Interim Report of the
Federal Labour Standards Review

To the Honourable Joe Fontana,
Minister of Labour and Housing

October 2005

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Table of Contents

INTERIM REPORT

APPENDICES

INTERIM REPORT

The Establishment and Mandate of the Review

I was appointed as a Commissioner by the Minister of Labour and Housing, the Honourable Joseph Frank Fontana on October 1, 2004, to review Part III of the Canada Labour Code. Part III deals with a variety of labour standards established for employers operating in the federal jurisdiction. These standards govern hours of work, minimum wages, holidays, severance pay, unjust dismissal and various types of leave, but not collective bargaining or occupational health and safety. Although some provisions go back to the beginning of the 20^th century, or even earlier, and others have been added in recent decades, Part III itself was enacted in 1965 and has not been systematically reviewed since then.

The need for the review is captured in my letter of appointment (Appendix 1) and in a statement by the Minister on December 2, 2004, when my appointment was formally announced (Appendix 2). As these documents suggest, and as our own early investigations have revealed, five considerations have emerged as drivers of the review:

First, significant changes have occurred in the environment of work since 1965. Manufacturing workers accounted for almost half of the workforce then; today they are outnumbered by workers in the service sector; businesses such as trucking and banking were organized to serve mainly domestic markets then; today they serve continental and global customers. Second, changes have occurred within Canadian workplaces. With increasingly sophisticated technology systems, more workers are engaged in “knowledge work”; with the restructuring of Canada’s economy, workers are changing jobs more often and are more likely to be working under nonstandard arrangements with their employer; and businesses now often conduct parts of their operations through extended production and distribution chains, rather than through the “core” workforce of their own employees. Third, the demography and deployment of the workforce has changed: there are more women in the workforce, and there is greater racial and ethnic diversity; and workers are often connected to each other by electronic means rather than by physical proximity. Fourth, changes in the workplace and in family structures have created tensions for some people between their work, on the one hand, and on the other the things they want and need to do in the rest of their life. Finally, opinions seem more polarized than they did forty years ago about whether the state should be a more or a less intrusive presence in the labour market. This last point takes on special importance in a study of labour standards, where the state’s role has long been central.

The Structure of the Review

Reviewing such a complex subject as labour standards, in such a volatile environment, represents a significant challenge for me. Fortunately, while I am the sole Commissioner, the work of the Review is in fact being carried out with the assistance of three groups. First, I am advised by a panel representing labour and management stakeholder groups. Members of this panel have offered valuable advice concerning the general strategy of the Commission, organized meetings between the Commissioner and stakeholder constituencies, and participated in discussions concerning its research program, public consultations and other matters. Second, a panel of experts has worked closely with me on many aspects of the Review, but especially in conceiving and launching its research program. (For membership of these two panels, see Appendix 3.) And third, the small - but able and hardworking - staff has given me sound advice based on their experience with labour standards and in other related fields, provided logistical support and undertaken several major research projects. The staff has been supplemented from time to time by individuals with particular expertise who have assisted on particular projects. (The staff is listed in Appendix 4.)

The Strategy of the Review

Any assessment of how Canada’s labour standards legislation has been working over the past 40 years, and how it should evolve in order to meet the challenges of the future, depends on a number of approaches. First, it is important to obtain the best possible information about the actual operation and impact of Part III as it presently exists, about how comparable legislation works in other Canadian jurisdictions and in comparable foreign countries, and about the likely effects of changes, so far as these can be predicted. It must therefore be carefully researched. Moreover, it must be informed by the views and experiences of those who are going to be most directly affected by any future changes. It must therefore involve a series of conversations with Canadian workers and employers, and with public and private sector organizations that work with Part III. Finally so far as possible, it should operate in synergy with other public policies. It must therefore address some open-ended questions about issues not traditionally described as “labour standards”. If this strategy succeeds — if our research is of high quality, our discussions informative and our policy approach sound - I am optimistic that our final report will attract at least the confidence, and hopefully the support, of a broad cross section of interested Canadians.

Research

We have tried to ensure that research undertaken in connection with the Review is comprehensive, objective, user-friendly and of the highest quality. To assist us in mounting our research program, we convened two consultations attended by some forty leading Canadian and international scholars in the field of labour standards and in adjacent fields, such as regulatory theory (see Appendix 5). These consultations were followed by a meeting involving both the stakeholder and expert advisor panels at which specific research assignments were agreed. In the end, some 23 research projects were commissioned, in addition to a number of projects undertaken by or under the direction of the staff of the Review.

We have asked our researchers to maintain a balanced perspective and, in general, to provide a state-of-the-art review of the literature. In a few key areas, however, we have commissioned more extensive research projects designed to gather and analyze new data. The largest of these is the first-ever survey of employers and work practices in the federal sector, which is being undertaken by Statistics Canada in consultation with the HRSDC Labour Program Policy Development Division and monitored by staff of the Review. The second is a study of the trucking industry, one of the largest covered by Part III, and an industry which presents many difficult issues of interpretation, application and administration.

Our research program is described in more detail on our website at www.fls-ntf.gc.ca (see Appendix 6). Research reports will be posted there when completed and will be available to interested parties.

Conversations with Workers, Employers and Other Interested Parties

Our stakeholders’ advisory panel comprises representatives of the Canadian Labour Congress (CLC) and of the two largest groups of federally regulated employers — the Canadian Bankers’ Association (CBA) and Federally Regulated Employers in Transportation and Communications (FETCO). These panel members have been involved at each step in the Review; we have briefed the three organizations they represent on several occasions; and we will engage them in further structured consultations as the process unfolds. It is my sincere hope that the labour and management community will continue their active participation in the Review and will assist me in working towards a series of balanced and fair recommendations.

There are, of course, employers who are neither members of the CBA nor FETCO affiliates, workers who do not belong to CLC unions, and many other non-governmental organizations with an interest in labour standards. We are doing our utmost to ensure that all interested businesses, organizations and individuals have a chance to register their views. Where we are aware of their possible interest, we have contacted them directly to invite them to submit briefs and, in some cases, have actually met with them. In addition, we will be holding public hearings in the fall of 2005 in 13 centres across the country (Appendix 7). These hearings will provide an important opportunity for representative organizations, as well as Canadians in general, to make their views known, and to share with us the lessons they have learned from their practical encounters with labour standards legislation. At each hearing, we will receive briefs and oral submissions. In addition, Commission staff will be available to assist those attending to submit their suggestions or comments directly through the Commission’s web site. Further, those unable to attend one of the hearings are invited to submit a brief directly to the Commission, as several groups and individuals have already done.

Finally, on May 19, 2005 in response to its request for a briefing, I appeared before the House of Commons Standing Committee on Human Resources and Skills Development and the Status of Persons with Disabilities. I am pleased to report that all members of the Committee seemed to have a very positive view of the Review.

Synchronizing Public Policies

While jurisdiction over federal labour standards is legally vested in the HRSDC Labour Program, in reality many other public agencies can and do play a role in establishing and administering these standards. International treaties impose obligations on the federal government to observe certain minimum standards; Transport Canada regulations set hours of work for some federal workers such as pilots and truck drivers; decisions on whether or not to prosecute employers under Part III are the responsibility of the Department of Justice; and the federal minimum wage is set on the basis of provincial benchmarks. We have therefore launched a project to “map” the federal labour jurisdiction so as to ensure that our proceedings and, ultimately, our recommendations are brought to the attention of all federal government agencies concerned with labour standards. We have also established close contact with provincial ministries of labour both to gain the benefit of their views and experience and to open up the possibility of a broad-based discussion of labour standards following completion of the Review.

The Issues

To focus our expert consultations, give direction to our research and stimulate public interest in our work, we posted a Consultation Paper on our website in January 2005 and distributed it widely in written form (see Appendix 8). In March and April, our consultation with experts and stakeholders helped to clarify some issues and introduce us to others. And of course, formal and informal communications from interested parties and the public will place new matters on our agenda on a daily basis.

Here are some of the issues which seem to be emerging:

1. Many traditional labour standards provisions established by Part III — hours of work, minimum wages, vacations and other forms of leave, remuneration etc. — have their roots in laws going back to the 19th century. However, they were first consolidated and enacted as a comprehensive code forty years ago. Their adequacy has to be reviewed in light of contemporary expectations, but one litmus test must surely be: how — if at all — do they affect the employment conditions of our most vulnerable workers?
2. Several innovative provisions were added to Part III subsequent to its enactment. We have to ensure that these provisions are working well. Compassionate care leave, parental leave, wage recovery and the unjust dismissal provisions are good examples. We now have several years of experience with these provisions. Who is making use of them, and to what effect? Has experience shown that there are substantive or procedural changes which might make them work better?
3. The emergence of new forms of employment and of new patterns of family life are forcing Canadians to deal with tensions between the two. Do legislated labour standards have a role to play in striking the right balance? Or should that balance be worked out pragmatically by individual workers and employers according to their special circumstances, preferences and needs?
4. To be competitive in today’s world, employers need to effectively deploy a committed, skilled and educated workforce. Workers can use higher skill levels and higher educational achievements to meet their employer’s needs, enhance their work and career prospects and equip themselves to cope with the many changes in job requirements which they will encounter over their careers. Can labour standards play some role in advancing Canada’s human capital strategy?
5. It is not obvious just who is covered by federal labour standards and who is not. This involves some grey areas around which enterprises fall within “federal” jurisdiction, who is an “employee” entitled to the protection of Part III, and which agency of the federal government sets “standards” for which groups of workers. These ambiguities may be unavoidable, but they present problems for employers, for workers and for those charged with administering Part III. If they cannot be eliminated, they ought to be minimized.
6. Another important question is how to ensure that all workers are treated decently at work while at the same time allowing employers a degree of flexibility to adapt some labour standards to the exigencies of their particular circumstances? It is already clear that I am going to be asked to consider whether, and if so when and how, derogation or deviation from labour standards ought to be permitted.
7. Part III presently requires employers to consult with their employees about, and then to adopt, a policy dealing with sexual harassment. It has been suggested that these provisions raise the question of whether labour standards legislation ought to be concerned with a broader range of issues relating to conduct in the workplace more generally and to the role, if any, of employee “voice” and participation in addressing workplace conditions and policies.
8. Whatever may be the content of labour standards, once they acquire legal force they ought to be observed. If some employers consistently fail to observe them, this not only deprives workers of their rights, but puts pressure on their law-abiding competitors to cut corners. Compliance is clearly a very important issue and no doubt there will be considerable discussion around the issue of how it can best be achieved by developing the right combination of strategies to achieve compliance. These might include stronger programs of education and information for employers and workers, greater labour and management involvement in the setting of labour standards and, possibly, in promoting compliance and, as a last resort in the event of non-compliance, enhanced legal sanctions.
9. Other jurisdictions in Canada and abroad have been experimenting with new approaches to labour standards and their enforcement. What can we learn from their experience?

These are all difficult issues. If we are to respond to them in a sensible fashion, we have to identify some general principles which will help us understand what labour standards are designed to do and capable of doing and why they sometimes fail. We also have to develop a real sense of context. Labour standards apply to workers — often vulnerable workers — whose lives are affected by them on a daily basis. And they apply to employers — often small enterprises — which are making their way in a highly competitive environment. We hope that our research, our public hearings and our discussions with important stakeholder groups will assist us in developing both guiding principles and a well-informed sense of the context in which those principles are translated into practical measures.

Moving Ahead

I am looking forward to my conversations over the next few months with interested individuals and organizations across the country. Those conversations, complemented by the results of our research program, will put me in a position where in June 2006 I will be able to provide the best possible advice about labour standards for the consideration of the Minister and the government, of Canadian workers and employers and their organizations, and of other interested parties and the general public. Until I am in that position, however, I feel I ought to be listening rather than talking.

I appreciate this opportunity to address a set of interesting and important issues which will have a great impact on all our lives. I hope that my recommendations, when I make them, will make that impact a positive one.

APPENDICES