Submission

Submissions of the Canadian Cable Telecommunications Association to the Federal Labour Standards Review Commission

Executive Summary

1. The Canadian Cable Telecommunications Association (the "CCTA") is the national organization of the Canadian cable industry. Our member companies provide advanced telecommunication services, including video services, high-speed internet access, and local telephone services to Canadians in every region of the country. CCTA members are "federal works, undertakings or businesses", within the meaning of the Canada Labour Code (the "Code"), and are, accordingly, vitally interested in this Review. While recognizing the changes that have occurred in Canada's economic and demographic landscape since the Code's inception in 1965, the CCTA submits that the Code continues to be largely effective and has proven responsive to changing work and business conditions; no wholesale re-drawing of the lines of the employer/employee relationship need to be effected by this Review. The Code, as it presently operates, is also reflective of the kind of regulation seen in most provincial employment standards, ensuring a relative parity between the models of organization of employment affairs to which both federally and provincially regulated businesses must adhere. The CCTA has areas of concern that it will put forward to the Commission for its consideration in these Submissions. It is our position that these proposals will assist our members in maintaining their ability to go forward in highly competitive markets, while maintaining their workplaces as satisfying and productive for employees.

ISSUES TO BE REVIEWED

BACKGROUND

2. The CCTA is the national organization representing 78 Canadian cable companies that provide advanced media in the home through a wide range of entertainment, information, internet and telecommunications services. The cable industry provides television services to 7.3 million subscribers and cable high-speed internet access to 2.8 million Canadians. Canada's broadcasting and telecommunications systems are regulated by the Canadian Radio-Television and Telecommunications Commission (CRTC) through the Broadcasting Act¹ and Telecommunications Act² respectively.
3. The CCTA works with its members to promote standards of excellence, assess new technology and business opportunities, as well as to advance the development of services to Canadian consumers. As Canada's most diverse media providers, the cable industry champions innovation and choice for customers in hundreds of communities across Canada.
4. The Canadian cable industry provides Canadians with the most cutting edge services and technologies available today. Cable companies have played a leading role in establishing Canada as a world leader in high-speed internet access and the industry has begun to deliver advanced phone services to the home. Small and large operators continue to work at the local level to make Canada the most digitally connected country in the world. The industry's commitment to providing advanced media to the home has meant investing more than $7.5 billion to bridge the digital divide. By facilitating the advancement of innovation, investment and consumer choice, the cable industry would like to ensure that Canadians will be able to enjoy the benefits of economic growth, regional development and communications leadership. Any re-examination of the statutory regime governing these businesses must take into account the complex, competitive and highly cost-sensitive fields in which they operate.

CONSIDERATION OF ISSUES

Position:

5. It is the position of the CCTA that Part III of the Code should not be expanded to capture "independent contractors". The cable industry relies, to a significant extent, on the use of independent contractors to service certain aspects of its business. Such contractors are used, for example, to perform installations and repair of cable service and high speed internet access. These services are time-sensitive and time-variable, specialized, and often required over a widespread geographic area. These individuals are "in business" on their own account, and the result of extending Labour Code protections can and will lead to increased costs of doing business. These increased costs would harm the efficiency, productivity, competitiveness and profitability of the cable industry.
6. The CCTA is not addressing the purchase of services from a third-party organization that, in turn, provides these services through the third-party's employees. These contractors are employers, in their own right, and owe correlative duties under the governing employment legislation, obligations that they are required to discharge. Any failure to discharge those duties can and should be addressed through the presently available mechanisms of education and enforcement.
7. This issue concerns individuals working on their "own account", meaning those who have no employees working for them, and who provide services under a contract "for services".
8. The CCTA supports the principle that businesses and sole service providers have a right to contract, outside of the traditional employer/employee relationship. These service providers enjoy flexibility in arranging their work, and have and exercise the ability to negotiate conditions of compensation that meet their needs. They also have the ability, in structuring their businesses as sole proprietorships, or as corporations, as their financial advisors may direct, to deduct against revenue the costs of earning that income, significantly enhancing their tax position.
9. The cable industry supports the view that the benefits presently extended by Part III of the Code should continue to be available to the classes of "employees" for whom they are presently available. Concerns have been raised about the misuse of "independent contract" status, whether innocently or even willfully by employers and service providers, to characterize what are actually "disguised" employees or dependent contractors.
10. The CCTA notes that the Code has a long-standing mechanism that permits the issue of "employment status" to be adjudicated on a complaint-based basis. Adjudicators under the Code have developed extensive case law that examines dependency and control, as well as a host of factors in determining who are truly "employees". Similarly, they have developed a working definition of "independent contractor", which is flexible and responsive to changing economic and service models, using a range of criteria, none of which are necessary or sufficient in their own right, but which allow for a full consideration of the relationship.
11. These so-called "status" determinations are not an uncommon issue under provincial employment statutes, workers' compensation and workplace safety insurance legislation, the Income Tax Act³, and the Employment Insurance Act⁴. Adjudicators have developed bodies of law on how these issues can and are addressed. In fact, recently the Supreme Court of Canada took the occasion to clarify the tests to be applied in the modern, dynamic and complex business world: 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. [2002] 25 S.C.R. 983. This should not be altered in those circumstances or in the case of Part III. However, to the extent there are case-by-case issues on the appropriate use of independent contractor status, these are concerns that should be addressed on a case-by-case basis, by better education and enforcement of the Code, and not by over broadly re-drawing the conceptual net.
12. To extend rights beyond the traditional employment relationship adds significant complexity and cost to the system and would be antithetical to the goal of creating opportunities for Canadian federal corporations to be efficient and more profitable through the use of contractors in appropriate circumstances.

Position:

13. It is the position of the CCTA that Part III of the Code should maintain the exemption from hours of work restrictions and overtime for managers and professionals. The positions occupied by managers and professionals are unique, and to impose maximum hours of work would create significant costs for federal employers that their provincial counterparts are not required to bear. Managers and superintendents occupy unique roles in an organization, and will traditionally have a compensation structure that reflects this. These roles place unique responsibilities on them that differ from those placed on a non-managerial employee. Discharging those duties may well necessitate longer hours of work, at irregular intervals. Professionals, as well, have duties that must be discharged, in accordance with the standards of their professional governing bodies in many cases, and may necessitate longer hours of work, at irregular intervals.
14. Section 167(2) exempts the application of Division I - Hours of Work to employees who "are managers or superintendents or exercise management functions". It also exempts from the application of Division I certain designated professionals. In its present format, this exemption is considerably narrower than the comparable exemption in Ontario's Employment Standards Act, 2000⁵, which extends to managers, professionals, students in training for the designated professions, and, significantly, information technology professionals.⁶ It is submitted that Ontario's inclusion in this group of information technology professionals reflects the role that this group of specialists serves in the workplace, necessitating their availability on short-notice and off-hours, and the need to stay on the job until critical IT functions are restored. Extending the exemption of the application of Division I to these professionals would be an appropriate response to the role of the information technologist in the workplace.
15. The CCTA supports the continued exemption from Division I of managers and superintendents. In so doing, it is cognizant of the practical limitations that have been applied to the exemption by adjudicators under the Code. There has been extensive adjudication of whether particular employees fall within the exemption, and these decisions have created a comprehensive set of parameters that ensure a specific and narrow application. Cases such as Island Telephone Co. v. Canada (Minister of Labour) (1991), 44 C.C.E.L. 198 (Fed. T. D.) have restricted the application of this section to those who have the "autonomy, discretion and power of independent action and decision-making", to truly be said to occupy a senior management role. Adjudicators look at the work actually being performed "on the ground", rather than mere "title" to ensure the position falls within the exemption. This section was not intended to be used to permit employers to shift the burdens of "managerial" work (extended hours) without the "benefits" (presumably compensation), and the Code's adjudicators have achieved that goal. If there are perceptions that this is not the case, those are matters for education and enforcement.

16. Achieving a balance between the demands of work and home is a difficult, and yet highly individualized activity, that is not amenable to blanket regulation through employment legislation. Assisting employees in achieving their goals may very well encompass matters of available public and private resources for elder and child care, as well as respite and community-based care. Counseling and coaching have a role, as do Employee Assistance Programs that are routinely provided by federal employers as part of the cache of benefits available to employees. Similarly, referrals to and better consolidation of available public resources are important. These resources can best be marshaled through the government services sector.

Should "Division XIV - Unjust Dismissal" be maintained in its present form?

Position:

17. It is the position of the CCTA that the existing provisions of Division XIV should be amended to restrict access to employees having a minimum of ten years of service.
18. The Canada Labour Code is (virtually) unique in Canadian employment standards legislation in that it provides an opportunity for certain non-unionized employees to seek an adjudication of their claim of unjust dismissal through the use of a federally appointed adjudicator.
19. Under "Division IV - Unjust Dismissal", employees meeting certain criteria can apply for an adjudicated determination of whether the employer had just cause to discharge them, and, if the employer did not, to seek extensive monetary remedies, as well as reinstatement. Those criteria are:
    1. they are not managers (s.167(3));
    2. they have completed twelve months of continuous employment (s.240(1)(a));
    3. they are not subject to a collective agreement, which presumably has its own procedures for addressing whether discipline and/or discharge were imposed without just cause (s.240(1)(b)); and
    4. they were not terminated because of lack of work or the discontinuance of a function (s.242(1)(3.1)).
20. It should be noted that the right to seek a Division XIV adjudication is without prejudice to any rights the employee may have in the civil courts (s.246(1)), which is unique.
21. Collective agreements in unionized workplaces will virtually always include clauses preventing the employer from discharging an employee without just cause, and where just cause is not established, reinstatement is presumptively available. Conversely, the individual contract of employment received considerably different treatment at common law. Common law courts considered non-bargaining employees to be employed under an individual contract of employment (of an indefinite term), which, absent express terms as to its duration or the manner of its termination, could be brought to a conclusion by the provision of "reasonable" notice or pay in lieu thereof. Where there was a fundamental breach of the contract by an employee, the employer may have "just cause" to terminate the contract without notice or pay in lieu thereof. However, even if the employer were found to be incorrect in its assertion of just cause, the courts would restrict their remedies to a determination of the damages flowing from the failure to give reasonable notice. Judges would not usually order reinstatement of the employee, as that would be tantamount to ordering specific performance of a contract of service.⁷
22. Employment standards legislation in individual provinces has introduced statutory variations to the common law. However, few other provincial employment standards enactments provide an adjudicator with the power to order reinstatement, when an individual contract of employment is terminated; in fact, these rights exist only in Quebec and Nova Scotia.
23. Section 128(1) of Quebec's Act Respecting Labour Standards⁸ permits employees with greater than two years service to seek a determination of whether they were dismissed for "good and sufficient cause", and if they were not, reinstatement is an available remedy. Nova Scotia's Labour Standards Code⁹ provides a right of adjudication of "just cause", with a remedy of reinstatement, but only to employees with ten or more years of service. None of the other provincial jurisdictions provides comparable rights.
24. Under the present Division XIV regime, adjudicators are empowered, where just cause is not established, to award the complainant compensation "not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person" (s. 242(4)). Anomalies in the practices of assessing this measure of compensation have been pointed out in detail by Geoffrey England in his 1999 paper on Section 240.¹⁰ As is noted, under this section, the measure of compensation awarded to an employee can and does, routinely, exceed the usual measure of common-law damages, assessed under the principles established in Bardal v. The Globe and Mail (1960), 24 D.L.R. (2d) 140 (Ont. H.C.).
25. It is respectfully submitted that access to the Division XIV adjudicative process and its extraordinary remedies - an expanded measure of compensatory damages, and discretionary reinstatement - should be available to employees whose length of service is significant. The administrative and financial costs of adjudication are high for all parties, and to compel employers to engage in the process for employees with as little as one year's service, as is presently the case, is inappropriate. As well, all employees who do or do not have access to the adjudicative process retain their rights to sue civilly, a right that is the sole right of employees in most common law jurisdictions. It is the CCTA's position that section 240(1)(a) should be amended to restrict the right to employees with a minimum of ten years continuous service and consideration should be given to including an election such as exists in other provincial enactments to seek remedies and claims either through the Courts or through the administrative mechanisms under legislation, to avoid the potential for duplicative claims being advanced.

RECOMMENDATIONS

1. It is the recommendation of the CCTA that Part III not be expanded to include independent contractors, whether in whole or in part. It is the further recommendation of the CCTA that the existing Code mechanisms for determination of the "status" issue of whether a worker or service provider is an "employee" should be maintained.
2. It is the recommendation of the CCTA that the exemption from overtime and hours of work provisions presently extended to managers and superintendents be maintained. It is the recommendation of the CCTA that the existing Code mechanisms for determining whether an employee is a "manager" or "superintendent" subject to the exemption should be maintained. It is the further recommendation of the CCTA that the exemption from overtime and hours of provisions be extended to information technology professionals. It is the further recommendation of the CCTA that legislative amendments are not the appropriate vehicle to assist employees in achieving work/life balance.
3. It is the recommendation of the CCTA that rights to seek reinstatement to employment be amended to limit the availability of such rights to employees with ten or more years of service. It is the further recommendation of the CCTA that all employees existing rights to pursue civil remedies with respect to their dismissal be maintained.

COMMENTS

26. The CCTA has had an opportunity to review the submissions of the Canadian Labour Congress, filed with the Commission on March 16, 2005. These submissions propose a dramatic re-writing of Part III. This exercise, as reflected in their submissions, constitutes a significant, costly and unwarranted re-shaping of the federal employment landscape. The CCTA has noted that the rise of independent contractors, for example, is a genuine and bona fide response of contractor and service provider to mutually beneficial business needs. Where these business relationships are not being used in the way the legislation contemplates, there are available remedial measures. It is not reflective of the way business is conducted in the cable sector to assert service providers who have structured mutually satisfactory business relationships should be pulled into the Part III regime. There may be some sectors in which employees are engaged in the kind of 'precarious" employment that the CLC paints. A small group of the potentially non-compliant employers and workers should not be permitted to provide the impetus to significantly re-write the way the vast majority of employers and contractors do business.
27. Part III represents a basic floor of entitlements, designed to ensure provision to workers of certain core expectations and safeguards in employment. In this way, it functions in a fashion comparable to the employment standards legislation of virtually all other Canadian jurisdictions. At present, no more than 10% of Canadian workers are employed in the federally regulated sector. Employers and workers face social and economic pressures that are not unique to, nor were they "created by" federally regulated employers. There are larger socio-economic issues that are nation-wide in scope, and beyond the purview of any group of employers to solve or resolve. The Commission is urged to exercise considerable caution in making any fundamental shifts in federal employment policy, as the impact will not be modest.

Sincerely,

Michael Hennessy,
President

Endnotes

¹ Broadcasting Act, S.C. 1991, c. 11

² Telecommunications Act, S.C. 1993, c. 38

³ Income Tax Act, R.S.C. 1985, c. 1

⁴ Employment Insurance Act, S.C. 1996, c. 23

⁵ Employment Standards Act, S.O. 2000, c. 41

⁶ Ontario Regulation 285/01, ss. 2, 4(b) and 8

⁷ See, for example, discussion in National Ballet of Canada v. Glassco (2000), 186 D.L.R. (4th) 347 (Ont. H.C.J.)

⁸ An Act Respecting Labour Standards, R.S.Q., C.N - 1.1, ss. 124 and 128

⁹ Labour Standards Code, R.S.N.S. 1989, c. 246, ss. 21, 71 and 72

¹⁰ England, Geoffrey, "Section 240 of the Canada Labour Code: Some Current Pitfalls" (1999), 27 Man. L.J. 17-43