It’s a stone’s throw away from becoming law, and it’s bringing a massive wave of change to employment law. Is your organization ready?
By Melissa Campeau
When Bill 148 comes into effect, HR professionals need to be ready for sweeping changes to Ontario’s labour and employment laws, right away. In fact, many of the measures in the Fair Workplaces, Better Jobs Act, 2017 need to be implemented by January 1, 2018.
Changes have been officially in the works since last May. Premier Kathleen Wynne announced the impending minimum wage increases shortly after the release of the Changing Workplaces Review, which outlined 173 recommendations aimed at strengthening collective bargaining, workplace safety and wage fairness for non full-time employees. On June 1, the Premier then entered Bill 148 into legislature. It’s expected to move to Royal Assent this fall and quickly become law.
The headline-grabbing news has been the change to the minimum wage (up to $14 per hour as of January 2018, and $15 as of January 2019). Bill 148, though, has a lengthy list of amendments that will impact rates of pay for different categories of workers (full-time, part-time, etc.), scheduling, vacation pay, emergency leave entitlements, collective bargaining rights and more.
“Based on my experience with our clients who don’t rely on minimum wage labour, there was a misconception at first that the Bill was all about minimum wage, because that’s what was capturing all the headlines,” said Laura Williams, founder and principal of Williams HR Law and Williams HR Consulting. “When you dive a little deeper into the Bill, you recognize increasingly the loss of flexibility and discretion in managing your operations and the cost implications, particularly if you’re not proactive about properly structuring compensation, entitlements and scheduling.”
As the implications of the Bill become more widely understood, employers and HR professionals are keeping a keen eye on the legislature.
“Within the context of my clients, I would say everyone is extremely nervous,” said Patrizia Piccolo, partner at Rubin Thomlinson. “They’re very concerned about the sheer volume of changes. It’s very difficult for them to digest and get a handle on the intricate detail of all the changes and there’s a sense of being overwhelmed.”
Compensation, change and complexity
Bill 148 includes several measures related to compensation, above and beyond the minimum wage increase.
One relatively straightforward proposal is an across-the-board rise in vacation pay, from four per cent to six per cent, after five years of service.
On the more complicated side, the new law would introduce a policy of equal work for equal pay regardless of employment status. This would mean part-time staff, temporary, seasonal and casual workers would earn the same rate of pay as full-time employees doing the same job. Exceptions would be made for pay systems based on objective measures, including seniority and merit.
Legal experts suggest there may be a few bumps in the road when it comes to implementing this change.
“I have many clients with unions in their organizations who have collective agreements in place and they’ve negotiated differentials in pay rates, so there are big question marks around what happens there,” said Piccolo. “The law trumps the collective agreement, so that’s something of a complicated mess, if you will, to be cleaned up. For instance, does this mean if you pay a certain rate of double time or overtime to a full-time employee, but offer time and a half to part-time employees, that you need to change what you give part-time workers? There are certain practical issues and details that will need to be sorted out.”
In many cases, this could make part-time or seasonal workers a more expensive addition to the workforce – something that may influence strategy when it comes to workforce planning.
“We may find there’s a decreased appetite on the part of employers to hire part-timers,” said Piccolo.
If interns and more junior employees have trouble getting a foot in the door, that could mean organizations have one less avenue for sourcing and engaging potential new talent.
“This may be a disincentive for employers to hire on students and others who may not come with a full set of skills,” said Williams. What’s more, the changes come as more and more people are seeking greater flexibility from their employers. “You have a growing number of individuals who choose temporary or part-time work because they need that flexibility in their schedule to accommodate whatever their lifestyle is. So that presents a challenge, as well.”
Personal emergency leave
The proposed changes will also impact employees’ rights to take personal emergency leave. At the moment, employers with 50 employees or more are required to give their workers 10 days of unpaid leave.
“The proposal wipes out the 50 employee requirement – so this would now apply to every employer – and two of those 10 days must be paid,” said Piccolo.
That could prove costly, says Hendrik Nieuwland, partner with Shields O’Donnell MacKillop.
“The operating presumption is that if there are days available to be taken, they are on average taken,” said Nieuwland. “That leads to a differential impact on smaller employers with respect to productivity because more people will be taking days off, and two of those days must be paid.”
The new law would also stipulate that an employer couldn’t require a doctor’s note to explain an absence. An employer can still ask, but an employee can simply say no.
“That’s problematic from a practical standpoint because one of the ways to create a disincentive for abusing leave days is the requirement to have a doctor’s note,” said Nieuwland. “Now that tool has been removed from the employer’s toolbox.”
Scheduling changes
Proposed workplace scheduling changes would impact many businesses, as well, particularly those in the retail, hospitality and service industries.
“Employees will now have the right to refuse a shift or refuse to be on call if they’re given less than four days’ notice,” said Nieuwland. “That’s tough for these industries because they need flexibility to address peak periods.”
That may impact how businesses think about their staffing requirements.
“The consequence of that is likely to be the need to have a broader pool of potential casual employees to draw from,” said Nieuwland. “Just in terms of probabilities, you’re going to need more people to draw from in order to meet your needs.”
Another proposed rule says if a shift is cancelled within 48 hours of when it should start, an employer must pay the employee at least three hours’ pay.
“So in these industries, they have peak times where they need to bring people in, but they also have slow times where they need to send people home, and those aren’t predictable,” said Nieuwland. “What I suspect that rule will do is create an incentive for the people in retail, services and hospitality to basically understaff and place a higher service burden on the staff who are there.”
Unions and collective bargaining
There are also a few significant changes proposed that would impact collective bargaining.
“In certain industries, namely building services, home care, community service and temporary help agencies, the new law says a union can certify a bargaining unit without a vote as long as they can show that at least 55 per cent of the bargaining unit has signed membership cards,” said Nieuwland. Until this change, if less than 55 per cent but more than 40 per cent of workers had signed cards, a vote was required.
“The key difference is that when you have a vote, employers have certain rights to make representations to employees about the pros and cons of having a union,” said Nieuwland. “When you have a card-based certification process, that ability goes away. Oftentimes, this is done under the radar so employers aren’t always aware. When that happens, the employer’s ability to have a say in the process is gone.”
The other union-related proposal says if a union can show that 20 per cent or more of a bargaining unit are members of the union, they can have the Labour Board direct the employer to supply a list of everyone in the proposed bargaining unit.
“Historically, inside organizing committees would have had to network and it wasn’t always efficient,” said Niewland. “With a list, they can reach everyone much more directly.”
Small things (and big things) add up
Some of the proposed changes are relatively simple, and some much more complex and costly. It’s the sheer number of changes, though, behind many employers’ general anxiety.
“Taken in the aggregate, these seemingly minor amendments could have huge cost implications for employers,” said Williams. “Small businesses will feel these changes more than others, and when you consider that small business is responsible for two-thirds of the private sector employment in Ontario, that’s a pretty significant impact.”
In fact, a study released in August predicts the changes could put 185,000 jobs at risk. The analysis – done by the Canadian Centre for Economic Analysis and commissioned by a group of business sector representatives – also predicts the changes will mean a 50 per cent increase in inflation this year and for the foreseeable future for Ontarians, and an average increase of $1,300 per household for consumer goods, every year.
“Some proposed changes, like increasing vacation pay, are probably overdue,” said David Whitten, partner with Whitten & Lublin. “But it’s the cumulative effect of all these changes that is going to cost employers a fortune.”
Where to start?
Once Bill 148’s proposals become law, HR will have to act quickly. While there’s a chance of further revisions, Whitten says employers should start preparing based on what’s in place after the second reading.
“I would anticipate we’re going to see the Bill go through a third reading then receive Royal Assent in October because it gives companies a couple months to make changes to their policies and practices,” he said.
At that point, HR expertise will be in high demand.
“If Bill 148 is passed into law, it will be absolutely mandatory for new businesses and smaller businesses – many of whom don’t have dedicated HR departments – to engage HR professionals to come in and do audits, ensure compliance and put policies in place to limit exposure in the future,” said Whitten. “There may be an upfront cost to it, but now, in the early days, is the time to ensure compliance and limit exposures and cost. There’s no ‘cowboying it’ on your own, or you’re going to end up paying the price down the line.”
To begin planning, first consider the bigger and more expensive items on the list.
“What I’m telling clients is to plan immediately for the dollar impacts,” said Whitten. “We know the minimum wage is going to come. That’s a clear promise.”
From there, said Nieuwland, “Work with your counsel to set out what changes you need to make to your policies and practices by, in most cases, January 1.”
Costs might extend into less obvious areas, too.
“The list of things you need to do could include revamping employee handbooks, perhaps even making changes to employment contracts so they comply with the new laws and perhaps opening up discussions with unions,” said Piccolo. “Plan ahead so you’re ready when the legislation finally comes through, and you have the funds ready to be able to do what you’ve planned.”
Williams points out that while organizations want to make sure they’re meeting compliance responsibilities, they should also use care to make sure they’re not unwittingly exceeding them.
“For example, if you already offer a certain number of personal emergency leave days, and then you add two additional emergency leave days that have to be paid, you might unintentionally be providing 12 days,” she said.
While it might be tempting to push aside any concerns about how these changes will impact an organization’s culture – at least until the more urgent tasks are completed – Williams points out that times of change are when an organization can lean on the very strengths of its culture, and it offers a chance to grow into new areas of strength.
“When you talk about what employers should do, they should look culturally,” said Williams. “For example, non-union employers who intend to remain non-union really have to be mindful of the fact that it’s going to be easier for unions to gain bargaining rights,” said Williams. “Unions generally gain bargaining rights not because employers aren’t providing adequate compensation and benefits – although that’s a piece of it – but because of how of the employer is treating employees.
“In all changes and times of uncertainty, it matters whether there’s transparency and fairness and whether the managers are leaders and truly trying to bring the best out of the teams.” When employers miss the mark, there’s a lot at stake in terms of culture, engagement and productivity.
“My advice to employers and to HR professionals is to do your homework, be strategic about how you’ll meet your compliance responsibilities, and you’ll be okay,” said Williams. “The big risk here is that when employers feel a wave of regulation coming upon them, they tend to take an ostrich approach. Avoidance is not going to serve you well. This is something you really have to tackle – and it really is doable.”
View the Fair Workplaces, Better Jobs Act (Bill 148) here.