One of the government's primary goals when enacting the Fair Workplaces, Better Jobs Act, 2017 ("Bill 148") was to provide additional protections for vulnerable employees. One of the categories of vulnerable employees identified by the government were individuals employed by temporary help agencies (referred to below as agency employees). The changes contained in Bill 148 will have a significant impact on both temporary help agencies and the companies that utilize their services. The changes are intended to reduce the financial incentives that have, over time, caused many companies to favour utilizing agency employees as opposed to engaging employees directly, on either a full or part-time basis.
The most important changes impacting agency employees are:
- temporary help agencies will now be obligated to pay agency employees at the same rate as employees of their customer performing the same job,
- agency employees will now be entitled to notice of termination if an assignment lasting more than 3 months is ended early; and
- agency employees will now be able to unionize on a card based certification model.
Equal Pay for Equal Work
The Equal Pay for Equal Work provisions contained in Bill 148, which will take effect as of April 1, 2018, are intended to prevent employers from paying employees doing the same work at different rates based on the employee's employment status (i.e. whether employed on seasonal, part-time or full-time basis or as an agency employee).
In the context of agency employees, the practical effect of these 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 side by side with a direct employee then, absent qualifying for one of the exemptions detailed below, the agency will need to pay the agency worker at the same rate of pay as the customer is paying to its direct employee.
In order to facilitate compliance with this new requirement, Bill 148 contains provisions allowing temporary help agencies to request the wage rates being paid to a customer's direct employees and requiring the customer to provide this information to the temporary help agency.
The work being done by two employees will be considered to be equivalent, for the purposes of this new requirement, if it is performed in a similar environment and requires substantially the same amount of effort, skill and responsibility. It is important to note that it is not necessary for the work to be exactly the same, it just needs to be substantially similar.
Even if an agency employee is working the same job as a direct employee, it may still be permissible to pay the agency employee 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. By way of example, it will not be a breach of the Equal Pay for Equal Work requirements to pay an employee with ten (10) years of service at a different rate than a new hire, provided you have a wage grid in place that provides for different rates based on years of service.
It is worth noting that the Equal Pay for Equal Work requirements apply only to rates of pay; it is still permissible to provide different types or levels of benefits based on an employee's employment status.
For further information regarding Bill 148's Equal Pay for Equal Work provisions, please see our previous article on this topic here.
Notice (or Pay in Lieu) of the Termination of an Assignment
Effective January 1, 2018, temporary help agencies are now required to provide their 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 new requirement only applies to agency employees assigned to a client employer for an estimated term of three (3) months or more. When an assignment is ended before the end of the estimated term, notice will not be required if the agency employee is offered another assignment of one (1) week or longer during the notice period.
Temporary help agencies will now be required to retain records confirming that this new notice requirement has been satisfied.
Card Based Certification
Bill 148 also contains changes to the Labour Relations Act that will make it easier for agency employees to unionize. While normally, a union cannot obtain bargaining rights in Ontario without the Ontario Labour Relations Board conducting a vote of employees in the proposed bargaining unit, 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, then it will be recognized as the certified bargaining agent, without a vote being held.
Implications for Temporary Help Agencies and Employers
The financial model that has supported the growth of temporary help agencies in Ontario will be significantly altered by the new requirements contained in Bill 148. The requirement to pay agency employees the same rate as direct employees (before the agency's fees are applied) will, in most cases, increase the cost associated with utilizing agency employees and may result in some companies re-examining their usage of agency workers.
In order to ensure compliance with the new requirements both temporary help agencies and their customers will need to work together to assess the nature of the work being performed by agency staff and determine whether the Equal Pay for Equal Work provisions will apply. If so, information regarding current wage rates for the relevant positions will need to be exchanged and co-ordinated.
In addition, given that the new notice requirements can be satisfied through the provision of working notice, processes should be put in place to ensure that notice of a change in an assignment end date is identified and communicated to the agency worker at the earliest possible date.