Government of Canada Introduces Major Changes to Canada Labour Code and Creates Federal Pay Equity Obligations

November 2018

Recently, the Federal Government tabled, for first reading, Bill C-86 that, assuming it passes in its current form, will (i) significantly alter federally regulated employers’ obligations under the Canada Labour Code and (ii) create a new federal pay equity regime.

Below is a flavour of the key changes included in Bill-C-86.

Proposed Canada Labour Code Amendments

  • Increase in the minimum age of employment from 17 to 18 years of age.
  • Other than employees who are terminated for just cause or who receive notice under the new group termination provision discussed below, individual termination notice (or pay in lieu) will now be based on a sliding scale, taking into account length of service:
    • At least 3 months of continuous service = 2 weeks’ notice;
    • At least 3 years of continuous service = 3 weeks’ notice;
    • At least 4 years of continuous service = 4 weeks’ notice;
    • At least 5 years of continuous service = 5 weeks’ notice;
    • At least 6 years of continuous service = 6 weeks’ notice;
    • At least 7 years of continuous service 7 weeks’ notice; and,
    • At least 8 years of continuous service = 8 weeks’ notice.
  • In addition to the requirement to provide 16 weeks’ notice to the Minister that there has been a group termination, employers must now also provide at least eight (8) weeks’ notice of termination (or pay in lieu of notice, or a combination of notice and pay in lieu) to all employees defined as “redundant employees” under the Code.
  • Authority for adjudicators, in unjust dismissal complaints, to dismiss or suspend the complaint, including, where the complaint is frivolous, vexatious or not made in good faith or where the substance of the complaint has been dealt with in another proceeding.
  • Employers must provide at least 96 hours’ notice to institute a schedule. Failure to do so permits an employee to refuse to work any shift within the 96 hour notice period, with reprisal protection. Provision not applicable (i) in emergency, (ii) where a collective agreement “specifies an alternate time frame for providing the work schedule or provides that this section does not apply to those employees,” or (iii) the change is employee requested under Flexible Work Arrangements provisions.
  • A 30 minute unpaid meal break every five consecutive hours. Where employee required to be available during the break, it becomes a paid break. Provision for postponement/cancellation of the break in limited circumstances (emergency).
  • A minimum of eight hours between shifts (not applicable in emergency).
  • Requirement to provide employees with unpaid breaks for medical reasons, or as necessary to permit a nursing employee to nurse or express breast milk. Such obligations likely fall within many employers’ accommodation programs under human rights law. Now, in addition, they are statutorily required by the Code.
  • Introduction of five (5) personal leave days, the first three (3) of which are paid (after three (3) months of continuous employment) and the remaining two (2) unpaid. The personal leave days can be used for (i) illness or injury, (ii) responsibilities related to the health or care of family members or the education of family members under 18 years old, (iii) dealing with an urgent concern of the employee or family member, and (iv) attending a citizenship ceremony.
  • Rename the current Sick Leave entitlement in the Code to “Medical Leave” making it applicable not only to illness or injury but to (i) medical appointments during working hours and (ii) organ or tissue donation. The duration of the leave entitlement continues to be 17-weeks. Not surprisingly, employers cannot discipline employees who take or plan to take a Medical Leave and are prohibited from “taking such an intention or absence into account in any decision to promote or train the employee.”
  • Previously, the Federal Government created a Leave for Victims of Family Violence, that provided 10 days of unpaid leave. Bill C-86 makes the first five days of a Leave for Victims of Family Violence a paid leave, provided the employee has three months of continuous employment.
  • Increased vacation entitlement:
    • After one year, 2 weeks’ vacation (and 4% vacation pay);
    • After five years, 3 weeks’ vacation (and 6% vacation pay); and
    • After 10 years, 4 weeks’ vacation (and 8% vacation pay).

    Where a contract is lost on a retendering and the employee is retained by the new contractor, service with the previous contractor applies.

  • Elimination of the exclusion from having to pay holiday pay on holidays that fall within the first thirty (30) days of an employee’s employment.
  • Temporary help agencies are prohibited from paying their employees a lower wage rate than the rate that their client pays to its employees, where the temporary help agency employee:
    • Works in the same location;
    • Performs substantially the same kind of work;
    • Is required to exercise the substantially the same skill, effort and responsibility; and,
    • Does so under the similar working conditions.

    Temporary help agency employers do not have to increase their employee’s wage rate if the difference between their wages is a result of seniority, merit or the quantity or quality of the employee’s production.

    There are also new proposed restrictions on charging employees a fee to become an employee, to be assigned work or to complete an assignment or to establish an employment relationship with a client.  Temporary help agency employees will soon be prohibited from preventing their employees from being employed by a client if the employee’s first assignment was more than six (6) months before the employment relationship with the client was created.

New Pay Equity Act

Purpose: to address “the systemic gender-based discrimination in the compensation practices and systems of employers . . . experienced by employees who occupy positions in predominantly female job classes so that they receive equal compensation for work of equal value…”

  • Applies to federal employers with more than 10 employees;
  • Must establish a pay equity plan; and,
  • Creates a Pay Equity Commissioner to monitor implementation of and ensure compliance with the new Act and provide education to employers and employees about rights and obligations under the new Act.

Takeaways for Employers

The changes proposed in Bill C-86 are many and far reaching.  Although not yet law, federally regulated employers would do well to begin, now, to consider how these changes will impact the operation of their businesses and what the cost implications will be.  Failure to begin preparing for these changes now, may leave some federal employers playing catch up when Bill C-86 is eventually passed by Parliament and proclaimed in force and could lead to consequences under the Canada Labour Code or the new Pay Equity Act.