Soumission

Canada Labour Code Part III

BACKGROUND:

The Newfoundland and Labrador Employers' Council (hereinafter referred to as the Employers' Council) is a member organization, comprised of federally and provincially regulated employers in all parts of the province of Newfoundland and Labrador. The membership is comprised of both unionized and non-unionized workplaces, of which some have components of each. Some of the members operate in both the federal and provincial jurisdictions.

The mandate of the Employers' Council is to provide advocacy, information, and training services for its members in all matters related to the employment relationship. One of the major focuses for the Employers' Council is employment legislation.

The Employers' Council was extensively involved in consultations that led to the revision of the provincial Labour Standards Act and regulations, as well as the Employees' Compensation legislation.

In preparation for our input to this review, a Special Working Group of the Employers' Council conducted a survey of its federally regulated employers based on the questions raised in the consultation paper, and held two employer input sessions to further understand the issues and develop the options. The following submission reflects a compilation and analysis of that information.

INTRODUCTION:

Although the economy and the demographic makeup of Canada's workforce have changed dramatically since the Canada Labour Code Part III was developed, the Employers' Council contends that the Code is largely effective in its application in changing work and business conditions, with a few exceptions. The Code equals or exceeds the conditions that exist in most provincial employment standards, thus achieving relative minimum consistency across federally and provincially regulated workplaces, and providing enough leadership to the provinces to promote improvements.

The Employers' Council submits that employers have an obligation to provide a positive work environment that benefits all stakeholders (owners, employees, customers and suppliers), and should continuously improve their employment programs and practices in order to ensure the competitive long-term viability of the organization. We believe that such programs and practices lead to more productive and more highly skilled employees that can be retained in our economy. This is essential if we are to maintain the long-term economic growth, competitiveness and prosperity that we desire for Canada. This is more important now than ever as Canada is competing in a rapidly emerging global, knowledge-based economy, and must compete for markets and for labour supply. Such progressive programs and practices require cooperation and collaboration in the workplace, to structure programs and practices that are uniquely suited to that workplace, and therefore increase the competitive position of the employer. To that end, we must ensure that all government laws and regulations are conducive to fostering and encouraging cooperation and collaboration, that will in turn increase productivity and economic growth.

The number of unemployed skilled employees in Newfoundland and Labrador, particularly in urban areas, is very low compared to normal unemployment rates for the province. Competition for employees is very strong. Many sectors of the economy have seen their labour costs increase significantly because higher wages are required to attract employees as a result of labour shortages. Strong labour demand has given employees the leverage to negotiate better working conditions that more closely suit their individual needs.

Over the long term, flexibility is necessary if we are to create an efficient labour market that is highly productive, and that creates jobs and lowers unemployment. Markets are changing very rapidly and a flexible labour market structure allows employers to more easily adjust the application of capital and human resources to those areas that are needed in order to increase productivity and respond to the changed market demands. Such flexibility would also allow employees to supply their labour in areas that provide them the greatest benefit.

It is recognized that the level of unionization in Canada is at historically low levels. This is attributable to the increasing level of sophistication of the workforce that gives employees the ability to competently negotiate individualized terms and conditions of employment. Therefore, the perceived need for unionization as a protective mechanism has been reduced. It would be regressive for the Canada Labour Code to excessively create barriers to this group of the economy.

It must always be remembered that there continues to be a myriad of provincial and federal legislative mechanisms that regulate many aspects of the employment relationship. It would counterproductive to add unduly to the legislative burden already in place restricting the ability of employers and employees to negotiate mutually advantageous work arrangements.

Therefore, in order for Canadian employers to respond to current and future market demands, we require employment legislation that is flexible, yet maintains adequate protection for employees. This is particularly true of the federal labour Code as it tends to lead the way for provincial legislators as well.

Setting the Bar:

The workplace of the 21^st century is more homogeneous than ever before. The keynote speaker at the Employers' Council's 2005 Employer of Distinction of Awards said "there are four generations of employees - traditionalist, born from 1923-43, baby boomers, born from 1943-60, generation X, born from 1960-1980, and millennials, born between 1980 and 2000…Each group of employees must be managed differently, since they have different values and outlooks on life..…. treat employees like customers- learn all you can about them, work to meet their specific needs, and serve them according to their unique preferences".

Employees of the 21^st century are more highly educated than ever before, and they provide their services to the workplace, as opposed to the traditional model (i.e. master/servant). The majority of employees have higher levels of self-esteem, self-confidence, and assertiveness. Smart employers are already realizing that fact, and are adjusting their employment practices and programs to meet the needs of those employees in a meaningful way (e.g. family travel packages, tuition reimbursement towards upgrading, etc.). With the shortage of skilled employees, other employers will have no option but to follow that model if they are to attract and retain qualified employees and remain in business.

The objective of the Canada Labour Code should be to provide a minimum level of protection for employees, and to provide the framework and encouragement for the appropriate level of flexibility for workplaces so that the business remains competitive, and so that employees can better negotiate work arrangements that suit them. Employers and employees themselves can select the approach that best suits their particular circumstances and maximizes their ability of reaching appropriate agreements of highest mutual benefit.

Flexibility in employee regulatory regimes is crucial to provide an environment encouraging productive economic growth. Evidence throughout the developed world indicates that jurisdictions with flexible labour markets enjoy higher rates of job creation, greater benefits from technological change, and faster rates of economic growth. Further, rigid labour law can be an impediment to employment opportunities.

This flexibility with regard to the employer/employee relationship will allow employees to directly involve themselves in negotiating mutually beneficial workplace agreements. This will allow both employers and employees to develop working relationships that will enhance the prospects for productivity improvement. Finally, employees are able to form agreements that best suits their individual and family needs as well as personal circumstances.

Recommendations:

EXPANSION OF PART III TO COVER INDEPENDENT CONTRACTORS AND SELF-EMPLOYED PERSONS

The provisions contained in the Canada Labour Code are designed to protect federally regulated employees who are directly employed by a single employer or multiple employers. There are a growing number of individuals who have decided that they do not wish to work for a single employer and have chosen to become self-employed. Many self-employed people are highly skilled and specialized individuals that typically sell their services on a contractual basis. They also have the ability to work on projects that are self-satisfying or that will advance their careers. The level of choice and flexibility adds to the quality of life for those who choose to be self-employed. Utilizing specialized self-employed employees allows employers to use specialized skills on as needed basis, thus increasing their flexibility in terms of human resource requirements.

The Employers' Council 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.

The provisions contained in Part III of the Canada Labour Code should not be extended to cover those who have chosen to be self-employed. These individuals are "in business" on their own account (i.e. doctors, lawyers, and tradespeople who contract themselves). Eliminating the business status of those self-employed persons would harm the efficiency, productivity, competitiveness and profitability of both the self-employed person and the companies to whom they sell their services. To illustrate, being regulated in Canada may disadvantage a professional engineer having core clients in other countries.

The Employers' Council 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 jurisprudence 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.

These so-called "status" determinations are not an uncommon issue under provincial employment statutes, employees' compensation and workplace safety insurance legislation, the Income Tax Act, and the Employment Insurance Act. Adjudicators have developed bodies of jurisprudence on how these issues can and are addressed. 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.

Recommendation:

Hours of Work and Conditions of Employment

Hours of Work

It is the position of the Employers' Council 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 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.

In 2001, the government of Newfoundland and Labrador introduced changes to its employment standards legislation including the elimination of the exemption of managers from the overtime provisions of the provincial Labour Standards Act. In removing the managerial exemption from the required 24-hour break in a week, and 8 hours in a day, an inadvertent change was made in the requirements for payment of overtime for managers and supervisors. This accidental change has created undue upheaval and uncertainty for the business community in Newfoundland and Labrador. As a result of a strong lobby by concerned groups, the provincial government decided not to enact this particular change as proposed.

Managers and supervisors clearly negotiated employment contracts that took into account the need to work irregular patterns from time to time. In fact, many supervisors and managers, in being made accountable and responsible for achieving objectives in their divisions, are also given the autonomy to work in a manner that allows them to best achieve their goals. 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. Many new managers, supervisors, and professionals opt to invest additional time and effort of their own accord to further their careers and achieve advancement in their professions.

The Employers' Council 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" (forms of 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. It is well documented that individuals who accept positions as managers are highly skilled and educated with capabilities of independent thinking and negotiating skills related to the terms of conditions of employment including overtime. Therefore, it is unnecessary for a Code of protection for managers.

Current provisions used to exempt certain employees from hours of work requirements - especially overtime - are defined narrowly and only apply to those who are managers or have management functions. These criteria do not reflect current types of jobs in which the employees are highly paid, manage their own hours of work, and work independently, but do not exercise traditional management functions (e.g. fee for service information technology consultant). In many project-based arrangements, a requirement exists for completion within a specific period of time. This entails significant concentration of hours of engagement with a premium pay for successful completion.

Recommendations:

Minimum Wage

The federal minimum wage is set at the minimum wage of the province where the employee is usually employed. In terms of determining the minimum wage, it is the opinion of the Employers' Council that the current provisions, as stated in sections 178 through 181 of Part III of the Canada Labour Code, are acceptable.

Inappropriate or excessive increases in minimum wages have been shown to reduce employment opportunities for young and unskilled employees. In addition, such increases restrict the ability of employers and employees to negotiate mutually beneficial employment contracts.

A number of empirical studies have documented the negative effects of increasing minimum wages, such as reduction in youth employment. It is estimated that a 10% increase in the minimum wage results in a 2.5% decline in employment. Further, increases in the minimum wages have other adverse economic impacts. When minimum wage levels rise, employers are unable to fund on the job training and other important employment benefits. High minimum wage rates encourage higher school dropout rates, as higher wages make leaving school in search for employment more attractive to teenagers. It is the responsibility of the federal government to implement policies that encourage employers to offer better benefits and training and that encourage the continued education of all people, especially youth. An increase in minimum wages may assist a small group of employees in the short term; however, there will be a greater negative impact in terms of higher unemployment rates, a reduction in on the job training and other employment benefits, and higher school dropout rates.

With the increase in globalization of economic activity, various industries (e.g. steel) are in direct competition with firms in other countries that have lower cost models. In order to compete internationally and maintain business operations in Canada, consideration must be given to the wage rates getting paid to industry participants.

Recommendation:

Work/Life Balance

Achieving a balance between the demands of work and home is a difficult, and yet highly individualized activity that cannot be achieved by 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 employers as part of the package of benefits available to employees.

Balancing work and personal responsibilities is a challenge for both employees and employers. Employers have recognized that by reducing work-life conflicts, individuals can enjoy a healthier lifestyle while improving productivity at work. Many employers have implemented work-life balance programs. Typically, programs that help achieve better work-life balance include child care, emergency elder care, compressed work weeks, flex time, telework, maternity/parental leave, sick leave, personal leave, voluntary part-time work, gradual retirement, job sharing, and health and wellness programs.

The federal government has recognized the importance of work-life balance, and provides information that helps employers design and implement support programs and policies, which facilitate work-life balance. Employers require that kind of support, and flexibility, not government legislation and regulation, in order to design and implement successful work-life balance programs that meet the needs of both the employer and the employee.

Recommendation:

Aging Workforce

The Canadian population is aging. A marked increase in the number of older people, combined with the continuing fall in birth rates and continued increase in longevity, will bring about a rapid aging of the general population.

In 1956 almost half of the Canadian population was under the age of 25. Today, the 25 year old and under segment of the population accounts for approximately one third of the population. Based on Statistics Canada projections, by 2026, the proportion of people under the age of 25 will only account for 25% of the population. In contrast, in 1956 the portion of the population over the retirement age of 65 was less than 10%; by 2026 that percentage is expected to double to 20%. By 2026 the average age of the Canadian population is estimated to be almost 44 years . Employees over the age of 45 traditionally have had a lower rate of participation than the younger segment of the population. As the population ages, it will accelerate the increase in the number of people leaving the labour force.

An aging population results in an aging workforce. As the workforce ages, employers will face a growing challenge to replace skills and experience of the retiring workforce. Employers will be faced with new challenges during this transition period including:

• A shortage of skilled employees as a growing number of older employees retire;
• The need to transfer knowledge from older to younger employees;
• The loss of knowledge and its effect on innovation and productivity.

Employees approaching retirement are generally the most experienced employees and are highly productive. Businesses are developing strategies to phase in retirement for those employees who wish to do so. For example, employers are offering flexible work schedules, including job-sharing, flextime, and reduced workweeks.

Research conducted by the federal government showed that few labour market adjustment programs exist specifically targeted to older employees. Further, programs designed to assist older persons tend to focus on the provision of income support. The federal government should consider developing an older employee re-employment strategy that will assist employers in accommodating the retention or re-entry of older employees, and that will assist older employees to make the transition to the type of employment that meets their needs.

Gender Equity:

The consultation document of the Review of Part III of the Canada Labour Code asked whether the Code should be amended to meet the needs of women of to promote the pursuit of gender equality in the workplace. The Canadian Human Rights Act prohibits discrimination based on gender. The courts' interpretation of the gender grounds has broadened sufficiently to protect the rights of women circumstances that range well beyond the obvious case of a person not being hired or promoted because of their gender. One objective avenue for resolution of a workplace issue is sufficient. The Federal Government should be seeking to reduce unnecessary duplication of public services, and unnecessary disruptions in workplaces. If the avenue that is currently available, i.e., the Human Rights Tribunal, then resources should be applied to remedy the deficiency, not to add another public expense. Similarly, the Employment Equity Act ensures gender equality in the workplace, and overlapping legislation and regulation will simply lead to more confusion, undermine the intentions of the individual pieces of legislation, and add unnecessary public costs.

Recommendation:

Unjust Dismissal

The Canada Labour Code is different from most 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. 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:

• They are not managers (s.167 (3));
• They have completed twelve months of continuous employment (s.240 (1)(a));
• 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
• They were not terminated because of lack of work or the discontinuance of a function (s.242 (1)(3.1)).

It is unique to have this adjudication process in addition to civil law actions for wrongful dismissal. Common law courts consider non-bargaining unit 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 usually restrict their remedies to a determination of the damages flowing from the failure to give reasonable notice. Judges usually do not order reinstatement of the employee, as that amounts to ordering specific performance of a contract of service. It appears that protections under common law provide an equitable solution for the dismissal of employees. Having specific and prescribed unjust dismissal provisions in the Code causes unnecessary, duplicitous, costly, and inefficient mechanisms in the system.

The administrative and financial costs of adjudication are high for all parties. As well, all employees, even those with access to the adjudicative process, retain their rights to sue civilly, a right that is the only recourse of employees in most common law jurisdictions. This right to adjudication in federally regulated situations creates an undue burden to employers, many of whom, by virtue of being non-unionized, are smaller organizations.

It is the Employers' Council's position that section 240(1)(a) should be removed or, as a minimum, amended to provide for a mechanism that requires employees to seek remedies and claims either through the Courts or through the administrative mechanisms under legislation, to avoid the potential for duplicate claims being advanced.

Recommendation:

SUMMARY OF RECOMMENDATIONS: