‘We want to not only make sure the company is not offside, but it’s equipped to succeed.’
The phrase “compliance audit” may strike fear into the hearts of some HR professionals, but it doesn’t have to be a bad experience. Canadian HR Reporter spoke with Daniel Wong, chair of the Employment Law Group at WeirFoulds, a Toronto law firm that offers a customized compliance audit program.
Q: How has the pandemic affected compliance?
A: “Number one is the changing rules and restrictions regarding the pandemic and public health measures, together with a difference between jurisdictions. For example, you've got the introduction of the new COVID leaves… Most, if not all, of the jurisdictions implemented a suspension of temporary layoff provisions. For employers who operate in multiple jurisdictions, they needed to make sure they were looking at the right requirements.
“Another change is the significant shift in employees working from home. That’s impacted the traditional workday, resulting in the risk that employers may be exposing themselves to overtime and hours-of-work issues. Out-of-sight employees have to juggle their workday because of accommodation issues and neither themselves nor the employer are tracking the hours.
“One other significant change in employment law during the pandemic, but not because of the pandemic, is the Ontario Court of Appeal’s decision in [Waksdale v. Swegon North America Inc.], which significantly expands the circumstances where a court may find that a termination clause is unenforceable.”
Q: What are common areas that employers miss when it comes to compliance?
A: “Number one is the misclassification issue, whether it’s classifying employees as independent contractors or misclassifying employees as overtime-exempt — that's a very common area of non-compliance that I encounter. Another one is where clients employ individuals in more than one jurisdiction, some of them take a one-size-fits-all approach. They fail to recognize that the statutory requirements vary from province to province.
“A third area is failing to maintain up-to-date templates and policies, especially ones that are not regularly looked at. If they rely on them and they’re outdated, then they're not going to be addressing the situation in the correct way.
“One that I find very surprising is mandatory workplace postings. For example, health and safety inspectors have said to me that when they visit a workplace, they'll often ask to see where the health and safety policy is posted. If they get a blank look, they keep digging because if employers haven't even done what I would consider an essential and a fairly easy compliance requirement, what else have they not complied with?”
Being proactive is the best way to approach compliance audits, says another expert.
Q: How frequently should an organization conduct an audit?
A: “I actually think of it as an ongoing process. Having said that, there are some aspects that need to be done at least on an annual basis, because there are certain requirements under employment legislation that mandate that. For example, in Ontario employers are required to review their health and safety policy and their workplace violence and harassment policy as often as necessary, but at least annually.
“For other documents that are not necessarily subject to prescribed timeframes, it's a good idea to have those documents reviewed at least once every few years to stay on top of amendments to employment statutes and developments in the case law. For employers who haven't undertaken a comprehensive audit in a while, I would recommend one so that they have a good starting point. From that, you can implement a regular cycle of compliance audit review.”
Q: What are key elements to getting started on a compliance audit?
A: First and foremost, organization is key. My suggestion is if you're going to review one document, you might want to look at all of the other documents in that folder or that handbook, so you're not just doing it on a piecemeal basis.
Daniel Wong
“Another key element to consider is the end product, because the compliance audit can have a number of different outcomes — a written report, a summary of areas of concern, or a prelude to changes to a template or a policy. That will help inform the process.
“It's important to manage expectations. An audit process almost inevitably turns up something, whether it's an area of non-compliance or an opportunity for improvement. It's unrealistic to think, ‘We’re going to get external counsel to review this and I really hope he doesn't find anything.’ The reality is something's going to be found.
“But an audit is not a witch hunt. The focus should be on ensuring that the organization's procedures and practices comply with the applicable law, and also are appropriate and effective for that organization. We want to not only make sure the company is not offside, but it’s equipped to succeed.”
Employer compliance with public health measures has increased in Ontario following an inspection blitz.
Q: What are top compliance issues for employers going forward?
A: “I think number one is Waksdale because it has retroactive application — meaning the contracts that everyone thought were solid and enforceable, now the decision from the Ontario Court of Appeal has rendered them either absolutely or potentially unenforceable.
“As we emerge from the pandemic and the judicial system returns to normal, we're likely going to see more cases in which employees are challenging the enforceability of their termination provisions. That's something that employers need to be aware of, because, unfortunately, it's an issue that has landed in their laps through no fault or action on their own.
“Another issue will be the changing workplace environment post-pandemic. The workplace will include a home office for many employees. That's going to have a lot of employment implications, both from a compliance perspective but also from a performance management, accountability, and productivity angle.”
