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• Introduction
• Program Description
• The Evaluation Focus
• Evaluation Methodology
• Key Findings:

Introduction

This brief summarizes the findings from an evaluation of the Canada Labour Code, Part III (federal labour standards). The evaluation was designed, managed, and funded by Evaluation and Data Development, Strategic Policy, Human Resources Development Canada.

Program Description

The mandate of Part III of the Canada Labour Code is to develop and administer labour standards directed toward fair and equitable conditions of employment for 727,000 Canadians under the federal jurisdiction.

Part III includes a variety of labour standards in such areas as hours of work, overtime, minimum wage, holidays, vacation pay, termination, severance and sexual harassment. It applies to businesses or enterprises under the Canadian federal jurisdiction, such as interprovincial transportation (trucking, air, railways), banking, telecommunication and others. Provincial labour standards apply to other businesses or enterprises in the Provinces and Territories.

The legislated requirements are administered by Labour Affairs Officers (LAOs) who are located across Canada in Human Resource Centres of Canada, district or regional offices, or co-located with provincial authorities. From these locations, LAOs serve 53,000 federally-regulated worksites across Canada.

The Evaluation Focus

The evaluation examined several issues related to the administration and the delivery of the Labour Program, the level of compliance with Part III, alternatives to the current model of service delivery, and costs and benefits of compliance.

Evaluation Methodology

To address the evaluation issues, six types of methodologies were used:

• a review of background research on labour standards

• interviews with key informants (over 40 people)

• a substantial national survey of employers (618 firms)

• a national survey of union representatives (73 unions)

• a national survey of Labour Affairs Officers (74 officers)

• a review of administrative data (Labour Program, LOIS data base)

Key Findings:

Delivery of the Labour Program

Resource constraints and the high volume of complaints, which must be investigated by law, hindered LAOs in their efforts to prevent complaints through education and other means.

The Labour Program receives some 5,000 complaints every year. The majority of complaints relate to two specific areas of the Code, namely, payment of wages (about 35% of total) and unjust dismissals (about 28%). The investigation of complaints increased the costs of the purely reactive function of the program.

The high proportion of LAO's time spent on the symptoms of the problem (complaints) rather than the problem itself (non-compliance), combined with the absence of sufficient educational efforts promoted the "spiral effect" in the sense that more violations occur by reason of lack of awareness or understanding of labour standards, thus forcing LAOs to investigate more complaints.

Level of Compliance with Part III

The employer survey data pointed to widespread ignorance of and non-compliance with Part III, particularly in some areas such as normal hours of work and severance pay. Many firms also reported that their policies did not allow for bereavement leave or sick leave. The vast majority of employers did not have a policy on sexual harassment.

Only about 25 percent of employers were in compliance with most provisions of Part III (there are all together 15 provisions in the Code), with about half of all employers being more compliant than not. About 25 percent generally were in non-compliance with most provisions.

A large number of employers were unaware of whether their current employment practices were consistent with the Code. Generally, lack of employer awareness was identified as one key driving force behind non-compliance, while some evidence also pointed to deliberate violations for a small number of employers (up to 5%).

Non-compliance with the Code was correlated in a statistically significant way (albeit modest) with a number of employer characteristics. Non-compliance is more likely in firms that are smaller, non-unionized, less profitable, and in the trucking industry (the trucking sector is a major source of complaints, workload and administration costs of the Part III program), but also most of the employers.

Alternatives for Service Delivery

Potential program improvements were noted around the issues of education and stronger enforcement tools.

In the area of education, there was a general consensus among key informants, that more educational efforts could improve compliance with the Code. However, it was noted that "passive" educational programs (i.e, simply making the information available) may not reach the population of non-complying firms.

The majority of the employers surveyed (58%) indicated that the provision of educational services should be a high priority for the program. About 30 percent of the employers favoured the government mediation of disputes between employers and employees and the investigation of complaints or potential violations as preferred priorities.

LAOs rated education as the best "remedy" for non-compliance for the vast majority of Part III provisions. This was particularly true for certain Code items such as: statutory holidays (49%); severance pay (45%); sick leave (45%); protection against sexual harassment (42%); and maternity and parental leaves (42%).

In the area of enforcement, LAOs overwhelmingly indicated that stronger enforcement tools are required to affect compliance, particularly for certain provisions of the Code such as the timely payment of wages, individual terminations, and overtime pay rate. The implementation of an effective system of fines and tickets was favoured as an alternative to the current prosecution system which is significantly impeded by the high cost of pursuing legal actions against employers.

Many LAOs indicated that there was a need for more thorough reviews of non-compliant employers to assess if violations evident for a given employee were occurring for other employees, and to assess if the employer was non-compliant in other ways (many employers in violation of the Code remain non-compliant).

The evaluation noted the efforts of the Labour Program to examine alternative methods of service delivery, such as partnerships with the Provinces/Territories, information dissemination and cost recovery.

From a LAO perspective, the potential for co-delivery with the provinces seemed most promising in the areas of education and awareness programs. As well, many LAOs indicated a need for improved approaches to the regulation of labour standards for First Nations.

Costs and Benefits of Compliance

About 60 percent of employers reported that current labour standards did not impose any additional administrative costs to their operations. Those employers identifying additional costs caused by Part III reported only modest increases to administration or payroll costs.

Employers and union representatives both saw the costs and benefits of labour standards as relatively balanced for firms. As well, both employers and unions generally agreed that benefits of labour standards were far greater than costs for employers.

Compliance with labour standards was found to be positively correlated with a variety of indicators of business success such as operating at full capacity and profitability.