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5.4 Other Standards and Requirements

See also: The Changing Workplaces Review

5.4.1 Greater Right or Benefit

Background

Employees and employers cannot contract out of ESA standards. Section 5(1) prohibits an employer and an employee from contracting out of, or waiving, an employment standard and provides that and any such contracting out or waiver is void.

However, the ESA does contemplate an employer providing employees greater rights or benefits than the standards in the Act. Section 5(2) of the ESA provides:

if one or more provisions in an employment contract or in another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than the employment standard, the provision or provisions in the contract or Act apply and the employment standard does not apply.

This means that if established employer policies in a non-union workplace or collective agreements provide a greater right or benefit than a specific standard in the ESA, the terms of the policy or the collective agreement apply instead of the ESA provisions. The greater right or benefit provisions do not provide for all benefits provided by an employer to be compared with all benefits required by the ESA. An employer cannot rely on a greater benefit with respect to one standard to offset a lesser benefit with respect to another. This has not been permitted because the result would be that employees would be deprived of the benefit of some standards. Accordingly, when comparing benefits to assess greater right or benefit, the comparator must relate to the same subject matter. For example, the purpose of rest periods is to provide employees time off work and it is not a greater benefit for an employee to receive payment in lieu of the required rest periods.

Submissions

Employers in the context of Personal Emergency Leave (PEL) have commonly raised the issue of greater right or benefit. Some argue that, as a bundle, their leave policies are more generous than PEL even if they do not cover all the specific instances that PEL can be taken (see sections 5.3.4PEL and 5.3.5 – Paid Sick Days).

During consultations, some employers suggested that collective agreements or employer policies, taken as a whole, should be assessed to determine whether the contract provides greater rights or benefits than the ESA standards, taken as a whole. Opponents of this approach argue that the main purpose of the ESA is to mandate statutory minimum terms and conditions of employment for employees. Adopting this approach to measuring greater rights or benefits would mean that some legislated minimum standards would not be available to employees on the basis that the benefit package provided by their employer provides greater benefits than the ESA. Furthermore, opponents of this approach argue that measuring whether a package of rights and benefits provided to employees by an employer provides greater rights or benefits would be a difficult – perhaps impossible – task. Employees have different needs and circumstances. What is an essential entitlement for one employee may be of no moment to another.

Options:

  1. Maintain the status quo.
  2. Allow employers and employees to contract out of the ESA based on a comparison of all the minimum standards against the full terms and conditions of employment in order to determine whether the employer has met the overall objectives of the Act.

5.4.2 Written Agreements Between Employers and Employees to Have Alternate Standards Apply

Background

Some of the employment standards established by the ESA consist of one rule that applies automatically unless the employer and employee agree that another rule applies. The rule that applies automatically is often referred to as the “default standard”; the rule that applies if the employer and employee agree is referred to as the “alternate standard.”

Agreements to an alternate standard between employees and the employer can be made for a number of employment standards, including:

  • how and where wages can be paid;
  • limits to the hours of work limits;
  • minimum rest periods;
  • the formula for determining when overtime pay is earned;
  • taking overtime as paid time off instead of pay;
  • whether an employee works on a public holiday; and
  • when vacation pay and vacation time are provided.

The Act currently provides for agreements to be entered into in 20 different contexts. This section discusses the application and appropriateness of individual agreements to alternate standards generally, but not the specific advisability of the agreements in a particular context. For example, the advisability of employee agreement to variations in hours of work is discussed in section 5.3.1 – Hours of Work and Overtime Pay.

The Act requires that an agreement between an employee and employer to have an alternate standard apply must, with one exception, be set out in writing. Only agreements to split the mandatory 30-minute eating period into two shorter periods do not have to be in writing.

Additional requirements apply to some types of agreements (e.g., employers must provide employees with a Ministry-prepared information document before the employee agrees to work excess daily or weekly hours, and sometimes they must also obtain approval from the Director of Employment Standards [see section 5.3.1 for more on Director approvals and Hours of Work and Overtime Pay]).

The policy of the Employment Standards (ES) Program is that electronic agreements can constitute an agreement in writing.

The requirement to have agreements in writing aids the administration and application of the Act. Precisely written agreements help to avoid misunderstandings between the parties as to what they agreed to and provide evidence of the mutual intention of employers and employees. Such agreements help to ensure that the employer and employee are aware of the consequences of their agreement and further decrease the likelihood that the validity of an agreement will be challenged by an employee claiming lack of informed consent. Finally, such agreements provide a permanent record and allow an ESO to readily determine which standard is to be enforced, the default or the alternate.

Unless the Act provides otherwise, employees are entitled at any time to revoke their written agreement to the alternate standard and revert to the default standard. In some cases, the employer and employee must both agree in order to revoke the agreement (e.g., overtime averaging agreements) or the employee must provide the employer with advance written notice (e.g., agreements to work excess daily or weekly hours).

The ESA’s anti-reprisal provision prohibits employers from threatening or otherwise penalizing employees for refusing to enter into an agreement or for revoking an agreement.

Submissions

We heard from employee advocates that, because employees do not have equal bargaining power with their employers, employees’ agreements are not always voluntary – they enter into them because they are afraid that they will lose their jobs or otherwise be sanctioned if they refuse. They suggest that this is particularly problematic in the overtime averaging context and with respect to agreements entered into by assignment employees. A recommendation was made that the Act be amended to remove the ability to enter into agreements.

Employer groups generally recommended that the flexibility needs to be maintained and enhanced. Rules concerning hours of work and overtime were cited in particular as needing additional flexibility.

Several employer groups suggested that the ESA should be amended to permit employees and employers to enter into agreements in electronic form. It may be that the stakeholders who made this submission were unaware of the existing policy that permits this or would like to see it codified in the ESA.

Options:

  1. Maintain the status quo.
  2. Amend the ESA to reflect the Ministry of Labour ES Program policy that electronic agreements can constitute an agreement in writing.
  3. Amend the ESA to remove some or all of the ability to have written agreements.

5.4.3 Pay Periods

Background

The ESA requires employers to establish a recurring pay period and a recurring pay day, and to pay all of the wages that were earned during each pay period (other than accruing vacation pay) no later than the pay day for that pay period.[246]

With the one exception described below, the ESA does not prescribe any limits as to how long or short a pay period can be, or the days of the week that it can start and finish.

Common pay periods are weekly, bi-weekly, semi-monthly, and monthly.

Several employment standards refer to a “work week.” For example, the entitlement to overtime pay is triggered after working a certain number of hours in a work week, the amount of public holiday pay an employee is entitled to is determined on the basis of wages earned and vacation pay payable over a 4-work week period, and the weekly/biweekly rest rule and maximum number of weekly hours an employee is permitted to work are determined with reference to the work week.[247] “Work week” is defined as a recurring period of 7 consecutive days selected by the employer for the purpose of scheduling work; if the employer has not selected such a period, the work week will be a recurring period of seven consecutive days running from Sunday to Saturday.[248]

The employer’s work week may or may not correspond to the employer’s chosen pay period.

A special rule with respect to pay periods applies to the commission automobile sales sector.[249] This rule, which applies to employees who sell automobiles partially or exclusively on a commission basis:

  • provides that pay periods are not to exceed 1 month;
  • establishes reconciliation periods of 3 months’ duration;
  • where a commission automobile sales employee receives wages in the form of a “draw” or advance against commissions earned, the employer is required to reconcile at the end of each reconciliation period the amount advanced with the amount of commissions that the employee earned (the reconciliation cannot result in the employee being paid less than the minimum wage for each pay period, and the balance at the end of each reconciliation period cannot be carried forward into the next reconciliation period):
    • if the employee earns more in commissions than he or she received in draws during a particular reconciliation period, the surplus is to be paid to the employee – it cannot be carried forward past the end of the reconciliation period in order to offset any deficit that may accrue on the employee’s account during later reconciliation periods;
    • similarly, if the employee earns less in commission than he/she received in draws during a particular reconciliation period, the “deficit” may not be carried forward past the end of the reconciliation period in order to offset commissions earned in later reconciliation periods. (The employer may be able to recoup the amount of the deficit by making deductions from wages earned in the next reconciliation period if the employee provides written authorization to do so, if it does not result in the employee earning less than the minimum wage for each pay period).

Submissions

Pay period issues did not receive attention in stakeholder submissions.

We heard from Ministry staff that:

  • where an employer’s pay period does not correspond to the employer’s work week, it takes substantially more time for Employment Standards Officers to determine whether there has been compliance with standards that are based on the employer’s work week. This is more acute in the proactive inspection context because of the number of payroll records that officers review; and
  • determining whether there has been a contravention could be made simpler and more efficient if the ESA required pay periods and work weeks to be harmonized (e.g., by permitting only weekly or bi-weekly pay periods).

Options:

  1. Maintain the status quo.
  2. Amend the ESA to require employers to harmonize their pay periods with their work weeks by, for example, permitting only weekly or biweekly pay periods, and requiring the start and end days of the pay period to correspond to the employer’s work week.
  3. Extend, either as-is or with modifications, the application of the special rule that applies only to the commission automobile sales sector to other sectors in which wages are earned by commission (e.g., appliance, electronics, furniture sales).

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