An earthquake shook Canadian politics and public policy yesterday with the election of a Liberal majority government. The Conservative Party retires after nine years in office and the New Democratic Party, expected to attain power (or at least a share of it) suffered a significant electoral setback.
Economic and Fiscal Policy Implications for Employers
The Liberal Party under Justin Trudeau campaigned to “the left” of its traditional ground, and even of the NDP, running on an economic policy which proposed three straight deficits before returning the country to balanced budgets. The deficits – together with tax increases – are the avenue through which the Liberals propose to inject billions of dollars into Canadian transport, social and green infrastructure, through grants, loans and guarantees.
Additional stimulus would come in a 1.5% reduction in the income tax rate charged to households with $44-89K annual income, a new Home Buyer Plan and incentives for landlords to improve rental housing stocks. Labour-sponsored funds are promised as $775 million in additional worker training support, which might have a meaningful impact directly on employers.
In the immediate term a stimulus program is anticipated to generate economic activity which will affect Canadian employers, in particular those whose businesses fit within the infrastructure plan. Offsetting that lift, perhaps, will be the $25 billion in borrowing, its effects on interest rates (if any) and higher tax revenues needed to pay for it.
Tax policy changes also touch and restrict the tax advantages of stock-option plans, which are considered a vital element in employee compensation in start-up businesses.
Retirement and Unemployment
OAS. For retirees, the Liberals have proposed restoring the age at which Canadians can receive Old Age Security to 65.
CPP. Additionally, though the specifics are unclear, the Liberals have promised to work with the provinces and territories and employers to enhance the Canadian Pension Plan. For employers in Ontario, enhancements to the CPP very likely mean that the Ontario Retirement Pension Plan proposed by Premier Wynne will not move forward.
Employment Insurance. The Liberals have proposed reforms to the Employment Insurance (EI) benefit system. Changes include eliminating the requirement for employees to work 910 hours before they can qualify for benefits and also reducing the elimination period from two weeks to one week. Of particular note to employers is the promise that when employing younger Canadians, between the ages of 18-24, in permanent positions between 2016-2018, employers will be exempt from paying EI premiums for these new employees for 12 months.
Federally-regulated employment and labour law
The Parliament of Canada has jurisdiction over labour and employment law in areas of federal competence, such as telecommunications, interprovincial shipping, rail and air travel, which constitute a real portion of the economy. The Liberals have also proposed a number of other policies that if implemented could have a significant impact on employment and labour relations across the country.
Federal labour relations: The Liberals have promised to repeal recent bills passed by the Conservatives including C-377, requiring labour organizations to provide financial information to the government and C-525, addressing the certifications of bargaining agents. The Liberals have also pledged to bargain in good faith with Canada’s public sector unions, an approach the unions say has been lacking under Harper’s Conservatives.
Flexible Working Conditions: Additionally, changes to the Canada Labour Code (Code) will impact employers whose workplaces fall under federal authority. The Liberals have proposed introducing a change to the Code, which would allow employees to request flexible work conditions without reprisal, which may include different start and end times and working from home.
Flexibility is also being proposed for parental leave, allowing parents to receive shorter periods of leave over 18 months, or a longer period of up to 18 months, which combined with maternity leave would be a lower benefit level. Though at first these changes will only affect federally regulated workplaces, the Liberals have also pledged to assist the provinces and territories in implementing similar changes.
Marijuana: the Liberal promise to legalize marijuana will have effects on individuals, businesses and medical care. Changes to the legal status of the drug may have an impact on how employers address discipline for employees for marijuana use or possession. This does not mean that employees gain new rights to work in an impaired state and in the immediate term, the law is unchanged and employers do not yet have to review or alter workplace policies.
Canada’s new Liberal Government has an uncommonly ambitious plan for the reform of government and democratic practices. While promised changes in federal labour law are modest and of limited effect, their huge pledges of investment in targeted economic activity will, if enacted, likely be widely felt throughout the economy and labour market.