Criminal Finances Act 2017 – Employers liability

The Criminal Finances Act 2017 came into force in the UK on 30 September 2017. It introduces new corporate criminal offences of failing to prevent an employee, agent or any other person who is performing services for the organisation from criminally facilitating the evasion of tax, whether the tax is owed in the UK or in a foreign country.

The new offence does not alter what is criminal, but changes who can be held to account for the acts. The new offences are a reaction to the Government’s frustration at the difficulty in attributing criminal liability to companies and partnerships (“relevant bodies”) where tax evasion was facilitated by employees or other associates.

There are three stages to the offence. The first is criminal evasion of tax by the taxpayer.  This means the offence of cheating the public revenue and all other statutory offences involving dishonestly taking steps with a view to, or being “knowingly concerned in” the fraudulent evasion of tax. Anything falling short of a criminal offence at taxpayer level will not count.  The second stage is criminal facilitation of the tax evasion by an “associated person” of the relevant body who is acting in that capacity.  This requires deliberate and dishonest action to facilitate the evasion. Assisting unwittingly, even if negligently, will not be caught by this offence. In addition, an individual will not be “acting in the capacity of” an associated person, where they are an employee acting in the course of their private life  and “as a frolic of their own”.

The final stage is failure by the relevant body to prevent the representative from committing the criminal facilitation. This is a strict liability offence, meaning that if stages one and two are committed then the relevant body will have committed the new corporate offence unless it can show that the time of the offence the relevant body had reasonable prevention procedures in place to prevent the criminal facilitation offences.

In determining the reasonable prevention procedures, the government has given guidance by setting out six guiding principles. These include conducting risk assessments, adopting a proportionate risk based prevention procedure, top level commitment, due diligence, communication (including training) and monitoring and review.

From an employment perspective, companies should therefore be establishing good training on the offence and also the effective establishment of whistleblowing procedures. The guidance published by HMRC also indicates that employers should consider having terms in employment contracts and contracts for services requiring employees and others providing their services not to engage in the facilitation of tax evasion and to report concerns immediately.    Such clauses could also confirm that the employee or contractor will comply with the employers policy on the prevention of facilitation of tax evasion.

Employers may also wish to introduce an anti-facilitation of tax evasion policy or include reference to the offence in their existing handbook. A policy should be adapted to the specific business risks of the employer and should set out the reasonable prevention procedures that the employer has put in place as a defence against the corporate offence.  The HMRC guidance sets out some suggested reasonable prevention procedures for lower risk SME’s which includes:

  • Having a commitment to prevent the involvement of those acting on the relevant body’s behalf in the criminal facilitation of tax evasion, which might be demonstrated by issuing a prominent message from the board of directors (or the leadership team) against all forms of tax evasion.
  • Providing regular training for staff on preventing the facilitation of tax evasion, which may form part of wider financial crime detection and prevention training.
  • Having clear reporting procedures for whistleblowing of suspected facilitation of tax evasion offences.
  • Ensuring that the pay and bonus policy/structure encourages reporting and discourages pursuing profit to the point of condoning tax evasion.
  • Having regular reviews of the effectiveness of prevention procedures and refining them where necessary.
  • Monitoring and enforcing compliance with prevention procedures.
  • Giving an overview of its strategy and timeframe to implement its preventative policies.

Use of social media in France: Employee’s rights and obligations

The impact of the use of social media in the workplace has regularly given rise to controversies and debates as how this subject is to be handled by a company’s management. The current state of employment law is still not entirely settled in this respect. It is however possible to provide some guidance on the most common issues arising from such use with regard to employment law (data protection regulations will not be considered in this article).

Access and control of social media in the workplace

As a general rule, employees are allowed to access the internet for non-professional purposes in the workplace, whether using company equipment or personal equipment. However, such use must be both reasonable and licit and should not prevent the employees from properly carrying out their duties. As a result, case law has accepted dismissals based on the fact that an employee spent too much time on a social media website during his working hours.

In this regard, and in order to limit the potential risks that may result from the employees’ use of social media (loss of productivity, violation of professional secrecy and confidentiality, e-reputation, etc.), employment law admits that the employer may scrutinise and limit employees’ access to the internet and social media via the company’s equipment through an information technology policy setting out the employees’ rights and obligations relating to the use of social media in the workplace.

Such information technology policy is licit under employment law provided that, prior to its implementation, the employer informs its employees and carries out the information and consultation process with the employees’ representatives. In addition, in order for the employer to be able to sanction the employees in case of breach of the policy, the policy must comply with the implementation requirements of internal regulations (in particular, the scrutiny of the labor inspector) as it is considered as laying down general and permanent disciplinary rules. Also, specific procedures must be followed with the French data protection authority (“CNIL”). Last but not least, the information and technology policy must comply with general employment rules providing that any limitations on employees’ rights and freedoms must be justified by the nature of the task to be performed and proportionate to the purpose sought.

Rules of evidence in accessing the employee’s information

In principle, French case law considers that connection to the internet during working hours and through the professional computer of the employee is deemed to be for professional reasons and thus entitles the employer to freely access them without informing the employee.

The matter is quite different when it comes to determining whether or not the employer may invoke content posted by the employee on a social media. Indeed, employment law strictly regulates the means by which the employer can gather evidence for justifying a disciplinary measure against an employee. Besides, the employee’s right to privacy and private correspondence are protected against any violation by criminal law (both offences punishable by an imprisonment of up to one year and a fine of up to 45,000€).

In a nutshell, the employer is only allowed to invoke evidence if such evidence has been collected through fair and loyal means, i.e. the employee has been informed of such collection or is inherently aware of the possibility of access given the particular technology (connection history, etc.). Thus, the employer is generally allowed to invoke elements of evidence provided by one of the recipients of the employee’s posting or “friends”. It is also admitted that the employer may invoke content accessible to the public (Twitter for example, or Facebook in some cases). In last resort, the employer can always seek a judicial injunction so as to access the employee’s account provided it is justified by legitimate and objective reasons and necessary to the safeguarding of its rights.

Abuse of the employee’s freedom of speech

Finally, the employer is authorized to discipline and even dismiss an employee if he/she does not comply with the information technology policy and more generally if he/she uses social media in an unreasonable fashion (too many connections at the detriment of his/her duties).

In addition, the employer is also entitled to take measures based on the content an employee has posted on social media, even outside his/her working hours and place. Indeed, while French law generally prohibits disciplinary measures based on facts occurring in the sphere of the employee’s private life, such measures are permitted provided that the facts complained of regarding the employee are linked to the professional activities or constitute a violation of the employee’s contractual obligations (loyalty, confidentiality, etc.). Moreover, although employees benefit from freedom of speech both in the workplace and in their private lives, they cannot abuse it by making excessive, insulting or defamatory statements and more generally violate their contractual obligations.

Significant changes to French employment code to enter into force no later than January 1st, 2018

French President Emmanuel Macron has signed five ordinances making important changes to several aspects of the French employment code. The ordinances, which were immediately published in the French Official Journal on September 23rd, 2017, are aimed in particular at providing employers more flexibility and predictability in labour-management relations.

Several provisions of this ambitious reform – numbering 159 pages and providing for 36 measures – are already in force.

The amendments to existing legislation effected by the Ordinances are built around the following principles defined by the French Government:

  • giving precedence to micro-businesses (TPE) and to small and medium-sized companies (PME);
  •  demonstrating trust in businesses and employees by giving them the ability to anticipate and adapt simply, swiftly and securely;
  • creating new rights and new forms of protection for employees;
  • providing further protection to trade unions and elected staff representatives engaging in social dialogue.

The dates of entry into force may vary for each of the provisions but in any event, the ordinances will be effective no later than January 1st, 2018. A ratification law (loi de ratification) will then be voted by Parliament to ratify the ordinances promulgated by the Government.

Some of the principal changes effected by the ordinances can be summarized as follows:

Collective negotiation: reinforcement and simplification at company-level

  • Simpler and easier access to collective negotiation for micro-businesses and SMEs by allowing direct negotiation with an elected staff representative or with an employee duly appointed for such purpose by a union for SMEs or with employees directly through ratification for micro-businesses (employing 20 employees or less) that do not have elected staff representatives;
  • Wider opportunities to negotiate company-level collective bargaining agreements, which may differ from branch-wide collective bargaining agreements in certain areas;
  • All company-wide collective bargaining agreements concluded with unions will be signed by the majority of representative unions as from May 1, 2018.

Creation of a single employee representative body

  • Merger of the current three main employee representative bodies (Works Council, Health and Safety Committee and Staff representatives) into a single body – the social and economic committee (CSE);
  • Regulation of the costs of expert examinations (expertises) requested by the CSE, by requiring a financial participation of 20% of the cost of the expertise by the CSE for most kinds of expertises (rather than requiring, as is the case currently, for 100% of such costs to be paid by the employer);
  • Setting more precise rules regarding the calculation of the portion of the budget of the CSE allocated to social and cultural activities.

Employment contracts: additional flexibility

  • Arrangements for working from home: creating a right for employees to work from home and simplifying recourse to such arrangements;
  • Increase of legal dismissal indemnity to a quarter of month’s salary per year of seniority (currently a fifth) (this provision is already applicable);
  • Ability to supplement the dismissal letter setting out the grounds for dismissal after such document has been sent to the employee, either spontaneously by the employer or upon request of the employee;
  • Reduction of the statute of limitations for the bringing of dismissal claims to a one-year period (this provision is already applicable);
  • Implementation of mandatory lower and upper limits for damages in the event of unfair dismissal except in case of discrimination, harassment and breach of fundamental rights;
  • Implementation of mandatory lower and upper limits for damages in the event of unfair dismissal except in case of discrimination, harassment and breach of fundamental rights: (i) In companies with at least 11 employees, from three months’ salary minimum (for two years of service) up to 20 months’ salary maximum (for at least 30 years of service); (ii) In companies employing less than 11 employees, the minimum amount set out will range from ½ month of salary to 2.5 month’s salary; the maximum amount remains the same as above.

 

Streamlining of redundancies procedures

  • Economic grounds for dismissal will be assessed at the French level only, within the same business sector taking into account the results of the French companies of the group (where applicable);
  • Reclassification offers: the requirement to propose redeployment offers shall apply to available positions in France only;
  • Collective voluntary departures will now be regulated by the French employment code.

Restrictive covenants in UK contracts of employment

In the UK, a post termination restrictive covenant will be void for being in restraint of trade unless the employer has a legitimate business interest to protect and the protection sought is no more than is reasonable to protect that interest. The interests which can be protected are clients, staff, and confidential information. One type of restriction often imposed in UK contracts seeks to prevent an employee from competing with the previous employer and this can even extend to holding a shareholding in another competing company.  However, it is usual to exclude minor shareholdings which may simply be held by an employee as an investment, in contrast with those shareholdings where an employee has a significant interest in the competitor company.  A recent case has looked at the implications if the employer does not ensure the covenant is drafted effectively.

In this case a senior employee resigned in January of this year. Subsequently, the employer terminated the employment and paid the employee in lieu of notice.  Her contract of employment included a post termination restrictive covenant which provided that she was required, for a period of six months, not “directly or indirectly to engage or be concerned or interested in any business carried on in competition with any of the businesses of the Company or any Group Company which are carried on at the Termination Date or during the period of twelve months prior to that date and with which you were materially concerned during such period”.

Following termination of her employment she notified the employer that she was intending to start work for a competitor within the six month period. The company claimed that this would constitute a breach of the six-month non-compete clause contained in the employment contract and sought an injunction. There was no dispute that the employee was bound by the non-solicitation, non-dealing and confidentiality terms in her contract.

The employee argued that the non-compete clause was void for being wider than reasonably required for the protection of legitimate business interests. In particular, she claimed that being “interested” in a competing business was too wide as it could prevent her from holding a minor shareholding in a competitor for investment purposes.

In June 2017, the High Court upheld the non-compete restriction, and granted an injunction restraining the breach. The employee appealed to the Court of Appeal, arguing that the High Court had incorrectly constructed the non-compete clause in the contract. The employer argued that the High Court judge had correctly construed the covenant and relied on another clause in the employment contract which prohibited the employee from holding or having any interest in shares in competitors during employment, but which contained an exemption for minor shareholdings. The employer argued that it would be anomalous if the non-compete clause prohibited all shareholdings as it would then be more restrictive than during employment.  In addition, it argued that, if that was wrong, the words “or interested” could be deleted from the clause, leaving a valid covenant.

The Court of Appeal upheld the appeal, finding that the non-compete restriction was too wide, and therefore unenforceable. The court found that conventional understanding of the wording meant that a shareholder in a company was “interested in” that company. The court also rejected the argument that the words “or interested” could be severed from the non-competition clause. First, the clause would still be too wide even if the words “or interested” were removed. Second, it is settled law that the constituent parts of a single covenant cannot be severed; it is a requirement of severance that it can only take place where there are distinct covenants, and perhaps, not even then.  The clause had to be read as a whole, and could not be severed.

The non-compete restriction in the contract of employment was invalidated by its “theoretical width”, since there was in fact no suggestion that the employee wanted to hold any shareholding in a competing business. However, public policy justified the decision in order to prevent unreasonable restraint of trade.

Employers should therefore ensure that their restrictive covenants are tightly drafted and make it clear in non-compete clauses that employees can hold shares or securities in certain companies up to a maximum shareholding.

Termination and Flawed Performance Management Leads to Aggravated Damages Award

Performance management is always a challenge for employers.  Termination for cause on the basis of poor performance is trickier.  The recent decision of Cottrill v. Utopia Day Spas and Salons Ltd., 2017 BCSC 704 (“Cottrill”) is a good reminder of the importance of proactive and proper performance management, especially for underperforming employees.

Ms. Cottrill was a skincare therapist.  Throughout her employment, she attended regular goal setting meetings with her supervisor and was subject to performance reviews.  When her supervisor left the company in 2015, the President and CEO determined that she had regularly failed to meet her goals.  In the eleven years prior to this review, none of the management staff had reported any concerns about Ms. Cottrill’s performance.  The employee was told that she had “one more chance” to improve her performance and given a list of expectations to meet going forward.  The company set up coaching sessions between the employee and her new supervisor.  She was given a letter setting out her performance deficiencies and warning her that the company expected “marked improvement”, effective immediately.  She was told if she failed to meet the expectations in the next three months, her employment would be terminated for cause.

Over the next three months, the employee increased her call backs, service revenue, retail sales, number of requests and new guests.  Despite the improvement, her supervisors rated her as not “successful” and claimed that it was clear her performance was not going to improve.  Ms. Cottrill’s employment was terminated at the end of the three months.  She was not given a letter confirming her dismissal and she was not paid any severance.  Ms. Cottrill sued and alleged that she had been wrongfully dismissed.

At trial, the employer argued that Ms. Cottrill’s employment was terminated for cause due to her failure to meet the required performance standards, and because of her bad attitude.  Ms. Cottrill argued that she had not been given a meaningful opportunity to improve her performance and that she had been effectively set up to fail by the employer’s expectations.  The Court agreed and found that prior to 2015, Ms. Cottrill had not been adequately warned that her employment was in jeopardy and in fact, her prior performance reviews indicated that she was performing well.  The Court found:

  • the employer set unreasonable and unfair performance standards, which the employee had not been held to previously;
  • the employee was not given a reasonable opportunity to improve her performance; and
  • the employee was not told why her attitude was deficient or why the employer believed it had cause for her dismissal, and she was not given a chance to respond to these allegations.

To address procedural and substantive aspects of performance management employers should:

  1. establish objectively reasonable performance standards and communicate expectations to employees;
  2. provide supervisors and managers with proper training on these standards, and make sure they complete performance reviews regularly and accurately for their direct reports;
  3. promptly advise underperforming employees if and when they are not meeting expectations;
  4. provide underperforming employees with a clear warning that their employment is in jeopardy; and
  5. give underperforming employees a reasonable opportunity to improve their performance before terminating their employment.

Cottrill also highlights the importance of acting fairly in the manner of dismissal.  Failure to do so can significantly increase an employer’s liability for damages.  Ms. Cottrill’s employment agreement included a clause which limited her entitlement to notice of termination/pay in lieu to the minimum amounts set out in the B.C. Employment Standards Act.  As such, she was only entitled to eight weeks’ severance pay.  However, due to a finding of bad faith conduct in the manner of dismissal, Ms. Cottrill was awarded an additional $15,000 in aggravated damages.

Ontario Bill 148, as amended, cuts back on proposals authorizing the Board to review the structure of bargaining units

 

Ontario is one of a few Canadian jurisdictions that does not give its labour board the general authority to review, consolidate and otherwise amend bargaining units.  In the Changing Workplaces Review Final Report, the special advisors recommended giving the Ontario Labour Relations Board (“Board”) the power to modify bargaining unit structures, if the Board is satisfied that the bargaining unit or units are no longer appropriate for collective bargaining.  The special advisors further recommended that, in sectors or industries where employees have been historically under-represented by unions, the Board be given the power to consolidate existing and/or newly certified bargaining units involving the same employer and the same union in order to contribute to the development of effective collective bargaining relationships.

The original version of The Fair Workplaces, Better Jobs, Act (“Bill 148”) included revisions to the Labour Relations Act, 1995 (“LRA”) that would authorize the Board to review and consolidate newly certified bargaining units under a single employer, where those units are represented by the same bargaining agent.  It also gave the Board authority to review and amend the structure of bargaining units within a single employer, if the existing units were no longer appropriate for collective bargaining.

That version of Bill 148 passed First Reading on June 1st and, in an expedited process, was referred to the Standing Committee on Finance and Economic Affairs the same day.  Throughout the summer, the Committee held public hearings in 10 Ontario cities, and also considered written submissions from a variety of stakeholders.

When the MPPs returned from their summer break on September 11th, the Committee presented Bill 148 with amendments to several of the LRA proposals, including those addressing bargaining unit review.  Surprisingly, the Committee deleted in its entirety the new provision that would have authorized the Board, upon receipt of an application from either the employer or the union, to review and amend the structure of bargaining units if the Board was satisfied that the units were no longer appropriate for collective bargaining.

However, the original Bill 148 provision permitting the Board to review and consolidate newly certified bargaining units survived the Committee’s chopping block without revision.  Pursuant to that provision, the Board may review the structure of newly certified bargaining units is all of the following conditions are met:

  1. The employer, union or council of trade unions, as the case may be, applies to the Board requesting the review when the application for certification is made, or within 3 months after the date of certification;
  2. A collective agreement has not yet been entered into in respect of the bargaining unit; and
  3. The same union or council of trade unions that is certified as the bargaining agent for the bargaining unit already represents employees of the employer in another bargaining unit at the same or a different location.

In making a determination in an application for review, the Board must take into consideration all relevant factors, including whether consolidating the bargaining units would contribute to the development of an effective collective bargaining relationship, as well as collective bargaining in the industry.

If enacted in its present form, this new provision will not apply to the construction industry.

Bill 148, as amended, was ordered for Second Reading on September 11th and is still being debated in the Legislative Assembly.  We expect that it will pass Second and Third Reading and receive Royal Assent over the next few weeks, particularly since many of its amendments to the Employment Standards Act, 2000 are intended to come into effect by January 1, 2018.  Note, however, that the proposed changes to the LRA, if enacted, will not come into effect until 6 months after The Fair Workplaces, Better Jobs Act, 2017 comes into force.

 

Proposed amendments to Ontario Bill 148 address security and confidentiality of employee lists disclosed during union campaigns 

The Fair Workplaces, Better Jobs Act, 2017 (Bill 148), introduced on June 1, 2017, proposed adding a new section 6.1 to provisions in the Ontario Labour Relations Act, 1995 (“LRA”) that address union campaigns to establish bargaining rights.  Headed “Establishment of Bargaining Rights by Certification”, the new section (which does not apply to the construction industry) sets out the process unions must follow to apply for, obtain and use an employee list in the context of an organizing campaign.  More specifically, the new section permits a union to apply to the Ontario Labour Relations Board (“Board”) for an order directing the employer to provide the union with a list of employees in a unit that the union claims to be appropriate for collective bargaining.

The union’s application to the Board must include: (a) a description of the proposed bargaining unit, including the estimated number of individuals in the unit; and (b) a list of the names of the union members in the proposed bargaining, along with evidence of union membership. The copy of the application delivered to the employer does not include a list of union members or evidence of union membership.

If the employer disagrees with the union’s description of the proposed bargaining unit or the estimated number of individuals in it, the employer may file a notice of disagreement with the Board within 2 days after it receives the application. The notice of disagreement must state: (a) whether the employer agrees with the description of the proposed bargaining unit; and (b) if not, why the employer believes the proposed unit is not appropriate for collective bargaining. If the employer disagrees with the union’s estimate, the notice of disagreement must also include the employer’s statutory declaration setting out the number of individuals in the bargaining unit described in the union’s application.

If the employer does not file a notice of disagreement, and the Board determines that 20% or more of the individuals in the proposed bargaining unit “appear to be members of the union” when the application was filed, it must direct the employer to provide an employee list to the union.  If the Board determines that there is less than 20% support, it must dismiss the union’s application.

If the employer does file a notice of disagreement, the Board must determine whether the union’s description of the bargaining unit “could be appropriate” for collective bargaining.  If it could not be appropriate, the Board must dismiss the union’s application.  If the Board finds it could be appropriate for collective bargaining, and determines that 20% or more of the individuals in the bargaining unit “appear to be members of the union” when the application was filed, it must direct the employer to provide an employee list to the union.  If the Board determines the percentage to be less than 20%, it must dismiss the application.

If the employer is directed to provide an employee list to the union, that list must include each employee’s name, along with his/her phone number and personal email, if the employee has provided that contact information to the employer.  The union can use the list only for the purpose of a campaign to establish bargaining rights, and must keep it confidential and not disclose it to anyone other than the appropriate union officials.

In situations where the union makes an application for certification in respect of the employer and the employees on the list, and the application is dismissed less than one year after the Board’s direction to provide the list, the list must be destroyed on or before the day the application is dismissed.  Otherwise, the list must be destroyed within a year of the date of the Board’s direction to provide the list.

When Bill 148 was introduced in June, many employers and privacy advocates expressed concern that new section 6.1 favoured the union’s right to access and use employee personal information over the individual employees’ privacy interests, and did little to ensure the security and confidentiality of the list.  The amended version of Bill 148 contains provisions that appear to be designed to address such concerns.

Under Bill 148, as amended, if the Board directs the employer to provide an employee list to the union, the employer must “ensure that all reasonable steps are taken to protect the security and confidentiality of the list, including protecting its security and confidentiality during its creation, compilation, storage, handling, transportation, transfer and transmission.”   Likewise, the union must ensure that “all reasonable steps are taken to protect the security and confidentiality of the list and to prevent unauthorized access to the list.”

Bill 148, as amended, was ordered for Second Reading on September 11th and debated for the following two days.  We expect that it will pass Second and Third Reading and receive Royal Assent over the next few weeks, particularly since many of its amendments to the Employment Standards Act, 2000 are intended to come into effect by January 1, 2018.  Note, however, that the proposed changes to the LRA, if enacted, will not come into effect until 6 months after The Fair Workplaces, Better Jobs Act, 2017 comes into force.

 

Amendments to the Ontario Bill 148 include new entitlement to Domestic or Sexual Violence Leave

The version of Ontario Bill 148 introduced by Premier Wynne and Labour Minister Flynn in June included significant changes to the personal emergency leave (“PEL”) entitlement under the current Employment Standards Act, 2000 (“ESA”).  It eliminated the 50+ employee eligibility threshold, entitling all employees to 2 paid and 8 unpaid PEL days each calendar year.  The reasons for taking PEL days were also expanded so that an employee could take the leave if the employee or any designated family member experienced sexual or domestic violence, or the threat of sexual or domestic violence.

The amended version of Bill 148 that was ordered for Second Reading on September 11th retains all of the original changes to the PEL entitlement, except the inclusion of sexual or domestic violence or the threat of such violence as a ground for taking the leave.  However, Bill 148, as amended, introduces a new entitlement to Domestic or Sexual Violence Leave.

Pursuant to the amended version of Bill 148, an employee with at least 13 consecutive weeks of service is entitled to a leave without pay if the employee or a child of the employee experiences domestic or sexual violence, or the threat of domestic or sexual violence, and the leave is taken for any of the following purposes:

  1. To seek medical attention for the employee or her/his child in respect of a physical or psychological injury or disability caused by the domestic or sexual violence.
  2. To obtain services from a victim services organization for the employee or her/his child.
  3. To obtain psychological or other professional counselling for the employee or her/his child.
  4. To relocate temporarily or permanently.
  5. To seek legal or law enforcement assistance, including preparing for or participating in any civil or criminal legal proceeding related to or resulting from the domestic or sexual violence.
  6. Such other purposes as may be prescribed

For purposes of this new leave, “child” means a child, step-child, foster child or child who is under legal guardianship, and who is under 18 years of age.  Note that the employee is not entitled to the leave if she/he committed the domestic or sexual violence.

If the amended version of Bill 148 is enacted, eligible employees will be entitled to take up to 10 days and up to 15 weeks of unpaid Domestic or Sexual Violence Leave in each calendar year.  The 10-day entitlement is deemed to be taken in entire days. Accordingly, if the employee takes any part of a day as leave, the employer may deem the employee to have taken one day of leave on that day.   Similarly, as the 15-week entitlement is deemed to be taken in entire weeks the employer may deem the employee to have taken one week of the leave if the employee takes any part of a week as leave.

An employee who wishes to take Domestic or Sexual Violence Leave must so advise the employer, and the employer may require the employee “to provide evidence reasonable in the circumstances” of her/his entitlement to the leave. If circumstances are such that the employee must begin the leave before advising the employer, she/he must advise the employer of the leave as soon as possible after beginning it.  The notice must be in writing if the employee is taking any part of the 15-week leave.

The entitlement to unpaid Domestic or Sexual Violence Leave, if enacted, will be in addition to any entitlement an employee may have for Family Medical Leave and Family Caregiver Leave under the current ESA, Child Death Leave and Crime-Related Child Disappearance Leave (new unpaid leaves included in the initial version of Bill 148 and retained in the amended version), and PEL under the amended version of Bill 148.

Bill 148, as amended, was ordered for Second Reading on September 11 and debated for 2 days after that.  We expect it will pass Second and Third Reading and receive Royal Assent over the next few weeks, particularly since many of its provisions, are intended to come into effect by January 1, 2018, including those relating to the new Domestic or Sexual Violence Leave.

 

Update on Ontario Bill 148: Amendments to “equal pay for equal work” provisions provide some guidance for employers 

The Employment Standards Act, 2000 contemplates equal pay between the sexes. As we reported in June, Ontario Bill 148 proposes adding “new equal pay for equal work” provisions that mandate paying casual, part-time, temporary, and seasonal employees be paid the at the same rate as regular full-time employees who perform the same job for the same employer. Bill 148 also requires temporary help agency employees to be paid at the same rate as employees of the agency’s client who perform substantially the same work.  Employers are prohibited from reducing an employee’s rate of pay in order to comply with Bill 148.

The proposed equal pay provisions are subject to some exceptions. The provisions do not apply if a difference in wages among similarly situated employees is due to (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) another factor justifying the difference on objective grounds.

On September 11, an amended version of Bill 148 was ordered for Second Reading and then debated over the next two days.  One of the amendments provides some clarity with respect to how employers might rely on a “seniority system” to justify different wage rates on the basis of employment status.  The amended equal pay provision expressly states that a “seniority system includes a system that provides for different pay based on the accumulated number of hours worked”.

And employers with unionized employees, please take note. Under the amended version of Bill 148, if your collective agreement contains a provision that permits differences in pay based on employment status, and there is a conflict between the collective agreement provision and the Bill 148 equal pay provision, then the collective agreement provision will prevail and continue to apply until the earlier of (i) the date the collective agreement expires; and (ii) January 1, 2020.  If you are currently engaged in collective bargaining, you may wish to consider this in the context of your negotiations.

Overall, the equal pay provisions in Bill 148, if enacted, will require employers to take a holistic look at their employees and positions, to determine which roles are exempt from the provisions, and which non-exempt roles are substantially similar in skill, effort, responsibility and working conditions so as to require equal pay. In addition, it would be prudent to consider adopting standardized procedures as to how wage review requests will be determined and communicated.

“Scheduling” provisions amended as the Ontario Bill 148 advances to Second Reading

 

Scheduling of work under the Employment Standards Act, 2000 (“ESA”) is one of several sections in Bill 148 affected by recent amendments.

Currently, the ESA does not regulate an employer’s right to schedule work, aside from providing that an employee who attends a scheduled shift must receive at least three hours’ pay, even if the shift is shorter. Bill 148 not only includes this existing “3-hour rule”, but also expands it considerably, as follows.

Employers will be required to pay employees who are on call a minimum of three hours’ pay at their regular rate if they are not called in, or if they are called in but work less than three hours.  Further, employees who are scheduled to work or be on call will be entitled to three hours’ pay at their regular rate if their shift or on-call period is cancelled within 48 hours of its scheduled start time.

Employees will also have the right to refuse an employer’s request or demand to work or be on call when it is made less than 96 hours (i.e., 4 full days) in advance unless it is to:

  • deal with an emergency;
  • remedy or reduce a threat to public safety; or
  • made for such other reasons as may be prescribed.

Consistent with the current ESA, the 3-hour rule will not apply if the employer is unable to provide work because of fire lightning, power failure, storms or similar causes beyond the employer’s control that result in stopping of work.  However, the Bill 148 amendments also provide some additional relief for employers, given that the 3-hour rule will not apply if:

  • the nature of the employee’s work is weather-dependent and the employer is unable to provide work for the employee for weather-related reasons; or
  • the employer is unable to provide work for the employee for such other reasons as may be prescribed.

Bill 148 also gives most employees the right to request a change in schedule or work location. While the employer will not necessarily have to agree such requests, it will nonetheless be required to:

  • discuss the request with the employee;
  • notify the employee of its decision within a reasonable time; and
  • if the request is denied, explain why.

Finally, the amended version of Bill 148 clarifies the extent to which the 3-hour rule applies to unionized workforces. If a collective agreement that is in effect on January 1, 2019 contains a provision that addresses but conflicts with the statutory provision regarding: (1) payment for being on call; (2) payment when the employer cancels an employee’s scheduled day of work of on-call period; or (3) the employee’s ability to refuse a request or demand to perform work or be on call without the required advance notice, then the collective agreement provision will prevail until the earlier of the date the collective agreement expires and January 1, 2020.

If the Scheduling provisions in the amended version of Bill 148 do come into effect, employers will be required to handle scheduling with a considerable degree of foresight to ensure that employees received ample notice of schedules, and to minimize the potentially costly applications of the 3-hour rule. Employers may wish to implement standard processes for how employee requests for scheduling and location changes would be processed, determined and communicated.  It would also be prudent to consider contingency plans for instances where an employee is in the position to refuse short-notice shifts.

Bill 148, as amended, was ordered for Second Reading on September 11th and debated for the following two days.  We expect that it will pass Second and Third Reading and receive Royal Assent over the next few weeks, particularly since many of its provisions are intended to come into effect by January 1, 2018.  Note, however, that the Scheduling provisions would not come into effect until January 1, 2019.

 

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