisable to help employers better adjust to the marketplace. If in the future the provisions as currently structured prove difficult in practice, the government will have to look carefully at reform, likely adapting them on a sectoral basis.

7.4.1 Employee consent

Ontario’s uniqueness lies in its system of requiring written employee consent for various deviations from statutory requirements. For example, if the employer wants employees to work beyond 8 hours in a day or beyond regular workday hours, or beyond 48 hours in a week, individual written consent is required. While employers are not particularly happy with the time and steps necessary to obtain these consents, there was no widespread drive to repeal the requirement. However, many employers seemed unaware that obtaining consent electronically was permissible, and so we would recommend that this be set out in the legislation or regulations and not just be maintained as a Ministry of Labour practice.

The threshold at which employers must ask for employee consent if they want them to work overtime in Ontario is the lowest in the country (along with Manitoba), but we can only assume that obtaining consent is not a significant issue because most employees provide it.^{footnote 331[331]}

 While we did not hear from many employers that employee refusal to work overtime was causing problems. Those that did raise the issue were in sectors with a just-in-time manufacturing model or other businesses where there was an urgency to the work being performed. In some cases, we heard that that the consistent refusal of a minority of employees to work overtime caused problems especially where employees worked closely together as members of a team and the absence of a team member could cause difficulty with work being performed effectively.

This employer concern is not an issue in unionized workplaces where unions often grant consent on behalf of the workforce to work overtime and individualized consents are not required. Of course, individual employees will have family and other human rights considerations that would not permit them to work overtime and these obviously have to be respected and accommodated. However, this model in unionized workplaces demonstrates that we do not now rely on individual employee consent in all workplaces.

Accordingly, in our view, it may be appropriate in a non-unionized environment to also have an option where the majority of employees in a secret ballot vote process could determine the issue binding individual employees, except where human rights considerations apply or in the circumstances referred to in the Arthurs Report.^{footnote 332[332]} These votes could be supervised through the Ministry or the OLRB which has extensive experience in conducting workplace votes, and the results could be in place for a period of time after which there could be reconsideration by the group.

In our view, because this option reduces individual choice, it should not be an automatic option in every non-unionized workplace. Rather it should be an option that may be available, in non-unionized settings, on a sectoral basis. What we intend is that if individualized consents are posing problems for employers in a sector, this is a matter that should be raised in the sectoral committee (our proposal for sector committees is in Chapter 6) and an attempt made to achieve consensus on the need for an option for group consents at individual workplaces in that sector. In other words, it would be something that sectoral committees could discuss and recommend to the Minister, and some individual employers in a sector could then consider it as an option.

Recommendations

104. The Ministry of Labour’s practice of permitting employee consent agreements to be obtained electronically should be set out in the Employment Standards Act, 2000.
105. An option for obtaining group consent to work overtime, or to other hours of work rules, should be made available through a secret ballot vote on a sectoral basis, if it is appropriate for that sector.

7.4.2 Requirement for Ministry of Labour consent to work longer than 48 hours a week

From 2001 to 2005, employees and employers could agree in writing to a work week of up to 60 hours and no approval was required by the Ministry of Labour. Ministry approval was needed for agreements to work beyond 60 hours in a week.

Changes were subsequently made in 2005 to require the Director of Employment Standards to approve all agreements between employers and employees to work more than 48 hours in a week – not just those above 60 hours a week.

The return to the need for Ministry approval was in part a response to criticism that without the requirement for Ministry approval the law was effectively making possible the 60-hour work week. Presumably, the policy rationale for the requirement of Ministry approval on top of employee consent is that the employee consents cannot be relied upon without monitoring by the Ministry.

If the intent of the change in legislation was to achieve active Ministry oversight on the length of the work week, this has not occurred. Our understanding is that Ministry approvals to work 48-60 hours a week are given routinely. There is little scrutiny applied to these applications. In general, it appears that the Ministry currently does not exercise any substantial or meaningful policy judgement or framework within which these applications are evaluated. Applications for hours beyond 60 are scrutinized.

Is there any purpose served by maintaining the requirement? Some would argue it is worth maintaining just to discourage employers from applying. We disagree. If every employer who applies generally obtains Ministry approval, there is no reason for the unsophisticated employer who does not know that the application will be routinely approved to be disadvantaged by its lack of knowledge as to how the system works. Moreover, Ministry approval conveys the false impression to the employees and to the world that the government has turned its mind to the issue of the longer hours in that workplace and approved them, when in fact it has done no such thing.

Nor are we convinced that the Ministry should apply its mind to those kinds of decisions. If for 10 years the Ministry has just approved virtually all the applications and we have heard no outcry that there has become a standard, or prevalent or even contentious pattern of 60-hour work weeks, then there is no basis for maintaining the requirement.

It appears to be wasteful, unnecessary and misleading to continue this requirement for Ministry approval of work weeks between 48-60 hours and just creates unnecessary paperwork and regulation. The requirement that the Director of Employment Standards approve all agreements between employers and employees to work more than 48 hours in a week should be removed.

Ministry approval for permission to work more than 60 hours a week should be maintained.

Recommendation

106. The requirement for obtaining Ministry of Labour consent to work 48 – 60 hours a week should be repealed.

7.4.3 11-hour rule

The maximum number of hours employees can be required to work in a day without written employee consent to work longer is 8 hours or the number of hours in an established regular workday; however, there must be an 11-hour daily rest period. Taking into account the 11-hour daily rest requirement, the maximum regular workday that an employer can establish is 12 hours per day (because there are two 30-minute meal periods in that time frame) which cannot be exceeded, either by employee consent or Ministry approval. For example, if the regular established work day is 9 hours per day, written agreement would be required for the employee to work beyond 9 hours per day, up to 12 (plus two thirty-minute meal breaks) but no more.

Ontario is the only province to require 11 consecutive hours off each day. Ontario is the only Canadian jurisdictions to have daily rest rules mandating that the longest an employee can be required to work in a day is 12 hours and where no variations or extensions can be made. This is a hard cap on daily hours.

We heard from a few employers that this rule poses some problems for them but we were given no details and no specifics. The rule has been in place since 2001 and clearly most employers have either adapted to it or the Ministry of Labour does not enforce it. We considered loosening the rule to permit employee consent as in some other provinces or requiring Ministry approval. We rejected the latter option because it just adds yet another layer of regulation and we rejected the former because we are inclined to think that an absolute protection on the total number of hours of work in a day is a reasonable protection as a health and safety matter.

While we have decided to recommend maintenance of the status quo, if there are industries and\or areas of the economy where longer daily hours are required, that issue can be raised on a sectoral basis in the committee process we have recommended, where a discussion can take place as to whether a lower minimum period of daily rest is appropriate and necessary in the particular circumstances of that sector.

Recommendation

107. Maintenance of the status quo. The Ministry of Labour should be open to considering varying the 11-hour rule on a sectoral basis, if appropriate.

7.4.4 Overtime and overtime averaging

7.4.4.1 Overtime

We were urged by almost all the organizations advocating for employees and by the unions to move the trigger for overtime work from 44 hours to 40. Although the trigger for overtime in Ontario is higher than in Quebec, British Columbia, Manitoba, Saskatchewan, Newfoundland/Labrador and the Federal jurisdiction, we have been cautious recommending increased across-the-board minimum entitlements for all employees. Instead we have generally (but not always) emphasized targeted changes aimed at improving the security and circumstances of vulnerable workers in precarious jobs consistent with our mandate.

We have also listened to the employer community. We agree that the current uncertain state of the economy, the future of trade with the US which is our largest trading partner, our history of slow productivity growth, improvements to the CPP and the effects of cap and trade, the potential impacts of some of our recommendations on some employers, (e.g., eliminating the student and liquor server minimum wage provisions, the new part-time rule, and others) are such that we should be cautious in recommending broad changes which might directly affect the bottom line of those same employers. The trigger for overtime should remain at 44 hours per week.

Recommendation

108. The trigger for overtime should remain at 44 hours per week.

7.4.4.2 Overtime Averaging

The Act currently provides that agreement in writing is required between the employer and employees to average hours of work in order to determine an employee’s entitlement to overtime pay. In addition, Ministry of Labour approval is required for all such agreements. We understand that employer applications to permit overtime averaging over a period of 4 weeks or less are routinely approved by the Director of Employment Standards. Applications to permit overtime averaging over a period of more than 4 weeks are scrutinized.

There is no limit in Ontario on the number of weeks over which overtime can be averaged. This contrasts, for example, to the U.S. where the limit is two weeks. In Canada, only Nova Scotia, Saskatchewan, and British Columbia allow hours to be averaged.

In general, it appears that the Director of Employment Standards will approve up to 4 weeks averaging for non-unionized employers and 6 weeks averaging for unionized employers. The Ministry will consider such factors as whether the averaging provides employees with increased flexibility, whether the threshold for overtime is lower than the Act, (e.g., whether it is lower than 44), whether there are guaranteed hours of pay, and whether employees are paid more for working weekends or unscheduled hours. Generally, however, our understanding is that the denial of approval is rare and, as indicated above, applications for averaging over a four-week period are routinely approved. From the criteria applied on the applications for averaging above four weeks, it is difficult to understand how the Ministry balances the employee interest in being compensated for the long hours worked with whatever employer interest is driving the request for averaging.

In our view, averaging overtime is a necessary and valuable tool for increasing employee flexibility in hours of work while not increasing employer costs. Compressed work weeks and similar arrangements may also serve employer interests in that they may be necessary to enable continuous service or production. What all such arrangements typically have in common is that the total number of hours worked does not extend beyond the overtime threshold over the period of averaging. The scheduling requirements or desire for flexibility is accommodated without adding hours of work beyond the threshold and without added overtime cost.

Where averaging overtime is unnecessary to accommodate employee interests, or where an employer requiring additional longer hours of work at certain times will offset this with fewer hours of work at other times, the case for averaging is less compelling. To the extent it is allowed, it undermines the right to be paid overtime pay for working inconvenient hours. The reason for overtime pay is because working longer than normative hours in a day, or week, or on the weekend is considered an intrusion on what are normally non-working hours. Accordingly, the law requires an additional premium once a certain threshold of hours is reached. If the number of hours that attract the premium can be averaged over a number of weeks, the protection of the law and the premium for working inconvenient hours is lessened and undermined. For example, if an employee works a regular 40-hour week for two weeks and is required to work 50 hours the next two weeks, with averaging over four weeks the employee works 12 hours of overtime in the four week period but is only paid for four hours at overtime rates. It is not clear that there is any justification for this practice. If there is a justification, it should be addressed on a sectoral basis.

We were not provided with any data as to how much the averaging provision costs employees or saves employers.

In conclusion, our view is that as a general matter of principle, there is no reason to undermine the requirement to pay overtime by permitting averaging except: where the purpose is to accommodate employees with flexible work schedules; or, where an employer desires a similar accommodation for business purposes (while not requiring a total number of hours that exceeds the 44 hour threshold over the averaging period); and where the employees are agreeable to this arrangement. If there are business reasons why certain sectors of the economy require more liberal rules on overtime, including averaging, then that is a matter that should be addressed in sectoral committees where it can be understood, justified and provided for in respect of a sector.

Recommendation:

109. Overtime averaging should only be permitted where it would allow for a compressed work week, continental shift or other flexibilities in employee scheduling desired by employees, or to provide for employer scheduling requirements where the total number of hours worked does not exceed the threshold for overtime over the averaging period. Overtime averaging should not be permitted for other purposes, unless a specific case can be made by an industry or sector for averaging on a sectoral basis.

7.4.4.3 Blended overtime rate

Ontario is apparently the only jurisdiction in Canada to require that overtime be paid at a blended rate when an employee has two different positions and rates of pay. In other jurisdictions, the employee is entitled to overtime pay based on the rate of pay for the work done in the overtime period. The Canadian Payroll Association asked that this be changed and we agree that the blended rate concept is needlessly complex and overtime should be paid based on the rate for the work performed.

Recommendation

110. Overtime should be based on the rate in force for the work performed, not on a blended rate if an employee has more than one position.

7.5 Leaves of absence

The Employment Standards Act, 2000 currently provides ten unpaid, job-protected leaves of absence. Ontario typically mirrors leaves for which the federal government has provided income support, while the Employment Standards Act, 2000 provides the corresponding job-protection.

7.5.1 Personal emergency leave

The current legislation

Personal Emergency Leave is an unpaid, job-protected leave of up to 10 days per calendar year for the purposes of personal illness, injury, or medical emergency, as well as to attend to the death, illness, injury, medical emergency of, or urgent matter concerning, specified relatives. Personal Emergency Leave is intended to assist employees in dealing with personal illness or family emergencies without fear of job loss.

Currently, only employees who work for employers that regularly employ 50 or more employees are eligible for Personal Emergency Leave. Entitled employees have access to Personal Emergency Leave regardless of their length of service.

Section 50 of the Employment Standards Act, 2000 provides that an employee may use these days for: a personal illness, injury or medical emergency or for the death, illness, injury or medical emergency or urgent matter concerning:

• the employee’s spouse;
• a parent, step-parent or foster parent of the employee or the employee’s spouse;
• a child, step-child or foster child of the employee or the employee’s spouse;
• a grandparent, step-grandparent, grandchild or step-grandchild of the employee or of the employee’s spouse;
• the spouse of a child of the employee;
• the employee’s brother or sister;
• a relative of the employee who is dependent on the employee for care or assistance.

The current environment

In addition to pregnancy and parental leaves, the Employment Standards Act, 2000, also provides for other unpaid leaves of absence that are job protected in the following areas:

• Family caregiver leave of 8 weeks per calendar year per specific family member to an employee whose family member who has a serious medical condition that requires care or support.
• Family medical leave of 8 weeks in a 26 week period to provide care or support to a family member who faces a significant risk of death.
• Leave for events such as organ donor, declared emergency, critically-ill child, crime related death or disappearance of a child.
• Reservist leave for the Armed Forces.

In last year’s Fall Economic Statement, the government asked us to consider the Personal Emergency Leave provisions of the Employment Standards Act, 2000 on an expedited basis and to provide a recommendation to address business concerns.

The threshold

The terms of reference stated that the objective of the Changing Workplaces Review is to improve security and opportunity for those in precarious work and who are made vulnerable by the structural economic pressures and changes being experienced by Ontarians. Many of those employed in workplaces where there are fewer than 50 employees are vulnerable workers in precarious jobs. The focus on vulnerable workers in precarious jobs requires us to address whether the current legal framework effectively protects the rights of such workers. We are also mindful that there are certain groups that are overrepresented in precarious jobs, including: workers with less than a high school diploma, single parents with children under 25, recent immigrants, women and visible minorities.^{footnote 333[333]}

Ontario is the only Canadian jurisdiction with a scheme of entitlements for leaves that has a threshold exemption for small employers. The impact is to exclude approximately 29% of employees in Ontario from coverage (29% is estimated as being over 107 million employees in Ontario).^{footnote 334[334]} The current legal framework in Ontario grants no protection to over 1.7 million workers who may require time off work for the personal illness or family emergencies covered by section 50.

The importance of personal emergency leave to all employees

The rights granted to employees under the Employment Standards Act, 2000 for Personal Emergency Leave are very important in a modern workplace. Employees are sometimes required to be away from the workplace in the case of illness, injury or medical emergency. This has long been recognized by the Employment Standards Act, 2000.  Indeed, the health of others may depend on employees who are ill remaining away from the workplace. The prevalence of families where both parents work, of single parent families and an aging population increase the need to recognize a minimum entitlement to time off work to deal with family illness and urgent matters related to families. The granting of bereavement leave in the case of a death in the family is a manifestation of respect, of sympathy and of ordinary human decency.

This right to leave is as important to employees in firms that regularly employ 50 or less employees as it is to employees who work in larger companies.

We were advised in the submissions from an organization representing a large number of small employers^{footnote 335[335]} that 85% of employers below the threshold already accommodate personal issues even though they are not legally required to do so. If this is an accurate statistic, it reflects recognition by smaller employers of the common sense of accommodating absence for illness, injury or urgent matters regarding family and the practical advantages of establishing good relations with their employees.

We conclude that the current version of the Personal Emergency Leave provisions of the Employment Standards Act, 2000 do not effectively protect the rights of employees in workplaces that regularly employ less than 50 employees.

Recommendation

111. We recommend the elimination of the 50 employee threshold and that the Personal Emergency Leave provisions of the Employment Standards Act, 2000 be made available to all employees in Ontario.

7.5.2 Personal emergency leave entitlement

In 2014, the Ministry of Finance released its Long-Term Report on the Economy in which it stated:

Productivity growth is a key driver of an economy’s prosperity and living standards. Labour productivity growth for Ontario’s business sector, including key subsectors, has slowed significantly over the past decade. In addition, Ontario’s productivity gap with the United States, its key trading partner, has continued to widen.^{footnote 336[336]}

While this productivity gap is explained by many different factors, certainly absenteeism is a factor that impacts on productivity. The literature we have been referred to supports a conclusion that absenteeism contributes to lost productivity and revenue for Canadian organizations. These results were similar to findings for the United States and many European countries.

Statistics Canada’s Labour Force Survey provides measures of time lost from work because of personal reasons - specifically illness or disability, and personal or family responsibilities. In Ontario, the average days lost per worker in a year, for illness or disability, was 6.3 days in both 2014 and 2015. For personal or family responsibility (excluding maternity leave), the days lost during same years was 1.4 and 1.5 days respectively.^{footnote 337[337]} This resulted in 7.8 total days lost per worker in 2014 and 7.7 total days lost per worker in 2015.

Personal Emergency Leave is not easily compared to leave provisions in other jurisdictions because it essentially combines three separate leaves (sick, bereavement, and family responsibility leaves into one with an employer size threshold (50+). A review of Canadian jurisdictions indicated that there is a variety of entitlements and conditions for job-protected leaves. Three Canadian jurisdictions combined personal illness and family responsibility leave into one, however, bereavement leave is always a separate job-protected leave. Alberta is an outlier in Canadian jurisdictions as it does not provide sick, family responsibility or bereavement leave provisions in its legislation.

The Canadian leave provisions are summarized in the following chart outlining statutory entitlements to personal illness leave and family responsibility leave:

In the United States, it is far more common to have no leave protections for these purposes. Some states (e.g., California and Massachusetts) do provide sick leave that is broad in nature. As well, the United States does have the federal Family and Medical Leave Act (FMLA) that requires employers with 50 or more employees to provide job-protected, unpaid leave for qualified medical and family reasons. Eligible employees are entitled to 12 work-weeks of leave in a 12 month period for various purposes such as the care for a newborn or adopted child; the care of the employee’s spouse, child, or parent who has a serious health condition; a personal serious health condition; any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on covered active duty; or twenty-six work-weeks of leave in a 12-month period to care for a covered service member with a serious injury or illness. While there are similarities in eligibility between the Family and Medical Leave Act and Personal Emergency Leave, employees in Ontario are also entitled to a number of leaves that cover similar criteria as the Family and Medical Leave Act (e.g., pregnancy and parental leave, family caregiver leave, family medical leave).

The impact of personal emergency leave on employers

In most studies, employer groups perceived unplanned/unscheduled absences to be the greatest productivity loss when compared with planned and extended absences. This is because unscheduled absences were found to be the most disruptive to businesses and resulted in greater costs. One study investigating absenteeism in Canada conducted by the Morneau Sheppell’s research group reported that the majority of employers surveyed viewed absenteeism as costly and having a negative impact on productivity in their organization and half of the employers indicated that absenteeism was a serious issue in their workplace.^{footnote 338[338]} The Conference Board of Canada found that, based on 2011-2012 absenteeism rates, organizations estimated that the direct cost of absenteeism^{footnote 339[339]} is about 2.4% of a firm’s gross annual payroll.^{footnote 340[340]}

It is often recognized that unplanned employee absences are more disruptive to businesses than other types of absences. Several studies have highlighted the greater direct and indirect costs for employers of unplanned absences.^{footnote 341[341]} Even when employee absences are unpaid, employers often incur significant costs such as replacement workers, overtime costs, administrative expenses for managing absenteeism, and a general loss of productivity in some cases.^{footnote 342[342]}

In the literature, some reasons to explain the impact of worker absenteeism on productivity were stated as:

• In some instances, the absent employee is simply not replaced and as a result, there is no productivity during the absence.
• Replacement workers are sometimes assigned to cover roles and are often perceived to be less productive than regular employees. For example, one study found that replacement workers were perceived to be 31% less productive when covering for unplanned absences.
• In some workplaces, co-workers are used to fill in for absent employees and are generally less productive because of the increased workload. Absences also impact the productivity of supervisors as supervisors must spend time adjusting workflow and arranging cover off.^{footnote 343[343]}

Some employers who represent major investment in this province and whose presence affects the well-being of many other corporations and their employees have reported to us that they are required to maintain additional staff on their payroll to deal with the problems of unplanned absenteeism which has been exacerbated since the introduction of Personal Emergency Leave days in 2001. In their opinion, the additional costs associated with such staffing could be a factor when making decisions to invest in the province.

Some employers have articulated concerns over how the present Personal Emergency Leave provisions operate and their impact. These concerns are made in the context of a continuous effort by many in the employer community to manage absenteeism that, as noted above, is seen as a major problem. For example, some employers with existing generous leave provisions argue that the fact that existing statutory leave entitlement provides a variety of reasons for absence results in employees getting not just the benefit of the employer’s leave policies, but, in addition, the benefit of the Employment Standards Act, 2000 provisions. A related problem for some employers is that it is very difficult to determine when the employer provides a greater right or benefit such that the employer policies prevail and the Personal Emergency Leave provisions of the Employment Standards Act, 2000 do not apply. These employers assert that the Ministry of Labour’s policies to determine if the employer’s policies provide a greater right or benefit are complex and require an individualized assessment. Because of the perceived complexity of the issue of greater right or benefit, some employers do not feel that they receive credit for the days the employee takes off when there is a right to the entitlement under both company policy and the statute. In addition, the Ministry’s view of what constitutes a greater right or benefit is not binding on the OLRB or arbitrators or courts, and those decision-making processes and the expense involved just adds to the uncertainty and the complexity. There was a strong view that we heard from the employer community that we ought to recommend provisions that bring greater clarity to the interaction of the greater right or benefit section of the Employment Standards Act, 2000 with the Personal Emergency Leave provisions, and employer policies.

In addition, some employers state that from their standpoint, not all of the time off is legitimately in line with the intention of the Act and that while the Employment Standards Act, 2000 is intended to provide time off for legitimate reasons for personal emergencies, they argue that the current provisions contribute to growing unwarranted absenteeism and abuse. These employers point out that that a disproportionate number of Personal Emergency Leave days tend to get taken on Mondays and Fridays, on days prior to or just after scheduled vacations, on the Monday following the Super Bowl, during hunting season, or when an employee has already been denied permission to take a day off. These employers would agree with Professor Gunderson who has opined that: …personal leaves may be more likely to be abused by employees because there is generally not a well-documented event like pregnancy that justifies their leave, and they may increasingly regard them as a right rather than a privilege, especially if co-workers commonly take the leaves.^{footnote 344[344]}

The challenge: Find a reasonable balance of interests

Finding a reasonable way to bridge the conflicting needs and interests of employees and employers in this area is the essence of the public policy goal and the challenge we face.

We believe most employers and employees understand the needs and interests of the other. After all, almost all employers – including those below the threshold of 50 employees – do recognize the need to accommodate the reasonable needs of their employees.

Similarly, most employees understand that there are limits on the extent to which employers can be asked to accommodate absences. Equally important, most employees recognize that the absences the law protects are bona fide personal emergencies, and not the desire to take a day off, to take a longer vacation or to avoid working overtime. The vast majority of employees understand that the statutory benefit is intended to be used to justify absences specified in the section and does not give employees a blank cheque to take time off as they desire.

As in any cross-section of the population, however, there are certainly employers and employees who do not wish to take into account the legitimate needs of the other.

Analysis, findings and recommendations

Our first finding is that the concern of a few but important segments of the employer community over the Personal Emergency Leave provisions have gone beyond the point of mere concern, to the point where investment decisions in Ontario are put in issue in some cases. Given that the Government of Ontario committed to supporting economic growth,  which includes new investments and expensive renewal and upgrades of existing plants and operations, we do believe that Ontario would be prudent to endeavor to correct deficiencies in the current Personal Emergency Leave provisions, if it can do so reasonably without fundamentally sacrificing the legitimate needs of employees.

Second, we accept that in some areas, at least, abuse of the provisions has become a problem. Whether this is as a result of lax employer management of absenteeism and a reluctance to question employees’ use of the provisions or as a result of the spread of misconceptions amongst employees about the extent of the rights the statute provides is unclear.

Some employers, however, have told us that in their workplaces taking this time off has come to be regarded as a right, regardless of the circumstances, together with a perception that employers are not entitled to inquire as to the circumstances or to ask for evidence that is reasonable in the circumstances. That cultural development in those workplaces is an unfortunate outcome of legislation designed to protect employees and gives them rights to be away from work in legitimate circumstances. And the cultural perception is not accurate. The legislation is designed for personal illness, family illness, and urgent matters related to family. The onus is on the employee, if asked, to provide reasonable evidence in the circumstances that the leave was legitimate. The section requires the employee to give the employer notice of the intention to take the leave and where that is not possible, to do so as soon as possible thereafter.

We are of the view, however, that the existence of abuse in some places is not itself a sufficient reason to change legislation intended to meet the bona fide needs of employees. As stated above, the employer can require the employee to provide evidence reasonable in the circumstances that the employee is entitled to the leave. Many employers can do better in terms of absentee management. As recommended by the Conference Board, organizations looking to address absenteeism should:

• understand organizational drivers and predictors of absences;
• track absences;
• have a formal absence management process;
• focus on prevention; and
• intervene early.^{footnote 345[345]}

Structure and operation of the section

The structure and operation of the section is awkward. It combines two (and some would argue three) generically different kinds of leaves, namely bereavement, personal illness and family emergencies having an overall limit of 10 unpaid days in any calendar year.

7.5.3 Bereavement leave

The inclusion of bereavement leave in this section is problematic. Since the current Personal Emergency Leave provisions limit the number of absences to 10 in any calendar year, the occurrence of a death reduces the availability of days for a personal illness, injury or medical emergency or for illness, injury or medical emergency or urgent matter concerning family members. Conversely the use of the provisions for other purposes can reduce or eliminate the right to take bereavement leave.

In our view, when death of a family member does occur, the right to bereavement leave should not be tied to the number of days already taken that calendar year because of the illness of the employee or of a family member. It should be a standalone right unaffected by the absence of an employee for other reasons. This is the standard in other provinces. To deny bereavement leave to an employee who wishes to mourn and to attend the funeral and surrounding events following the death of a family member fails the test of decency. The same considerations apply to the impact of multiple deaths in the family in the same calendar year. If there are two deaths, two parents, for example, and the bereavement leave was three days for each, (we believe, a minimum acceptable standard for death of an immediate family member) that would leave the employee with only four other days to cover off all personal illnesses and family emergencies in that year. This is irrational and avoidable by providing a separate entitlement for bereavement leave.

The most common bereavement leave provision in Canadian jurisdictions is three days of leave for the death of an immediate family member (the exception is Alberta which has no statutory provisions for bereavement leave). Quebec, Saskatchewan and New Brunswick each provide for five days for immediate family members (with Quebec including one paid day), however, the category of family members is narrower than Ontario’s Personal Emergency Leave provisions. In no other province is the entitlement to bereavement leave made contingent on whether a bank of days has been used for other reasons. No other jurisdiction limits the number of bereavement leaves for members of the employee’s immediate family in a calendar year.

We conclude that the entitlement of an employee to bereavement leave should stand on its own, independent of other absences, and should only depend for its trigger on the death of a person covered by the section. We recommend that a specific provision be enacted providing for unpaid bereavement leave for three days in case of the death of any of the family members covered by the existing Personal Emergency Leave provisions.

7.5.4 Personal illness and family emergencies

We have recommended a free standing statutory right to bereavement leave of three unpaid days for the death of all family members currently covered by the Employment Standards Act, 2000. Does this mean that the remaining number of days should be reduced? And should there be separate leaves for personal illness and family emergencies? We think these questions should be examined considering, among other relevant factors, how these entitlements are structured across the country.

Only three other provinces have combined entitlements for personal illness and family responsibility; Nova Scotia and Manitoba have three combined days, and Newfoundland has seven combined days.

Alberta is an outlier with no entitlements for either personal illness or family responsibility. The federal jurisdiction and Saskatchewan do provide entitlement days for personal illness or injury but do not provide family responsibility leave.

British Columbia has five days for family responsibility and none for personal illness.

Of those provinces that have separate personal illness and family responsibility provisions, New Brunswick has five personal illness and three family responsibility days; PEI has three personal illness days (with one paid day after five years of continuous service), and three family responsibility days. Quebec is an outlier with the largest by far entitlement for personal illness at 26 weeks, and 10 family responsibility days.

These provisions are complex and somewhat difficult to compare but seven days combined entitlement for Ontario would be in approximately the middle of the range.

The number of days of employee absenteeism in Ontario annually has some relevance to the determination of the number of days. As previously mentioned, Statistics Canada reported that Ontario’s total days lost per worker was 7.7 days in 2015.

The value of removing bereavement leave from the Personal Emergency Leave entitlement, and therefore from the 10 days, is probably something less than three days because – on average - utilization of bereavement leaves is likely less frequent than once per year.

A very important additional factor is that we are recommending the elimination of the 50 employee threshold and therefore the new restructured provisions will apply to small employers. In our view, many smaller employers are likely to have a more difficult time than larger employers in finding staff to cover the absences and paying for the added costs. Also, the impact of unscheduled absences on small employers may be greater because of the smaller scale of the enterprise. Accordingly, we think it would be unfair to require small employers to meet the 10-day current entitlement, as those employers will also have to provide bereavement leave now under our recommendations, as well as personal illness and family emergency leave.

A uniform minimum entitlement for all employees across Ontario is a desirable and equitable outcome. For this reason, a reduction in the total amount of days for personal illness and family emergencies, while making bereavement leave a new and separate leave, is a fair way to obtain universality in the application of the entitlement, and we recommend that the combined leave be set at seven days.

While this will have some impact on employee flexibility, it is likely that the number of employees who take the full entitlement of 10 days now without utilizing any bereavement leave is far less than the majority of employees. In other words, the vast majority of employees should find this entitlement to be adequate, although we grant it is certainly not perfect. For some employees, obviously, even 10 days would be inadequate, as would any other minimum standard. Whatever the standard, some employees will require additional leave and we encourage employers to act reasonably in the circumstances and grant further leave where circumstances dictate.

For employers who do not act reasonably in these circumstances, there are other employee protections. The Human Rights Code requires that employers accommodate disability and family status, unless there is undue hardship. So in those cases where the employer disciplines or terminates, employees are entitled to the protection of the Human Rights Code. Employment standards are probably never the benefits we would most desire for ourselves or our families. They are not designed to reflect average entitlements. They must be decent but they are minimum standards.

Should there be one group of leaves for personal illness and family emergencies or two separate leaves?

We have already recommended the creation of a new independent right to bereavement leave of three days and determined that a combined entitlement of seven days is around the midpoint of Canadian entitlements. But should the seven days be further broken down into two particular entitlements, of, for example, four days for personal illness and three days for family emergencies?

The difference in allocating the seven days into one group, or into two, is significant. The many employers who do not provide for family emergency leave but do provide for personal illness would strongly favour two groups because it would mean that instead of a possible maximum usage for family emergencies, the entitlement to family emergency leave would be reduced. However, if they remain together as a single group, employees would have flexibility to use the seven days as they needed them.

If the Personal Emergency Leave provisions were originally introduced in 2001 as three separate leaves totaling 10 days, one for bereavement, as the case in almost every other jurisdiction, a second one for the employees own illness and a third covering family emergencies, the adaptation to the provisions by employees and employers and the usage would likely have been different. It might well be clearer now if one of the leave amounts was inadequate and why. As practices have evolved over the past 15 years, however, the existing combination has provided elements of flexibility that have become important to employees in the usage of time off.

Under the existing system, in any one year, some employees may require no time off, but in another year they may need seven days off to care for young children who are ill, and in other years they may require more time to care for aging parents, or as a result of the employee’s own illness. For that reason, many employees are reluctant to give up that flexibility and many employee advocates and unions have urged us not to break the entitlements down into separate groups, whereas many, but not all employer groups, have favoured a breakdown. Again the effect of a breakdown into categories would be a diminution of flexibility and would amount to the setting of smaller limits for each use than currently exist. The effect, therefore, would be to limit usage in areas where many employers have no policy, which is leave to attend to family emergencies.

Flexibility in the modern world is necessary and valuable to employees. We have heard from many employers in this process about their desire for flexibility in many policy areas. Here employees want to maintain their flexibility to minimum entitlement for leaves of absence based on personal or family emergencies.

The modern world is increasingly complex and having greater flexibility to deal with the some of the urgent reasons that arise and that require the employee not to be at work is valuable and a decent right to legislate. The future needs of any single employee in any year are unknowable and a single grouping of seven days provides important elements of flexibility to meet changing needs while the maintenance of two smaller categories provides artificial limits without regard to those needs. When the policy of the law is to permit these leaves, it should not matter to the employer whether the employee is away for reasons of illness or family emergency, but it may matter deeply to the employee if the law artificially and arbitrarily restricts her/his ability to respond effectively to family emergencies or to personal illness. In this case, the employee need far outweighs the employer concerns.

From a practical point of view, creating separate groupings for personal and family emergencies would limit the ability of employees to take time off for family emergencies, since many employers provide some form of leave for personal illness greater than four days, but not as commonly for family emergencies.

In our view, cutting back further on the right to take leave to deal with family emergencies is contrary to the current purpose of the Employment Standards Act, 2000 and contrary to good public policy. It is the very need of the modern employee to respond to family emergencies as well as to personal illness that led to the creation of the Personal Emergency Leave entitlements in the first place.

Policies that enhance the ability of employees to respond to family emergencies are to be favored over policies which restrict that flexibility. For instance, women commonly bear a disproportionate burden for the care of children and the elderly, and take more time off work than males.^{footnote 346[346]footnote 347[347]} Whether or not an employee has children was found to have very little impact on overall absenteeism rates, but did affect the reasons for which employees report being absent. Employees with children under the age of five take over twice as many days for personal or family responsibilities compared with those with no children. However, they were also off work less due to their own illness or injury compared with other groups.^{footnote 348[348]}

As a society we require policies that enable employees to respond to the needs of their families. Simply put, the breaking down of the right to be absent into separate categories of personal illness and family emergency after having a combined entitlement since 2001, would be a retrograde step that would negatively impact employees and is contrary to the interests and needs of the modern family. Helping families through the rigors of modern living is an important value in contributing to a decent workplace.

Another reason to favour a combined group of entitlements is that we have had a history of 10 days and in moving to seven we are already limiting flexibility. Breaking it down further means that for those with particular needs, say for family emergencies, the reduction would be more dramatic and have a greater adverse impact. This would be too drastic and we find it unsupportable.

Yet another reason for favouring a combined entitlement is that the reality in many workplaces today is that where employers have generous personal illness policies but not family emergency leaves, they permit personal sick days to be used in the case of the illness of a child or parent or other similar circumstances. This common sense and practical approach by employers is to be strongly encouraged and should be formalized in employer policies. The statute should not encourage a rigid separation of entitlements.

Another contributing factor to our favouring a single remaining group of seven days is that we believe it will be less administratively burdensome, particularly for small employers to keep two separate banks of days and to keep track of the reasons for absence by category. Having said that, the administrative convenience/burden argument is a small factor compared to the overall policy of allowing employees added flexibility by keeping the entitlements combined.

Recommendations

112. We recommend that bereavement leave be removed from the Employment Standards Act, 2000’s personal emergency leave provisions and be made an independent entitlement of up to three unpaid days for each of the family members covered by the existing personal emergency leave provisions. It should not be limited by an annual restriction and it should be applicable to all employers.
113. We recommend that the personal emergency leave provisions be amended to provide an annual entitlement of seven days for all the reasons currently covered in the provisions, except bereavement.

7.5.5 Domestic violence

Since the interim report was issued, we have become aware that the issue of domestic violence leave was a serious omission in the scope of the review. We are more aware of the prevalence of domestic violence and the importance of providing leave for victims.

A number of states in the US have legislation providing for such leaves. These include: Arizona, Arkansas, California, Colorado, Connecticut, Florida, Hawaii, Illinois, Kansas, Maine, New Jersey, New Mexico, North Carolina, Oregon, Virginia, Washington, and the District of Columbia. The activities covered by such leaves are differently expressed but all are designed to assist victims of domestic violence.

In Canada, Manitoba has enacted legislation providing paid and unpaid leave from work for domestic violence victims, guaranteeing them job security while they secure shelter, healthcare and legal counsel. Under the Domestic Violence and Stalking Act in Manitoba, domestic violence is defined as: an intentional, reckless or threatened act or omission that causes bodily harm or property damage; an intentional, reckless or threatened act or omission that causes a reasonable fear of bodily harm or property damage; conduct that reasonably, in all the circumstances, constitutes psychological or emotional abuse; forced confinement and sexual abuse. The Manitoba legislation describes situations of domestic violence as instances of violence that occur by one person against another person who: lives or has lived with him or her in a spousal, conjugal or intimate relationship; has or had a family relationship with him or her, in which they have lived together; has, or previously had, a family relationship with him or her, in which they have not lived together; has or had a dating relationship with him or her, whether or not they have ever lived together; or is the other biological or adoptive parent of his or her child, regardless of their marital status or whether they have ever lived together.

An employee who is a victim of domestic violence and has worked for the same employer for at least 90 days is entitled to the leave. Employees can use domestic violence leave to: seek medical attention for themselves or their minor child for a physical or psychological injury or disability caused by the domestic violence; obtain services from a victim services’ organization; obtain psychological or other professional counseling; temporarily or permanently relocate to a safe place; or to seek legal help or law enforcement assistance, including participating in any civil or legal proceeding related to the domestic violence.

We have concluded that the omission of a consideration of a right to domestic violence leave in the scope of the Employment Standards Act, 2000 review is problematic.

It is recommended that domestic violence should be added to the category of reasons that may be used by employees for taking Personal Emergency Leave pursuant to s. 50 of the Act. The Personal Emergency Leave provisions will, if our recommendation is implemented, be available to all employees and not restricted to employees whose employers employ 50 or more. This is a substantial extension of the Personal Emergency Leave provisions of the Act and if our recommendation that domestic violence be added as a reason for absence is accepted, it will be available to all Ontario employees regardless of employer size.

Recommendations

114. Section 50 of the Employment Standards Act, 2000 should be amended to provide that an employee can use Personal Emergency Leave days if the employee is a victim or their minor children are of domestic violence.
115. We also recommend that, in implementing domestic violence leave entitlement as part of section 50 of the Employment Standards Act, 2000, the Ministry of Labour should consider the definitions of domestic violence and situations of domestic violence referred to in the Manitoba legislation as an initial guidelines and should stipulate in the Employment Standards Act, 2000 that domestic violence leave can be utilized for the purposes set out in the Manitoba legislation.
116. Finally, we recommend that the Employment Standards Act, 2000  provide that all information related to and given by an employee to support the taking of domestic violence leave must be kept confidential with restricted access to no more than two managerial or human resources personnel and must also be kept separate and apart from any personnel file otherwise maintained by the employer.

7.5.6 Sick days

Currently, Personal Emergency Leave provides an unpaid, job-protection entitlement to be absent for a certain number of days (unpaid) for urgent matters as well as personal illness, injury or medical emergency.

While most provinces in Canada have some protection for employees to be away from work due to illness, requiring payment for sick days is not common. In Canada, Prince Edward Island is the only province to provide 1 paid sick day per year. This leave is only available to employees with 5 or more years of service.

In the US, only California and Massachusetts have paid sick leave legislation. In California, the leave is available to all employees and accrues at 1 hour of paid leave for every 30 hours worked. Employers are allowed to limit the amount of paid sick leave per year to 24 hours or 3 days per year. In Massachusetts, paid sick leave is available to employees who work for employers with 11 or more employees and accrues at one hour of earned sick time for every 30 hours worked up to a cap of 40 hours per year. Employers with fewer than 11 employees are expected to offer the same leave, but unpaid. In the US, it is uncommon for there to be statutory leave entitlement for personal emergency leave which includes personal illness.

In September 2015, US President Obama signed an executive order requiring federal contractors to offer their employees up to 7 days of paid sick leave per year. The executive order was estimated to assist approximately 300,000 people at the time of signing. In addition, President Obama has urged Congress to pass legislation that would provide paid sick day protections for workers.

Globally, a 2010 report for the World Health Organization^{footnote 349[349]} suggests that as many as 145 countries have some form of leave and wage replacement with respect to employee illness. However, there are variations in how long these leaves may be and how wages are replaced (for example, wages may be replaced only partially). A recent study of combined employer and state paid sick pay schemes in the EU demonstrates a very wide degree of variability in paid indemnification for illness.^{footnote 350[350]}

There is a very strong view expressed by health care professionals and others that the lack of paid sick days causes unnecessary costs to patients, other workers who become infected by colleagues who are ill, and the health-care system generally.

Employee advocacy groups asserted that the lack of legislated entitlements to paid sick days has left many precarious workers unable to stay home when sick due to fear of lost wages and/or termination. It was commonly recommended that the Employment Standards Act, 2000 should be amended to repeal the exemption of 49 or fewer workers from providing Personal Emergency Leave, that all employees should accrue paid sick time [for example, a minimum of 1 hour of paid sick time for every 35 hours worked (approximately 7 paid sick days per year)], and that employers should be prohibited from requiring evidence for such absences. In January 2014, the OMA issued a news release encouraging people who are sick to stay home. It also encouraged employers to not require sick notes as doing so only encourages the spread of germs in the doctor’s office waiting room. The then-president of the OMA said: I can’t stress it enough: going to work while sick is bad for you and potentially worse for your colleagues. Staying home to rest will help you to manage your illness and prevent others from getting infected. Others have questioned the utility of medical notes that are costly, very often result from a telephone consultation and repeat what the physician is told by the patient, and which are of very little value to the employer.

While the introduction of paid sick leave would be beneficial, the more important first step is the expansion of Personal Emergency Leave to all employers so that all employees have a basic right to time off in the case of personal illness. Therefore our recommendation is in the context of, and related to, our recommendation on changes to the current Personal Emergency Leave provisions of the Employment Standards Act, 2000.

Recommendation

117. An employer should be obligated to pay for a doctor’s note if the employer requires one.

7.5.7 Interaction between company policies and the personal emergency leave provisions of the ESA

Section 5 (1) prohibits the contracting out of employment standards. Section 5 (2) which is referred to as the greater right or benefit provision provides as follows:

If one or more provisions in an employment contract or in another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than the employment standard, the provision or provisions in the contract or Act apply and the employment standard does not apply.

The purpose of this section is clear. It is to permit and encourage policies and contractual arrangements that exceed the minimum standards set out in the legislation. The interaction between the Personal Emergency Leave provisions of the Employment Standards Act, 2000 and employer policies that provide for leaves of absence and s. 5 (2) of the Act has been the subject of discussion during the Changing Workplace Review consultations. It is apparent that there is confusion and\or misunderstanding with respect to the proper application and interpretation of section 5 (2) - particularly where it is asserted that employers’ policies regarding leaves of absence provide a greater right or benefit than the Personal Emergency Leave provisions of the Employment Standards Act, 2000. In this regard, our respectful opinion is that the interpretation manual of the Ministry of Labour and the decisions of courts and tribunals may have contributed to lack of clarity and confusion.

Some employers currently have leave of absence policies that in some cases do not provide for all leaves of absence mandated by the Employment Standards Act, 2000 but in other areas provide more generous leaves than the Act requires. For example, an employer may have a policy providing for leaves of absence for personal illness, injury, or medical emergency of the employee (personal illness), bereavement leave and educational leave but that does not provide for leaves of absence for illness, injury or medical emergency or urgent matter concerning a family member (family emergency). Some employer representatives have suggested that in order to determine whether the employer provides a greater right or benefit, the Ministry should be required to assess the total leave provisions provided by the employer to determine whether, in aggregate, employer leave policies provide a greater right or benefit to employees than is required by the Employment Standards Act, 2000. In the example given, this would require the Ministry to determine whether the existing leave policies of the employer, even though they do not provide for family emergency leave, provide greater rights or benefits to the employee.

We do not agree that this approach should be permitted. There is no acceptable and established methodology to make comparisons of the value to employees of one type of absence compared to another. Such an approach would lead to endless disputes as to whether an employer’s leave policies provide greater right or benefit and to uncertainty with respect to the rights of employees and the obligations of employers. Furthermore, in the example given, where the employer policy does not provide for leave of absence for family emergency leave, the policy does not comply with the Personal Emergency Leave provisions of the Employment Standards Act, 2000. As a matter of public policy, it has long been established that employees should have a limited right to leave for absence for family emergencies. To permit non-legislated leave provisions to be a greater right or benefit than the legislated minimum Personal Emergency Leave standards would permit employers to opt out of the Personal Emergency Leave section of the Act thereby undermining the purpose of the section which is the right to time off work without penalty for the reasons set out in the section. That right should be applicable to every employee and every employer without ambiguity.

In summation, where a company policy does not provide for employees to be absent for the reasons set out in the Employment Standards Act, 2000’s Personal Emergency Leave provisions, notwithstanding the policy of the company, the employee is entitled to additional leaves of absence in accordance with the Personal Emergency Leave provisions of the Employment Standards Act, 2000.

Provided they comply with the minimum requirements of the Employment Standards Act, 2000, employers are in a position to implement more generous leaves of absence policies. Any additional or superior entitlements over and above the statutory minimum standards that are provided by employers as a matter of company policy or agreement are permissible and welcome.

Recommendation

118. We recommend that section 50 of the Employment Standards Act, 2000 be amended to provide that section 5 (2) of the Act (the greater right or benefit provision) does not apply to section 50, but that employers can decide to add to the entitlements provided under section 50.

7.5.8 Summary of personal emergency leave recommendations

1. Eliminate the 50 employee threshold and the Personal Emergency Leave provisions of the Employment Standards Act, 2000 be made available to all employees in Ontario.
2. Enact a specific provision providing for unpaid bereavement leave for three days in case of the death of any of the family members covered by the existing Personal Emergency Leave provisions.
3. Amend the personal emergency leave provisions to provide an annual entitlement of seven days for all the reasons currently covered in the provisions, except bereavement.
4. Amend section 50 of the Employment Standards Act, 2000 to provide that an employee can use Personal Emergency Leave days if the employee is or their minor children are a victim of domestic violence. Develop the definitions and requirements for confidentiality of supporting documentation for the entitlement to the leave based on Manitoba’s legislation.
5. Require employers to pay for doctor’s notes if they require them.
6. Amend section 50 of the Employment Standards Act, 2000 to provide that employers must comply with all its minimum requirements but, employers can add to the entitlements.

7.5.9 Family medical leave

Family medical leave is a leave of up to 8 weeks in a 26-week period. It may be taken to provide care or support to certain family members and people who consider the employee to be like a family member in respect of whom a qualified health practitioner has issued a certificate indicating that he or she has a serious medical condition with a significant risk of death occurring within a period of 26 weeks.

The federal Employment Insurance Act provides 26 weeks of employment insurance benefits (compassionate care benefits) to eligible employees taking this leave.

For example, two recent federal changes may have an impact on Ontario’s Family Medical Leave:

1. an amendment to the Employment Insurance Act increased the number of employment insurance compassionate care benefit weeks from 6 weeks in a 26 week period to 26 weeks in a 52 week period; and
2. an amendment to the Canada Labour Code that increased maximum compassionate care leave from 8 weeks to 28 weeks for providing care or support to a family member with a serious medical condition with a significant risk of death within 26 weeks. The period in which the leave may be taken has increased from 26 weeks to 52 weeks.

We are advised that Nova Scotia has already amended its Compassionate Care Leave to mirror the recent employment insurance and Canada Labour Code changes to compassionate care leave and Newfoundland and Labrador is making changes.

Recommendation

119. We recommend that the family medical leave provisions of the Employment Standards Act, 2000 (section 49.1) be amended to provide for family medical leave of up to 26 weeks in a 52-week period.

7.5.10 Crime-related child death or disappearance leave

The Employment Standards Act, 2000 currently provides leave of up to 104 weeks with respect to the crime-related death of a child and up to 52 weeks with respect to the crime-related disappearance of a child. An employee who takes time away from work because of the crime-related death or disappearance of their child may be eligible for the Federal Income Support for Parents of Murdered or Missing Children grant.

The issue raised in our consultations is whether special leave should be available for employees who are dealing with the death of a child that is not a result of a crime and whether it makes any sense to have different leave entitlements in these circumstances.

There is reason to provide leave of absence in the case of the death of any child if a parent wishes to take advantage of such leave. While there could be debate about how long such a leave of absence should be, this question has been answered by the existing provisions of the Act which provide for two years in the case of the crime-related death of a child. The duration of leave when a death is not crime-related should be the same.

Furthermore, while the Act provides an entitlement for leave of up to 104 weeks in circumstances of the crime-related death of a child, it is not easy to understand why the Act provides for up to 52 weeks of leave with respect to the crime-related disappearance of a child – an event that may be more disabling to a parent than the death of a child.

Recommendation

120. We recommend that the Employment Standards Act, 2000 be amended by expanding crime-related child death or disappearance leave to provide for a leave of up to 104 weeks with respect to:
     1. the death of a child;
     2.  the crime-related death of a child;
     3. the crime-related disappearance of a child.

7.6 Public holiday and vacation pay

7.6.1 Number of public holidays

Ontario has nine public holidays that most employees are entitled to take off work with public holiday pay (PHP). This is in line with the number of public holidays in other Canadian provinces and the federal jurisdiction, which ranges from six to ten days.

Recommendation

121. No changes are recommended.

7.6.2 The rest of the public holiday standard (Part X of the ESA)

Introduction

The Public Holidays standard is dealt with in Part X of the ESA and is six pages long in the printed ESA.

Part X contraventions are one of the most common contraventions found during inspections. Many employers do not understand the provisions, while others, particularly those whose employees have irregular schedules and high turnover rates, rely on the intricacy of the provisions to attempt to not give employees their entitlements. Because of the complexity of Part X, employees often find it difficult to determine whether they have received what they are entitled to.

7.6.3 Public holiday pay calculation

The current public holiday pay provision is a complex formula that states that an employee’s public holiday pay for a given public holiday shall be equal to:

1. The total amount of regular wages earned and vacation pay payable to the employee in the four work weeks before the work week in which the public holiday occurred, divided by 20; or
2. If some other manner of calculation is prescribed, the amount determined using that manner of calculation.

Adding to the complexity of the calculation, employees who work on a public holiday are entitled to either:

1. Their regular rate for hours worked plus a substitute day off with PHP or
2.  PHP plus premium pay of 1.5 times their regular rate of pay;

Because the calculation is based on a five-day work week over the course of four work weeks, the effect of the calculation is to pro-rate the amount of public holiday pay that part-time employees, and employees who were hired less than four work weeks before a public holiday are entitled to receive. It also has that effect for employees who work less than a five-day work week and who are away from work without pay during the four work weeks before a public holiday.

In 2001, changes were made to the calculation of public holiday pay, resulting in the current system. Public holiday pay under the new calculation is therefore a pro-rated average of recent earnings as opposed to a payment that reflects the hours that are normally worked on a day that is not a public holiday. The change in the way public holiday pay is calculated was intended to balance the impact on employers of extending the right to public holiday pay to more individuals.

General considerations

A simplified PHP calculation could benefit both employers and employees as they would find it more straightforward and ESOs would be able to enforce it more easily.

Changes to the calculation may require employers to update their own payroll systems. These changes may be minor or may be substantial depending on the approach.

Small businesses have asserted that premium pay is an added burden for retailers who need to be open on public holidays. On the other hand, Ministry officials have advised that many employers are not aware that the default standard for working on the public holiday in most industries is the employee’s regular rate for hours worked plus a substitute day off with public holiday pay. We also received advice that many employees are not aware of their public holiday pay entitlements and that simplification may assist in creating more awareness and understanding by employees.

Other jurisdictions’ calculation for public holiday pay

Of the Canadian provinces:

• Four provide a calculation that averages an employee’s earnings over a period of time that ranges from 30 days to 9 weeks.
• Five require an employee to be paid their regular day’s pay, and provide an averaging calculation if the employee has a varying schedule.
• Only a few jurisdictions provide for a percentage formula to be used in lieu of the regular public holiday pay calculation for the construction industry.

Calculate public holiday pay as a percentage of wages earned in a specified period prior to public holiday

We considered an approach that would be based on a percentage of wages over a period of time. For example, 10% of wages earned in the two work weeks prior to public holiday or 5% of wages earned in the four work weeks prior to public holiday.

This method of calculation would continue the current result of pro-rating the amount of public holiday pay owing to part-time employees (i.e. any employee who works fewer than 5 days a week) and new hires. With respect to new hires, the shorter the period over which the calculation is performed the less pro-rating there will be, i.e. the more they will be entitled to.

The shorter the time period over which the calculation is performed, the simpler it would be to perform. However, such a method would not likely result in a substantial simplification over the current calculation, as this option continues the requirement to add up the employee’s daily earned wages over a period of time. If vacation pay payable were excluded from the calculation, employees who are on paid vacation in the period before the public holiday would have their amount of public holiday pay reduced. If vacation pay payable is to continue to be part of the calculation, it may be advisable to address the current anomaly whereby vacation pay paid out in a lump sum just prior to a public holiday results in a substantial increase to the amount of public holiday pay owing.

Pay periods and work weeks often do not coincide. Many employers, payroll providers and bookkeepers perform the public holiday pay calculation using pay periods as the reference point, rather than the work week. Using the wages earned during pay periods rather than work weeks would make the calculation easier for employers and for employees who want to verify whether they have received the correct amount, and for the employment standards officer. However, we are not recommending a change to the Act to require standardization of pay periods which means that a one size fits all approach to calculation of PHP is not practical. Different formulae would have to be devised depending on the pay period of an employer.

The construction industry model - percentage (3.7%) of wages earned pre-paid throughout the year

A more formulaic way to calculate and pay public holiday pay is by the addition of a specific percentage to all wage payments. For example, employees could be paid 3.7% of wages earned in each pay period. This would be the equivalent of pre-paying holiday pay for 9 regular working days to reflect the 9 paid public holidays in a year. Employees who receive holiday pay in each pay cheque in the required amount would not receive public holiday pay on each individual holiday.

This concept is similar to the vacation pay calculation and consistent with the rule that applies to the construction industry (i.e. construction employees who receive 7.7% or more of their hourly rate for public holiday pay and vacation pay are exempt from the Public Holiday part of the ESA). It is therefore familiar to the employer/payroll community and should be easy to understand for employees.

Although prima facie attractive because of simplicity, it has practical impacts that are significant. Employees who receive PHP in every pay cheque as it accrues will experience a reduction in their pay cheque when a public holiday falls on a working day. Employees may respond to losing a day of pay by being more inclined to work on the public holiday – if not for the same employer, then for another. (Over Christmas, there could be a loss of three days’ pay.) This could undermine the original intent of Part X to provide employees with additional days off to observe common pause days.

There was consideration given to recommending treating the 3.7% in a manner similar to vacation pay and have it accrue to be paid out on the public holiday (or at other times). However, this was not an attractive option because of the record-keeping and related complexity that could undermine the simplicity that the 3.7% calculation would be intended to achieve. For example, there would, of necessity be new record-keeping requirements for the employer for public holiday pay earned and paid, similar to the requirements with respect to accrued vacation pay. There would be requirements for the employer to reflect the public holiday pay accrued and paid on wage statements. There would have to be rules governing how long such monies could be allowed to accrue and rules governing payments including pay-out on termination.

7.6.4 Qualifying and disqualifying criteria

In order to earn public holiday pay, unless absent for reasonable cause, the employee must work all of his or her last regularly scheduled day of work before the public holiday and his or her first regularly scheduled day of work after the public holiday.

An employee must also, unless absent for reasonable cause,  work his or her entire shift on the Public Holiday that he or she agreed to or was required to work.

More than 20 scenarios of an employee failing to perform certain work, and the implication for the employee’s entitlement, are set out in Part X.

Conclusion

Both employers and employees would benefit from a simplified Part X. Employers would find it more straightforward to apply, and employees would find it easier to verify if they have received their entitlements. It is expected that fewer issues would arise, and ESOs would be able to enforce it more easily.

The formula for the calculation of PHP is just one issue to consider in a revised Part X. There are numerous other issues to be considered in simplification.

Recommendation

122. Part X of the Employment Standards Act, 2000 should be reviewed in its entirety, revised, and replaced by statutory provisions that are simpler and easier to understand and apply.

7.6.5 Paid vacation

Employees are entitled to 2 weeks of vacation time after each 12-month vacation entitlement year. The ESA does not provide for any increases to the 2-week vacation time entitlement based on length of employment although a contract of employment or collective agreement might do so. There are rules around when vacation must be taken.

Vacation pay must be at least 4% of wages earned in the 12-month vacation entitlement year (or alternative period).

Compared to other Canadian provinces and the federal jurisdiction, Ontario has the least generous provisions with respect to vacation time and pay. Most other provinces and the federal jurisdiction start with 2 weeks of paid vacation, and increase it to 3 weeks after a certain period of employment, which ranges from 5 to 15 years. One province, Saskatchewan, starts with 3 weeks of paid vacation, and increases it to 4 weeks after 10 years of employment.

Recommendation

123. We recommend increasing vacation entitlement to three weeks after five years of employment with the same employer, and making a corresponding amendment to the vacation pay provisions (i.e. at least 6% vacation pay).