Canada Labor Code Changes Have Taken Effect

By Catherine Skrzypinski October 10, 2019
Canada Labor Code Changes Have Taken Effect

​Canadians working in the federal sector have said for years that federal labor standards lag far behind provincial legislation that covers working conditions, paid holidays, breaks, leaves of absence and wages. But now that's changed.

New amendments to the Canada Labor Code—which took effect on Sept. 1—affect approximately 18,000 federally regulated employers and 900,000 of their workers. The amendments impact employees who work in rail, aviation and shipping companies that move goods and people across borders. These changes also apply to those working in the government, banking and telecommunications sectors. Approximately 6 percent of Canada's working population is under federal jurisdiction.

"If all existing reforms are implemented, this will be the most significant reform of the Canada Labor Code in the past 50 years," said Lori Sterling, senior counsel with Bennett Jones in Ottawa, Ontario.

New employment standards of the Canada Labor Code include:

  • The right to request flexible work. After six consecutive months of continuous employment, employees can request in writing to change their work hours, modify their work schedules and propose to work outside the office. Employers must consider the request but can refuse it for operational or financial reasons.
  • Adjustments in shift scheduling and overtime. Employers must provide employees with their shift schedule a minimum of 96 hours before the start of their first shift. Additionally, employers must give workers a minimum of 24 hours' notice that a shift will change, except in emergencies. Employees can also elect to take time off at the rate of 1.5 hours per overtime hour worked instead of receiving overtime pay. 
  • Increased vacation entitlements. Employees are now entitled to three weeks of vacation after five consecutive years of employment and four weeks of vacation after 10 years of successive employment. In addition, all federally regulated employees are now eligible for holiday pay.
  • Updated personal leave rights. Employees may take up to five days of personal leave per calendar year after completing three consecutive months of employment. The first three days of leave are paid. Personal leave may be used for citizenship ceremonies, family responsibilities, jury duty and medical issues, and is extended to 10 days for victims of family violence. Indigenous people can take up to five days of leave for traditional practices.

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Impact on Businesses in North America

"Given the sweeping nature of these reforms, the changes will have a significant impact on federally regulated workplaces," said Shane Todd, a partner with Fasken, a law firm in Toronto.

The changes will have a significant impact on Canadian companies and U.S. businesses operating in Canada, as well. Todd pointed out that the increased minimum employment standards will make it more expensive for companies to conduct business with the federal sector in Canada.

"All of these proposed changes stand to limit employers' flexibility," said Tim Lawson, a partner at the law firm McCarthy Tetrault in Toronto.

While the changes will increase costs for employers, those costs may be offset by productivity gains, Sterling noted.

"Federally regulated employees may be more productive while at work because of predictability in their shifts and longer periods away from work," she added.

American businesses that operate in Canada under federal jurisdiction will be subject to these reforms for their Canadian employees.

"The new Canadian federal standards are more generous than what is provided by many—if not all—[labor statutes in the] U.S. states," Sterling said. "When coupled with existing standards, the new federal package of reforms is more generous than any province in Canada." 

Employee-Friendly Policies

Experts have noted that the new amendments are the starting point of updating the Canada Labor Code for the 21st century.

"The modernization of the code is, in fact, a major overhaul," noted George Vassos, a partner with Littler in Toronto. "Federal employers need to invest appropriate resources to understand all of the changes and to properly implement them."

Employers also need to understand that this modernization process is far from finished, Vassos continued. The Canadian government appointed an independent expert panel to study other workforce issues such as implementing a federal minimum wage, equal pay for part-time and agency employees, an updated harassment and violence policy, and the right to disconnect from work-related communication outside of work hours.

The upcoming federal election in Canada this month may slow implementation or impede other reforms, Vassos added. Since this is an election year, no new exemptions are likely until 2020.

"The timing is interesting," Todd noted. "If the Liberal government [led by current Prime Minister Justin Trudeau] is re-elected, they might put in new exceptions for certain classes of employers."

In the meantime, the government has also created interpretive guidelines to reduce disruption to employers and to the Canadian economy until the government passes regulations, Lawson explained. For instance, Canada's trucking industry is currently exempt from Canada Labor Code changes.

Be Prepared

Vassos advised human resource professionals for federal employers to immediately conduct a comprehensive overview of all company policies, handbooks, hiring letters and employment agreements to ensure compliance with the changes.

Todd added that HR should be aware of the record-keeping requirement in the code because employers must keep payroll and other records for at least 36 months. "There's now a lot more paperwork," he said.

HR practitioners should also assess the impact of these reforms on the business, Sterling concluded. "This analysis should examine the extent of change required to meet the new standards, feasibility, cost and impact on collective agreements," she said.

Catherine Skrzypinski is a freelance writer based in Vancouver, B.C.



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