Within the several changes to the Canada Labour Code (Code) that came into force on January 1, 2021, a new Part IV to the Code entitled “Administrative Monetary Penalties” (AMPs) accompanied by the Administrative Monetary Penalties (Canada Labour Code) Regulations (Regulations) was added. A phased-in approach has been adopted by the federal Labour Program, with AMPs imposed as of January 1, 2022, in relation to Type A violations only (to be discussed further below).
What are AMPs?
As the name implies, AMPs are penalties used to promote compliance with the Code among federally regulated employers when education and enforcement is unsuccessful or when prosecuting an offence under the Code is not appropriate. They will largely be used in cases of systemic or recurring cases of non-compliance, although some exceptions apply. Such exceptions, which could lead to immediate AMPs, include the non-respect of leave provisions, group termination provisions or excess hours permit, as well as employing those under 17 years old and obstructing or hindering compliance.
While AMPs are generally reserved for employer violations, they can, in rare circumstances, be imposed on employees.
Which sections of the Code are subject to AMPs?
Violation of numerous sections of Part II (Occupational Health and Safety) and Part III (Standard Hours, Wages, Vacations and Holidays), as well as non-compliance with Canada Industrial Relations Board orders or decisions are subject to AMPs. The violations have been classified from Type A to Type E violations, sliding in scale by seriousness.
Type A violations, which are subject to AMPs as of January 1, 2022, are administrative in nature. With regard to Parts II and III of the Code, they relate to various recordkeeping provisions as well as information, notification and policy requirements. The full list of violations and their classification are found at Schedules 1 and 2 of the Regulations.
How do AMPs work?
Employers are informed of violations through a Notice of Violation (NoV).
Following the issuance of an NoV, there is a 30-day period in which to request a review. The NoV can be challenged on either the ground that the alleged violation did not occur or that the penalty was incorrectly calculated.
Following the review, an additional appeal to the Canada Industrial Relations Board can be made within 15 days of the decision being served.
Note that the employers or persons named in an NoV will be unable to claim as a defence that they exercised due diligence to prevent the violation or that they believed in the existence of facts that would exonerate them.
How are penalties calculated?
Code violations are sanctioned with penalties ranging from $200 and $50,000 for a first violation. The amount of the base penalty is determined by the size of the business as well as the nature of the violation. Business size is determined as follows:
- Individual: natural persons including sole proprietorships and the federal minister;
- Micro business: fewer than 5 employees or less than $30,000 in gross annual revenue;
- Small business: fewer than 100 employees or less than $5,000,000 in gross annual revenue;
- Large business: over 100 employees.
Any violation that is committed or continues to be committed over more than one day is said to constitute a separate violation on each day that it was committed.
In cases of subsequent non-compliance, escalating penalties will apply. The AMP amount will then be equal to twice the base penalty amount and is added to the base penalty. As a result, in cases of repeated non-compliance, the total penalty will be equal to three times the base penalty.
What is a history of non-compliance?
The following constitute a history of non-compliance if occurring within five years of receiving an NoV for the current violation:
- Receiving a different NoV under the same Part of the Code for an equal or worse violation;
- Being guilty of an offence under the same Part of the Code;
- Being subjected to an injunction under section 153 of the Code.
Prosecutions prior to January 1, 2021, under Part II of the Code will also be considered as a history of non-compliance.
Are there particularities about the payments of AMPs?
If the amount of the AMP in the NoV is paid within 20 days of service, the penalty for a type A to C classification violation will be reduced by 50%. Otherwise, full payment is required within 30 days, unless a request for review is filed.
What about reputational risks?
In addition to the monetary penalty, any employer who has committed a type B to E violation for which an NoV was issued (and upheld if there was a request for review/appeal) will have the following information published online:
- Employer’s name (or name of business);
- Employer’s location;
- Nature of violation;
- Amount of penalty;
- Date of payment;
- Compliance status.
The publication will remain online until payment is made and the violation is corrected. After payment and correction of any violations, the publication will remain for an additional two years.
The author would like to thank James O’Shea, student at law, for his contribution to this article.