Understanding and complying with Provincial employment and labour law is essential for businesses who have employees who perform work in Ontario. The Fair Workplaces, Better Jobs Act, 2017 has made significant changes to both the Employment Standards Act (“ESA”) and the Ontario Labour Relations Act. Many of these changes came into force on January 1, 2018. Today, we will outline some of the fundamental aspects of Ontario’s employment law in the context of the ESA and the 2018 amendments. Next week we will publish a second post addressing the changes made that impact union issues and unionized work environments under the Ontario Labour Relations Act.

Employees Are Governed By Contract of Employment

It is particularly important for employers to understand that there is no “at will” employment in Ontario. Employees in Ontario are governed by a contract of employment, either express or implied. If an employee does not have a written contract of employment, there is an implied contract of employment incorporating the minimum statutory protections provided by the ESA plus additional rights of the employee under the common law.

With this in mind, employers headquartered both inside or outside of Ontario should enter into written employment agreements in order to set out the mutual obligations of the employment relations and to limit common law liability to their employees in Ontario. It is particularly important in such areas as termination, confidentiality/non-disclosure and non-competition/non-solicitation. In Ontario it is also essential that employer’s policies and procedures become part of the contract of employment. Of note are employee handbooks or policies/procedure manuals, which in many jurisdictions are expressed not to be or form part of a contract of employment, but should be incorporated into the contract of employment in Ontario so that the employers may rely upon their provisions with respect to managing or disciplining employees in Ontario.

Highlights of Changes to the Ontario Employment Standards Act:

  • Minimum Wage Increases – The general minimum wage increased to $14 per hour in 2018 and to $15 per hour in 2019. The special minimum wage rates for liquor servers, students under 18, and homeworkers increased by the same percentage as the general minimum wage. Note: In the recent Ontario provincial election, the Progressive Conservative party ousted the Liberal party government who introduced the minimum wage increase. One of the policy platforms of the Conservatives was to eliminate the minimum wage increase scheduled for 2019.
  • Paid Vacation – Employees with at least five years of service are entitled to three weeks paid vacation.
  • Paid Personal Emergency Leave – All employees are provided 10 days of emergency leave (“PEL”) per year, two of which would be paid. Employers are prohibited from requesting a doctor’s sick note from an employee taking PEL.
  • Family Medical Leave – This was increased from 8 to 27 weeks.
  • Overtime Pay – Employees who hold more than one position with an employer are to be paid at the rate for the position in which they are working during any overtime period.
  • Equal Pay for Equal Work – Employers are required to pay casual, part-time, temporary and seasonal employees the full-time employee rate when performing the same job for the same employer. Exceptions include where a wage difference is based on a seniority system, a merit system or systems that determine pay by quantity or quality of production.

Similarly, temporary help agency (“THA”) employees (“assignment workers”) are to be paid at the same rate as permanent employees of the THA client when performing the same job and such assignment workers are entitled to request a review of their wages. THAs will be required to provide assignment workers with at least one week’s notice when an assignment scheduled to last longer than three months will be terminated early.

  • Scheduling – Employees are entitled to request schedule or location changes after having been employed for three months.
    • Employees who regularly work more than three hours per day, but upon reporting to work are given less than three hours, are to be paid three hours at their regular rate of pay.
    • Employees can refuse to accept shifts if their employer asks them to work with less than four days’ notice.
    • If an employer cancels a shift within 48 hours of its start, employees are to be paid three hours at their regular rate of pay.
    • When employees are “on-call” and not called in to work, the employer will pay them three hours at their regular rate of pay for each 24-hour period that employees were on-call.
  • Employee Misclassification – Employers that misclassify their employees will be subject to penalties including prosecution, public disclosure of convictions and monetary penalties. Such measures are intended to address cases where employers improperly classify their employees as independent contractors and therefore would preclude them from being entitled to the protections under the ESA and to make the additional cost of remittances under the Canadian income tax legislation. In the event of a dispute, the employer would have the burden of proving that the individual is not an employee.

This new method of dealing with misclassification may require employers headquartered outside Ontario to take a more careful approach to the classification of their employees in Ontario than in the past because of the new and increased penalties under the revised law.

  • Joint or Related Employer Liability – Related businesses can be treated as one employer and held jointly and severally liable for monies owing under the ESA. Proof of “intent or effect” to defeat the purpose of the ESA have been removed when determining this issue. It is therefore important for related businesses to ensure that care is taken in maintaining their separate corporate and business identities to avoid one (compliant) business becoming responsible for the liabilities of the other (non-compliant) business.

This change in approach to the issue of joint or related employer liability is of particular importance to employers headquartered outside of Ontario which conduct business in Ontario through a subsidiary which is subjected to significant control by a non-Ontario parent and also for franchisors which are found to exercise an unusual degree of control over the operations of their franchisees.