One of the government's primary goals when enacting the Fair Workplaces, Better Jobs Act 2017 (known as 'Bill 148') was to provide additional protections for vulnerable employees. One category of vulnerable employees identified by the government was individuals employed by temporary help agencies (referred to as 'agency employees'). The changes contained in Bill 148 will have a significant effect on both temporary help agencies and the companies that use their services. The changes aim to reduce the financial incentives that have caused many companies to favour using agency employees, rather than engaging employees directly, on either a full-time or part-time basis.
The key changes affecting agency employees are as follows:
- Temporary help agencies must now pay agency employees at the same rate as their client's employees performing the same job.
- Agency employees are now entitled to notice of termination if an assignment lasting more than three months ends early.
- Agency employees can now unionise on a card-based certification model.
Bill 148's 'equal pay for equal work' provisions, which will take effect on April 1 2018, aim to prevent employers from paying employees doing the same work at different rates based on the employee's employment status (ie, whether the employee is employed on a seasonal, part-time or full-time basis or as an agency employee).
The practical effect of the new requirements will be that agency employees will need to be paid at the same rate as an employer's direct employees doing the same work. For example, if an agency employee is working on a production line alongside a direct employee, then – provided that the exemptions detailed below do not apply – the agency will need to pay the agency employee at the same rate of pay that the client employer pays its direct employee.
In order to facilitate compliance with this new requirement, Bill 148 allows temporary help agencies to request the wage rates being paid to a client's direct employees and requires the client to provide this information to the temporary help agency.
Work being performed by two employees will be considered equal, for the purposes of the new requirement, if it is performed in a similar environment and requires substantially the same amount of effort, skill and responsibility. The work does not need to be exactly the same, it must merely be substantially similar.
Even if an agency employee is working the same job as a direct employee, the agency employee may still be paid at a different rate if it can be established that the difference in pay is based on:
- a valid seniority system;
- a merit-based system; or
- a system measuring earnings by quantity or quality of production.
For example, it will not be a breach of the 'equal pay for equal work' requirements to pay an employee with 10 years' service at a different rate than a new employee, provided that the employer has a wage grid in place that provides for different rates based on years of service.
However, the 'equal pay for equal work' requirements apply to rates of pay only; providing different types or levels of benefits based on an employee's employment status remains permissible (for further details please see "Bill 148: equal pay for equal work").
As of January 1 2018 temporary help agencies must provide employees with one week's written notice or pay in lieu of notice when an assignment is terminated before the end of its estimated term. This requirement applies only to agency employees assigned to a client employer for an estimated term of three months or more. When an assignment ends before the end of the estimated term, notice is not required if the agency employee is offered another assignment of one week or longer during the notice period.
Temporary help agencies must also retain records confirming that this notice requirement has been satisfied.
Bill 148 also contains changes to the Labour Relations Act which will help agency employees to unionise. Generally, unions cannot obtain bargaining rights in Ontario without the Ontario Labour Relations Board conducting a vote of employees in the proposed bargaining unit; however, Bill 148 now provides a special process for various classes of vulnerable workers, including agency employees. Under the new process, if a union can demonstrate that it has signed union cards from more than 50% of the proposed agency employee bargaining unit, it will be recognised as the certified bargaining agent without a vote being held (for further details please see "Bill 148: changes to the Labour Relations Act").
The financial model that has supported the growth of Ontario temporary help agencies will be significantly altered by Bill 148. The requirement to pay agency employees the same rate as direct employees (before agency fees are applied) will, in most cases, increase the cost associated with using agency employees and may lead companies to re-examine their use of such workers.
To ensure compliance with the new requirements, temporary help agencies and their clients should work together to assess the nature of the work being performed by agency staff and to determine whether the 'equal pay for equal work' provisions will apply. If so, information regarding wage rates for the relevant roles should be exchanged and coordinated.
In addition, given that the new notice requirements can be satisfied through the provision of working notice, processes should be implemented to ensure that notice of a change in an assignment end date is identified and communicated to the agency employee at the earliest possible date.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
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