Nelligan O’Brien Payne LLP attempts, through its Employment Law Newsletter, to keep readers updated on significant court or tribunal decisions that change the law and affect their workplaces.
A more prosaic but equally important source of employment law in Ontario is the Employment Standards Act, 2000 (ESA). This article offers some basic information about that Act.
The ESA sets out the statutory rights and responsibilities of employees and employers in most, but not all, Ontario workplaces. It does not apply to employees and employers in federally regulated activities and workplaces such as airlines, banks, shipping, radio and television stations and inter-provincial bus lines and railways, or to federal public servants or employees of diplomatic missions. Other individuals (listed in the Act or its Regulations) are excluded from some, but not all, of its provisions.
Subjects covered by the ESA include:
- Hours of Work
- Wages and Overtime
- Pregnancy and Parental Leave, Personal Emergency Leave, Family Medical Leave, Organ Donor Leave, Reservist Leave and Emergency Leave for Declared Emergencies
- Public Holidays
- Temporary Lay-offs
- Termination and Severance of Employment
- "Assignment Employees" of Temporary Help Agencies
The Act also sets out procedures for enforcement and compliance. An employee who believes an employment standard has been violated, and is unable to resolve the matter with his or her employer, can submit a Claim Form to the Ministry of Labour. The Ontario Labour Relations Board will become involved only at the review (appeal) stage, if an employee or an employer is not satisfied with the decision rendered by an Employment Standards Officer assigned to investigate the initial claim.
Employees and employers are prohibited from contracting out of the minimum standards set out in the Act. That means that an employee cannot, for example, agree to waive his or her right to receive overtime or public holiday pay. Similarly, a standard American contract clause that provides for “at will” employment (meaning that the employer can terminate at any time without notice), will be seen as an attempt to contract out of the termination provisions of the Act and will not be enforceable in Ontario.
Here are some other highlights.
The Act requires employers to let employees take unpaid leave in a variety of circumstances. In all cases, the leave is "protected", which means that employees who have requested or taken such leave have several rights, including, in most cases, the right to reinstatement to their same job or a comparable job if the same job no longer exists.
The Act provides for the payment of overtime for hours worked in excess of 44 in a work week, with averaging permitted in certain circumstances. The Act makes no distinction between "salaried" and "hourly" employees when it comes to determining eligibility for overtime pay and a supervisor or manager will be exempt from the overtime provisions of the Act only if he or she performs non-supervisory or non-managerial tasks only on an irregular or exceptional basis.
"IT professionals" and certain other employees identified in the Regulations are not entitled to overtime pay.
As well as establishing minimum standards for day-to-day employment matters, the Act covers situations where the employment relationship ends, temporarily or permanently.
An employer is permitted under the ESA (but not at common law) to temporarily lay off an employee for up to 13 weeks (or for up to 35 weeks if the employer maintains a monetary connection with the employee, such as keeping group benefits coverage or pension plan contributions in place). Employers who attempt to use this statutory lay-off mechanism as a response to temporary cash flow problems or as a disguised termination (to postpone having to provide pay in lieu of notice of termination) may find themselves liable for damages for wrongful dismissal.
An employer who terminates an employee’s employment is required to provide notice of the termination or pay in lieu of notice. Unlike "reasonable notice" at common law, which is determined with reference to individual factors such as the employee’s age, service, position, and compensation, notice under the ESA is based only on length of service, in accordance with the following formula:
- Less than 3 months – 0 weeks
- At least 3 months but less than 1 year – 1 week
- At least 1 year but fewer than 3 years – 2 weeks
- At least 3 years but fewer than 4 years – 3 weeks
(etc., to a maximum of 8 weeks)
The minimum notice period may be higher if certain conditions are satisfied in a mass termination situation.
An employee is deemed to be actively employed during the statutory notice period. All of the employee’s group benefits coverage, including short-term and long-term disability, must be maintained and the employee continues to accrue vacation during this period.
Employees who have worked five years or more for an employer with a payroll of at least $2.5 million in Ontario are also entitled to statutory severance pay, which can range from 5 weeks to a maximum of 26 weeks.
On its face, the ESA looks relatively straightforward. Applying it properly can be challenging, however, and even the most well-meaning employer can inadvertently run afoul of its requirements. Administration of the Act is further complicated by the various exceptions and special provisions for particular types of employees set out in both the body of the Act and its Regulations. Employers and employees can obtain further information about their respective rights and obligations under the Act by visiting the Ministry of Labour website or by consulting a lawyer in the Employment Law Group at Nelligan O’Brien Payne LLP.