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Amendments to Part III of Canada Labour Code came into effect on April 1, 2014.

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Part III of the Canada Labour Code (the Code) was first enacted in 1965. It establishes minimum working conditions for employees and employers under federal jurisdiction (e.g. banking, telecommunications, and transportation across borders). These standards of employment include provisions on hours of work, minimum wages, general holidays, annual vacations, notice of termination, severance pay, and statutory leave (maternity, parental, compassionate care, bereavement and sick leave). It also includes provisions designated to assist employees in recovering unpaid wages and seeking recourse in case of unjust dismissal (e.g. investigation, inspection, adjudication, and prosecution).

Part III of the Code has been amended to include a number of significant changes. The following is the Federal Government’s
summary of same.

Establishment of a time limit to pay vacation pay on termination of employment

The Code requires employers to pay outstanding vacation pay “forthwith” to employees when they cease to be employed, whereas employers are also required to pay employees any wages or other amounts owing under Part III within 30 days from the time when the entitlement to the wages or other amounts arose. As vacation pay is considered wages under the Code, these amendments will ensure that employers pay employees any vacation pay owed within 30 days (rather than “forthwith”) after the day on which the employment ends. The amendments align sections of the Code.

Establishment of statutory complaint mechanism

Aside from Division XIV (Unjust Dismissal), Part III does not provide a procedure for making complaints regarding unpaid wages and other labour standards violations. The amendments will allow employees to file complaints in writing to Employment and Social Development Canada — Labour Program (Labour Program) inspector if they believe their employer has contravened any provision of Part III of the Code. Employees will have to file a complaint within six months from the last date on which an employer was required to pay wages or, for non-wage complaints, from the day on which the subject of the complaint arose. Inspectors will now have the power to temporarily suspend a complaint if they believe that an employee must take certain measures before the complaint is considered. Inspectors will also have the power to reject a complaint under certain circumstances (e.g. if it is frivolous, has been settled, or should be dealt with under a collective agreement’s grievance procedure). Employees will be able to request a review within 15 days of being notified of a decision to reject a complaint. These additional provisions will also authorize inspectors to assist parties in settling complaints, where possible.

Limits on the period that may be covered by a payment order

The current wage recovery system is an administrative tool for the collection of an employee’s unpaid wages or other amounts owing, and provides a route of appeal to parties who disagree with an inspector’s determination. This system gives inspectors the power to issue written payment orders to employers or directors, ordering them to pay to the employee any wages or other amounts owing to which an employee is entitled under Part III. The amendments will set limits on the period that may be covered by a payment order, as currently there is no such established time limit. A payment order will cover wages and other amounts owing for a period starting 12 months (or 24 months for vacation pay) before the date on which the complaint is made, the date on which employment was terminated, or the date on which inspection started (if a payment order results from proactive inspection). A notice of unfounded complaint would be issued if an inspector concludes that an employer has paid to an employee all wages and other amounts under Part III for the six-month period preceding the complaint (or if applicable, any extended period for filing a complaint).

Administrative review mechanism for payment orders and notices of unfounded complaint

With the current wage recovery system, when a payment order or a notice of unfounded complaint is issued, any affected party may appeal an inspector’s decision to the Minister within 15 days after service of the notice. New provisions will now provide for an administrative review mechanism aimed at allowing the Minister to internally review the inspector decision. A person affected by an inspector’s payment order or notice of unfounded complaint could request a review of the decision, with written reasons and within 15 days of service of the payment order or notice of unfounded complaint. An employer or corporate director requesting a review would have to pay the Minister the amount indicated in the payment order. A payment order or a notice of unfounded complaint could be confirmed, amended or rescinded on review. The decision on review could be further appealed to a referee, but only on a question of law or jurisdiction. The Minister could also refer a complex case directly to a referee, rather than through the new review mechanism.

Implications

In practice, these amendments will not have a significant impact on most employees and employers. They are primarily administrative in nature and will to a large extent align the Code with existing policies and procedures as well as with the legislation in other jurisdictions, giving them more legal weight. The changes to Part III aim to improve compliance, expedite processes, reduce costs and facilitate resolution of complaints by Labour Program inspectors. The amendments will clarify the rights and obligations of employees and employers but do not alter the existing balance of their rights and obligations under the Code.

Vacation Pay

The amendments have no impact, as they only align sections of the Code.

New complaint mechanism

The amendments are expected to result in a more efficient and effective approach to dealing with complaints by setting reasonable time limits for filing complaints, and encouraging parties to work together to resolve differences. In fact, timely complaints under Part III may enable inspectors to conduct investigations more efficiently, since they are more likely to find evidence while it is still easily retrievable.

The amendments should also result in a clarification of the rights and obligations of employees, by explicitly authorizing the inspectors to assist employees and employers in settling complaints. In addition, grounds under which complaints may be rejected will be set out explicitly (e.g. a complaint is beyond their jurisdiction, frivolous, vexatious), as will the procedure for advising employees of any such rejection. Finally, employees will have the right to request a review of an inspector’s decision to reject the complaint. In general, employees with valid complaints, particularly those who are non-unionized, should experience a more streamlined recourse process with potentially quicker access to resolution.

Limits on payment order

As there was no time limit on the recovery of unpaid wages through payment orders specified in the legislation, the determination of the amounts owing to employees is subject to ambiguity which creates an incentive for parties to appeal in order to increase or shorten the period covered by a payment order. The amendments will set a precise time limit, in order to provide clarity to employers, employees and inspectors. Setting time limits will also result in cost-savings for the Labour Program by reducing the amount of resources that must be spent on certain investigations.

Administrative review mechanism for payment orders and notice of unfounded complaint

New sections will be added to Part III to provide for an administrative review mechanism, which will allow a person affected by an inspector’s payment order or notice of unfounded complaint to request, with written reasons, a review of the inspector’s decision. This new internal review process will reduce the cost associated with appointment of referees for the Labour Program. It will also improve efficiency and flexibility by leading to a quicker resolution of complaint and reducing the reliance on external referees to adjudicate appeals of inspectors’ payment orders and notices of unfounded complaint. Appeals mechanism will remain available on the grounds of law or jurisdiction.


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