Changes include payroll tasks such as vacation pay, direct deposit, employee
by Nadia Zama
Exclusive to Canadian HR Reporter from Rudner Law.
Back in March, Ontario’s Bill 149, Working for Workers Four Act, 2024 (Bill 149) received Royal Assent.
Bill 149 introduced various amendments to the Employment Standards Act, 2000 (ESA), including an employer’s obligations relating to: paying employees tips or gratuities and paying employees vacation pay. Many of these amendments recently took effect on June 21, 2024.
The amendments that are effective as of June 21, 2024 include:
Tips and gratuities
An employer must pay any tip or gratuity by cash, cheque payable to only the employee, direct deposit or any other prescribed method. If paid by direct deposit, the account in which the pay is deposited must meet the requirements of the ESA (i.e. if the account is selected by the employee and is in the employee’s name, and no other person other than the employee, or a person authorized by them, has access to the account).
If an employer has a tip policy where the employer or a director or shareholder of the employer shares in a “tip pool,” the policy must be in writing and posted in the workplace where the policy is likely to come to the attention of employees, and retained for three years after it is no longer in effect.
Vacation pay arrangements
Employers were previously allowed to pay vacation pay at a time mutually agreed upon with the employee, but Bill 149 clarified the amendments made to the vacation pay provisions to confirm that any permissible alternate pay arrangement agreed to between an employer and employee must be in writing.
Employers were previously allowed to use an alternative pay structure than paying vacation pay to an employee in a lump sum before an employee commences their vacation, such as paying vacation pay as wages are earned (i.e. as a percentage on each paycheque), as long as the employee consents to this payment timeline. Bill 149 modified this by imposing a requirement that the alternative pay structure is only allowed if it is set out in an agreement between the employer and the employee.
Direct deposit
If a payment is made by direct deposit, in addition to being in the employee’s name and being accessible only to the employee or a person authorized by the employee, the account must be one that is selected by the employee.
There are additional amendments to the ESA, which were introduced by Bill 149, such as those relating to an employer’s obligation to disclose expected compensation information in any publicly advertised job posting.
Employers would be wise to contact an employment lawyer to understand how these amendments may impact their workplace. In particular, employers should review their current employment agreements, workplace policies, and vacation pay practices in order to ensure that the timing of vacation pay is expressly stated, and thus expressly agreed to, by employees.
Employers must also ensure that they are complying with the clarifying amendments relating to tips and gratuities, and direct deposits.
We will continue to monitor Bill 149 as updates with respect to key amendments will affect both employers and employees alike.
Nadia Zaman is a senior associate at Rudner Law in Toronto. She can be reached at (416) 864-8500 or [email protected].
