Proposed changes would cut bureaucracy, aid flexibility: Lawyers
Employment standards in Ontario could be facing further alteration this year, as the provincial government attempts to reduce the bureaucratic burden on employers.
Bill 66, Restoring Ontario’s Competitiveness Act, 2018, was introduced in the legislature Dec. 6, seeking to make changes to a variety of acts in an effort to cut business costs, harmonize regulatory requirements and end duplication, according to the province’s economic development minister, Todd Smith.
“We have a real problem in Ontario with red tape, which is a big part of the high cost of doing business here,” he said. “We’re going to lower business costs to make Ontario more competitive.”
The bill is part of a four-year plan intended to reduce business regulations by 25 per cent. The bill will be debated when the house resumes sitting in February.
If passed, Bill 66 will amend the Employment Standards Act, Labour Relations Act, and Pension Benefits Act — making for a “pretty profound” impact on employers in terms of cost savings, according to Andrew Shaw, partner at Baker McKenzie in Toronto.
The proposed amendments are really about flexibility for employers, said Craig Stehr, partner at Gowling WLG in Ottawa.
“To borrow on Ford language, it aims to really cut red tape that employers do run up against,” he said. “I expect that the amendments, if adopted, will make it easier for employers across Ontario — regardless of their industry or sector — to better manage their workforce, particularly around the issue of scheduling.”
ESA changes
As it stands, the bill would eliminate the need for Ontario employers to obtain approval from the government for excess weekly hours of work and overtime averaging agreements.
Currently, for an employer to have employees work more than 48 hours weekly, an application for approval needs to be filed to the director of employment standards — an annual occurrence that can take weeks to be processed, said Shaw.
If Bill 66 takes effect, an employer would simply need a written agreement with an employee, he said.
“The primary thing that this does is increase the flexibility for employers, and I think it’s a significant cost savings, both in terms of operational costs — dollars paid to employees — but also administrative costs, and, frankly, legal costs, too,” said Shaw. “To be able to do this without having to get the approval of the director is huge.”
Small business owners are sometimes reluctant to engage with the government on employment standards issues, said Lucas Mapplebeck, employment lawyer at Filion Wakely Thorup Angeletti in Hamilton, Ont.
“Small employers can be intimidated by applying to the director of employment standards,” he said. “For whatever reason, rightly or wrongly, they may feel like they don’t want to bring scrutiny into their organization, or they’re just intimidated by the process — maybe they can’t afford legal counsel.”
“The actual ability to make these agreements without additional steps and applying to the ministry is going to be welcomed.”
As for overtime averaging, employers would be able to sign written agreements with employees to average hours of work, including overtime, for periods of up to four weeks, without requiring government approval.
Such a change will allow employers to respond more easily to immediate or unexpected demands that may require more hours to be worked in a given week, said Stehr.
“It provides flexibility for the employer, because often an employer will be monitoring hours of work to ensure that overtime-eligible employees do not hit that mark where overtime becomes owing.”
Employers’ need for approval in both areas has been a “fact of life” for some time, he said.
“If the government was looking for areas to cut bureaucratic process and red tape, in terms of what we find in employment and labour standards in Ontario, this would certainly be among the top items for bureaucratic processes.”
Bill 66 would also remove the requirement that employers display a poster with employment standards information in the workplace, but rather provide a copy to employees, likely at time of hire, said Stehr.
“In today’s digital world, I’m not sure that it’s going to have any marked impact on employees and their ability to enforce their rights,” he said. “The bulletin board at work is not likely the first place most employees will be looking for information about their employment standards and their rights as employees.”
The move removes the possibility of an administrative fine, but is not intended to reduce workers’ access to the information, according to Mapplebeck.
Pensions, labour relations
Proposed changes to the Pension Benefits Act could also impact employers, said Shaw.
The bill aims to permit private sector plan mergers with jointly sponsored pension plans (JSPPs), following a current market trend in which employers are attempting to pool their risk, he said.
“It would assist with reducing costs, but the main thing would be… reducing the risk,” said Shaw. “The big concern with a pension plan is you've invested all these individuals’ money.”
“If you’ve got a defined benefit plan, you have to have the money in the plan to pay it out. And, obviously, if you're pooling your risk, you have a better chance of being able to withstand drops in the market and all that sort of stuff.”
Under current legislation, it is difficult for private sector employers to merge individual plans into JSPPs, said Mapplebeck.
“From the perspective of what it's going to mean for employers, it’s just less bureaucracy, giving employers potentially more ability to control what they want to do with their pensions,” he said. “We may see some public sector employers merging their pension plans into JSPPs.”
In terms of labour relations, Bill 66’s passage would mean trade unions will no longer represent employees of several public-sector entities — such as municipalities, school boards and public hospitals — as they will be deemed non-construction employers, said Mapplebeck.
The move could result in more competition in project bids, and lower costs for these employers, he said.
Advice for HR
To prepare for Bill 66, HR professionals could begin by reviewing workplace policies and employee agreements — depending on content — in terms of maximum hours of work and overtime payments, said Shaw.
Employee policies may mimic legislation and require revision, he said.
“Workplace policies are the kind of thing that sometimes gets forgotten about because it takes so much time to review,” said Shaw. “If they get started now, (HR) can potentially change it as legislation is written so that they can have it ready.”
HR could also look into potential strategic benefits in business operations, such as planning production cycles to take advantage of new overtime averaging agreements, he said.
Ensuring properly prepared agreements are in place with employees will be important, especially if usage increases, according to Stehr.
The previous process was “an impediment and a disincentive for many employers to put in place these arrangements,” he said. “I expect that we may see an increase in the number of employers that — if these amendments are adopted — will put in place these types of arrangements with their employees.”
A “robust” review process should be in place and employees should be made aware of the implications of these agreements prior to implementation, said Stehr.
