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As a result of a change in government leadership and recently signed laws and treaties, companies with operations in Mexico now have an important “to do” for 2019: prepare to review any unions that are “on the books” and assess compliance in this new environment. We’re pleased to share a timely client alert from our colleagues in Mexico which provides guidance on steps to take in light of this development.

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In its first decision of 2019, the Ontario Court of Appeal has overturned the lower court’s decision in Heller v. Uber Technologies Inc., 2019 ONCA 1. The Court of Appeal held that an arbitration clause requiring arbitration in the Netherlands of disputes between drivers and Uber to be invalid and unenforceable. Based on the presumption that Uber drivers are employees of Uber, the Court of Appeal found that the arbitration clause was a prohibited contracting out of Ontario’s Employment Standards Act, 2000 (ESA).

Background

The case arises from a Toronto-based UberEATS driver’s effort to bring a class action on behalf of Uber and UberEATS drivers in Ontario (collectively, “Uber drivers”) against Uber for allegedly violating the ESA. At issue in the litigation is the requirement that all prospective Uber drivers enter into a service agreement with Uber through the Uber app, which is governed by the law of the Netherlands and includes an arbitration clause selecting the Netherlands as the seat of arbitration. In early 2018, the Ontario Superior Court of Justice stayed the Uber drivers’ proposed class action in favour of arbitration in the Netherlands under the service agreement.

Court of Appeal Decision

It is well established that employers are prohibited from contracting out of any employment standard provided under the ESA, and, likewise, that an employee is not bound by a contractual term that ousts an employment standard. The Court of Appeal found that being forced to arbitrate a complaint against Uber in the Netherlands deprives an employee of the benefit of making a complaint to the Ministry of Labour under section 96(1) of the ESA. Once an employee submits a complaint under s. 96(1), an investigation process is triggered. The Court of Appeal held that this investigative process constitutes an employment standard under the ESA and cannot be circumvented.

The Court of Appeal acknowledged that the appellant had not made a complaint under s. 96(1) of the ESA and had instead chosen to initiate a civil proceeding by way of a proposed class action. The Court held that this fact did not alter the Court’s conclusion that the arbitration clause was a prohibited contracting out of an employment standard. Moreover, the Court reasoned that there were public policy considerations reinforcing its conclusion that the arbitration clause should not be enforced. These public policy considerations include the issue of determining whether persons in the appellant’s position are employees or independent contractors of Uber and whether such persons are entitled to the protections of the ESA, both of which are important issues for Ontarians.

Separately, the Court of Appeal held that the arbitration clause was invalid on the basis of unconscionability in part because Uber drivers have no avenue for resolving disputes in Ontario, and are required to incur significant costs to initiate an arbitration proceeding in the Netherlands. The Court found this to be a substantially improvident or unfair bargain. The Court also noted an inequality of bargaining power between Uber and Uber drivers, and the representative plaintiff’s lack of independent legal advice before entering into the service agreement.

Notwithstanding the Ontario Court of Appeal’s decision, it remains to be determined whether the Uber drivers are employees rather than independent contractors, and whether the proposed class action will be certified.

  – Many thanks to Faye Williams for her assistance with this article.

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On December 13, 2018, Bill C-86, the Budget Implementation Act, 2018  received Royal Assent. Bill C-86 has a wide ambit given that it primarily implements the February 2018 federal budget plan. Among other things, Bill C-86 makes numerous amendments aimed at “modernizing” the labour standards in the Canada Labour Code (“CLC”). To help federally regulated employers navigate the many changes to the labour standards, we have outlined the key changes to be aware of and what to do about them.

Takeaways

Overall, the Bill C-86 amendments to the federal labour standards vary in their subject matter and reach, closely reflecting Ontario’s Bill 148. Most of Bill 148, introduced by the Liberal government, has been reversed or modified by the current PC government. Employers will need to keep abreast of the effective dates for the changes under Bill C-86 to ensure that they maintain compliance. At this point, the timing for implementing these changes is not yet entirely clear, but all of the changes will likely be rolled out in 2019.  We will monitor progress and will provide an update when the timeline becomes clear.

Misclassification: Misclassifying individuals as non-employees is now expressly prohibited. Further, the employer will bear the onus of proving an individual is not an employee.

What to do

  • Review arrangements with independent contractors and other service providers to identify potential risk.
  • Consider making changes to the arrangement and the terms of the contract where risk is identified.
  • Keep in mind that reviewing contracts is not enough for a proper risk assessment ‒ the employer’s day-to-day expectations and the economic realities of the arrangement, among other factors, need to be taken into account.

Equal pay for equal work: As a general rule, pay rate differentials based on “employment status” are prohibited. The general rule requires equal pay where employees work in the same industrial establishment under similar working conditions and perform substantially the same kind of work, requiring substantially the same skill, effort and responsibility. Despite the general rule, exceptions permit employers to establish distinct pay rates on the basis of seniority or merit systems, systems measuring the quantity or quality of each employee’s production, or any other prescribed criterion.

Temporary help agency employees will also be entitled to the same pay rate as employees of the client in the circumstances described above. The exceptions described above also apply in the case of temporary agency employees. In addition, actions that deter or prevent employees from becoming an employee of a client of a temporary help agency are expressly prohibited, including fees charged to the employee or the client for establishing an employment relationship.

What to do

  • Review and update policies and practices relating to pay rates.
  • Review and revise job descriptions to better differentiate among classes of employees as appropriate.
  • Audit your workforce to assess whether the new equal pay rules are met.

Termination: Individual notice of termination requirements are increased based on length of service. Notice entitlement begins at 2 weeks for employees with 3 months of service and increases to up to 8 weeks for employees with at least 8 years of service. Employers will have the option of providing sixteen weeks of wages, in lieu of sixteen weeks of notice to the Minister of Labour, where the employer terminates the employment of at least 50 employees (provided that notice to the Minister is given at least forty-eight hours before the group termination).

What to do: Employers who have not already done so should budget for increased costs associated with terminations or layoffs in 2019 and beyond.

Continuous employment: The continuous employment provisions are expanded; in particular, there will be continuous employment where an employee is employed in connection with the operation of a work, undertaking or business, both before and after a lease or transfer from one employer to another, if the work, undertaking or business is federal, or if it becomes federal due to the lease or transfer. As well, there will be continuous employment for employee contracts transferred to another employer as a result of a re-tendering process.

What to do: Increased entitlements to vacation time and vacation pay, notice of termination, etc. may apply due where employment is deemed to be continuous under the new provisions. As such, employers should factor this possibility into their budget planning for 2019 and beyond.

Leaves: As outlined below, new leaves have been added, along with incremental changes to existing leave entitlements.

What to do:

  • Develop guidelines for determining what kind of leave pertains and whether the leave needs to be paid or unpaid.
  • Prepare for workforce continuity issues as a result of the increased leave entitlements, e.g., cross-train staff on work assignments and budget for retaining replacement workers based on forecasted need.
Leave type Current CLC Bill C-86
Maternity 6 months’ service required for eligibility No service requirement for eligibility
Paternity 6 months’ service required for eligibility No service requirement for eligibility
Personal Up to 5 days for illness, injury, health-related family responsibilities, education-related responsibilities for family members under 18, urgent matters, citizenship conferral, or prescribed reasons – first 3 days paid for employees with 3 months’ service
Medical 17 weeks unpaid for sick leave – 3 months’ service required for eligibility – employer may require health care practitioner’s certification for absence Up to 17 weeks unpaid for personal illness or injury, organ or tissue donation, or medical appointments during work hours – no service requirement for eligibility – employer may require health care practitioner’s certification for absence of 3 days or longer
Court or jury duty Leave to act as a witness, juror or to participate in jury selection, no maximum leave period specified – no service requirement for eligibility
Reservist No maximum leave period – 6 months’ service required for eligibility Maximum leave period of 24 months in 60-month period – 3 months’ service required for eligibility

Other incremental changes:

Entitlement Current CLC Bill C-86
Vacation 2 weeks’ vacation and vac. pay of 4% of wages (all employees); 3 weeks’ vacation and vac. pay of 6% of wages after 6 years’ service 2 weeks’ vacation and vac. pay of 4% of wages after 1 year of service; 3 weeks’ vacation and vac. pay of 6% of wages after 5 years’ service; 4 weeks’ vacation and vac. pay of 8$ of wages after 10 years’ service
Holiday pay 30 days’ service required for eligibility No service requirement for eligibility
Breaks Unpaid 30-minute break during every work period of 5 consecutive hours
Rest periods Rest period of at least 8 consecutive hours between work periods or shifts
Medical and nursing breaks Unpaid breaks as necessary for nursing or to express breast milk
Notice of work schedule Written work schedules must be provided at least 96 hours before the start of the first work period or shift under the schedule – employees may refuse work that starts within 96 hours from the time the schedule was provided
Working age 17 years is the minimum age for working without regulatory restriction 18 years is the minimum age for working without regulatory restriction
Expenses Employees are entitled to reimbursement of reasonable work-related expenses

Communicating information to employees: Employers must post the most recent version of any materials that the Minister makes available and that contains information respecting employers’ and employees’ rights and obligations under the CLC. Employers must also, within the first 30 days of employment, provide employees with a copy of such materials.

  • Many thanks to Marc Di Pierdomenico for his assistance with this article.
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On November 21, 2018, Bill 47, Making Ontario Open for Business Act, 2018  (“Bill 47”), passed Third Reading and received Royal Assent. Bill 47 repeals or rewrites numerous provisions of the previous government’s Fair Workplaces, Better Jobs Act, 2017  (“Bill 148”). To help employers navigate and prepare for the many changes under Bill 47, we have summarized the key changes and what is left intact.

Key Takeaways

The Bill 47 amendments to the Employment Standards Act, 2000 come into force on January 1, 2019. However, employers should approach future changes to Bill 148 entitlements with caution. For non-union employees, the employer will be at risk of a constructive dismissal claim if it did not preserve the right to change the entitlement to correspond with its legal obligations. Legal advice should be obtained before any changes are made that would reverse or reduce Bill 148 entitlements.

Generally speaking, unionized employers who amended their collective agreement language to reflect Bill 148 requirements are likely without recourse until they negotiate again. Whereas employers who have not made changes to their language may have more flexibility. Employers who are currently engaged in bargaining should ensure that, where possible, they use language that limits the employer’s obligations to statutory compliance.

Employment Standards Act, 2000

The following changes under Bill 47 come into force on January 1, 2019.

Bill 148 Bill 47
Related employer Separate legal entities are treated as one employer if “associated or related activities or businesses” are carried on through multiple entities No change
Misclassification Misclassifying is specifically prohibited and the employer must establish that the complainant is not an employee Misclassifying is specifically prohibited but the complainant must establish that they are an employee
Scheduling 3 hour rule for shortened and cancelled shifts; on-call rule; right to request scheduling or work location changes; right to refuse work or on-call requests made with less than 96 hours of notice: all of the above were to come into force on January 1, 2019 3 hour rule for shortened shifts
Minimum wage Currently $14/hour; increasing to $15/hour on January 1, 2019 $14/hour; annual inflationary adjustments to restart as of October 1, 2020
Public holiday pay

As of January 1, 2018, public holiday pay = total amount of regular wages earned in pay period immediately preceding public holiday, divided by the number of days the employee worked in that period.

As of July 1, 2018, the “old” prorating formula re-adopted as an interim measure.

Prorating formula: public holiday pay = total amount of regular wages earned and vac. pay payable to the employee in the 4 work weeks before the work week in which the public holiday occurred, divided by 20 (i.e., the “old” formula)
Vacation pay 3 weeks’ paid vacation after 5 years’ employment No change
Equal pay for equal work Pay differentials based on “difference in employment status” are prohibited (e.g., PT vs. FT; temporary vs. indefinite) or for temporary help agency workers Repeal
Domestic or sexual violence leave Up to 10 days and up to 15 weeks of leave in a calendar year, with the first 5 days paid and the remaining days unpaid No change
Personal emergency leave (PEL)

10 PEL days with the first 2 days paid

Employer cannot require a certificate from a doctor or other qualified health practitioner (QHP)

8 unpaid leave days: sick leave (3 days), family responsibility leave (3 days), and bereavement leave (2 days)

No prohibition re. requiring doctor’s/QHP’s certificate

Fines Maximum fine amounts for contravention of the ESA increased Maximum fine amounts decreased to pre-Bill 148 amounts $250, $500 and $1000)

Labour Relations Act

The following changes under Bill 47 are in force as of November 21, 2018.

Bill 148 Bill 47
Employee lists Expedited process under which a union with support of at least 20% of the proposed bargaining unit can apply for a list of employees in that bargaining unit (and their personal information) Repeal
Remedial certification

The Ontario Labour Relations Board (“Board”) is required to certify the union if the Board is satisfied the employer’s contravention resulted in (a) the true wishes of the employees were not likely reflected in a representation vote; or (b) the union not being able to demonstrate 40% support.

The Board no longer has the option of ordering a representation vote under the circumstances described above and instead must certify the union for the bargaining unit the Board determines could be appropriate.

Reinstatement of pre-Bill 148 approach to penalty certification for employer misconduct.

Under the prescribed conditions, the Board would again have discretion to order a vote or certify.

Reviewing bargaining unit structure The Board may review structure of the bargaining unit if certain conditions are met (application made at time of certification application or within 3 months of certification; no collective agreement yet; same union represents both units) Repeal
Card-based certification

In the following sectors, the Board may certify the union (or direct a representation vote) if the Board is satisfied that more than 55% of employees in bargaining unit are union members: building services, home care and community services, and temporary help agencies.

If 40-55%: the Board will direct a representation vote.

Repeal (with transition clause for elections made before the in force date)
First agreements Mediation and mediation-arbitration provisions Return to pre-Bill 148 first agreement arbitration
Return-to-work rights No time limit on an employee’s right to reinstatement following the start of a strike or lock-out Employee’s right to reinstatement following the start of a strike or lock-out is reduced to six months (return to the pre-Bill 148 timeframe)
Fines Fines for offences increased ($5000 for individuals and $100,000 for corporations) Fines decreased to the pre-Bill 148 amounts ($2000 for individuals and $25,000 for corporations)

Please see our earlier blog post here for further details on the legislative changes under Bill 47.

Note that the current provision under the Labour Relations Act giving the Board the authority to review bargaining unit structures, will be repealed in its entirety instead of being revising as described in our earlier blog post. This change to Bill 47 was made in response to the recommendation of the Standing Committee on Finance and Economic Affairs.

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We’re pleased to share Jordan Kirkness’s article, here, on the impact to employers of Bill 47, Making Ontario Open for Business Act. The article was published in today’s edition of the Globe and Mail.

If it comes into effect in its current form, Bill 47 will reverse most of Bill 148 (the previous government’s Fair Workplaces, Better Jobs Act, 2017 ). However, as Jordan points out, Bill 47 is not necessarily a win for employers. Even if Bill 47 changes employers’ statutory obligations, altering Bill 148 commitments is likely to damage employee morale and may lead to constructive dismissal claims. For further details on Bill 47, please also see here.

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