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Archived - Discussion Paper on the Review of Labour Standards in the Canada Labour Code

Issues for Consideration

I. Responding to the Evolving Workplace

In setting minimum labour standards, the key challenge has always been to ensure that employees are provided with decent and fair working conditions, while preserving some measure of flexibility that allows businesses to operate competitively. This is a greater challenge today than it has ever been in the past. Due to factors such as the globalization of trade, the introduction of new technologies and the volatility of international and domestic markets, many Canadian employers have had to change the ways that they do business in order to remain competitive. New forms of employment relationships have also proliferated since 1965, when Part III of the Canada Labour Code was first enacted. This presents a different, but related, problem of how to set labour standards that are suitable for a wide range of workplace contexts.

Despite all these changes, however, the principle of “decency” remains. It is widely accepted that Canadian workers should not be subjected to conditions that are dangerous or exploitative. In addition, there are many who believe that decency and economic competitiveness are not at odds with each other— that it does not have to be an “either/or” proposition. Many would say that good working conditions can have a positive effect, resulting in productive, dedicated employees who make businesses more competitive and dynamic.

Part III sets out minimum standards on a number of complex matters, including hours of work, rest periods, vacations, statutory holidays, the termination of employment, unjust dismissal and sexual harassment. In reviewing these standards, the Federal Labour Standards Review Commission determined that many basic principles in Part III remain relevant today. For instance, it recommended that the maximum workweek of 48 hours be retained, that the overtime rate continue to be obligatory for work outside of standard hours (eight hours per day, 40 hours per week), and that employees continue to have a right of recourse against unjust dismissal.

Nonetheless, the Commission did identify many areas in which it believed that Part III was in need of reform. In many respects, the Commission’s recommendations are designed to provide more “regulated flexibility” for employers and employees. Indeed, “regulated flexibility”—the possibility of adjusting labour standards for each workplace, within basic parameters to ensure fairness and decency—was one of the key principles underlying the Commission’s report. Therefore, in proposing changes to labour standards—such as increasing the weekly rest period—the Commission also proposed ways to adjust the standard so as to meet the specific requirements of different sectors, workplaces, or occupations. The Commission also proposed changes in an attempt to class federal standards with the standards of the provinces and territories; codify existing practices or policies; and ensure that Part III adequately responds to the diverse array of employment relationships that now exist in the federal jurisdiction.

In summary, the Commission attempted to make recommendations that would modernize Part III, in order to respond to today’s evolving workplace. These recommendations can be grouped into the following themes, and are discussed in more detail below:

• Hours of work
• Annual vacations
• General holidays
• Communicating with employees
• Minimum wages
• Termination of employment
• Human rights in the workplace
• Training and education
• Coverage under Part III.

A. Hours of Work

Under Part III, standard hours of work are set at 40 hours a week, 8 hours a day, after which the overtime rate is generally payable. Maximum working hours are 48 hours per week, but can be exceeded when authorized by a permit from the Minister of Labour or in an emergency. Part III also provides for two distinct mechanisms—averaging arrangements and modified work schedules—through which hours of work may be averaged over a period of two or more weeks for the purposes of calculating maximum hours of work and overtime pay entitlements. Finally, Part III and the regulations contain exemptions or special rules for a number of occupations, including managers, designated professionals and certain commissioned salespeople.

The hours of work provisions of Part III and the regulations have been widely criticized as being too complicated and poorly worded. One of the Commission’s recommendations was that these provisions should be simplified and consolidated. Many would say that this recommendation is well-founded, given the submissions made to the Commission on this point. The Commission also proposed a number of substantive changes to provisions on the following issues: overtime; rest periods (meal breaks and daily and weekly rest); shift work; and mechanisms to adjust working hours (i.e., ministerial permits, emergency work, averaging arrangements, modified work schedules, sectoral conferences and workplace-level consultations).

1. Overtime

a) Time Swaps

Commission Recommendations:

An employer should be allowed to permit an employee, upon his or her written request, to work in excess of daily or weekly standard hours of work at straight time rates, in order to make up for time off taken, or to be taken, at a time specified in the request. However, the employee should not work more than 48 hours per week (R. 7.43)

According to employer briefs filed with the Commission, individual employees often request a “time swap”—that is, to take time off and make it up by working extra hours at another date. However, an employer may be concerned that this will trigger overtime pay rules where employees work more than 8 hours per day or 40 hours per week. Under the Canada Labour Standards Regulations, the overtime rate is not required if the employee, under an established work practice, exceeds standard hours because he or she has swapped shifts with another employee. However, there is no provision in Part III or the regulations that would allow employers and employees to agree to “time swaps”.

Providing employers and employees with this option would give an additional measure of flexibility around the scheduling of working hours. It would also allow for adjustments to working hours on an individual, rather than workplace, basis. On the other hand, there is the risk that it could be abused by a minority of employers who want to evade overtime pay requirements. To prevent this, the Commission recommended that “time swaps” at the straight-time rate should only be permitted where the employee so requests in writing, the number of hours to be swapped is clearly stated in the request, and the request can subsequently be withdrawn at the employee’s sole discretion. As well, time swaps could not be used to exceed maximum working hours.

For discussion:

Should an employer be allowed to permit an employee, upon his or her request, to work in excess of daily or weekly standard working hours at straight time rates in order to make up time that is taken off? If so, what conditions should apply, if any?

b) Method of Compensating Overtime

Commission Recommendations:

• Part III should permit an employee and his or her employer to agree that overtime hours will be compensated by time off with pay, at the rate of one and one half hours for every hour worked as overtime, to be taken at a time mutually agreeable to the employer and employee.
• Banked overtime should be used or paid out within three months of being earned, (unless otherwise provided by collective agreement or in a proposal approved through the workplace-level consultations). However, an employee should have the right to request an extension in writing. The employee should also have the right to immediate payment upon request, in which case the employer should pay out the banked overtime at the end of the pay period next following the request (R. 7.40-7.41)

Part III does not allow employers and employees to agree to time off in lieu of overtime pay. However, these arrangements are not uncommon in workplaces under federal jurisdiction. Many briefs submitted to the Commission from various groups and individuals with differing interests requested that Part III be amended to permit the substitution of paid time off in lieu of overtime pay. These arrangements are also specifically permitted in eight Canadian jurisdictions (Alberta, British Columbia, Manitoba, Newfoundland and Labrador, the Northwest Territories, Ontario, Quebec and Yukon). Many would say that it is reasonable to amend Part III to allow the parties to agree to paid time off in lieu of overtime pay.

In order to ensure that employees are compensated for their overtime work, legislation typically requires that banked overtime be paid out if it is not taken as paid time off within a certain period of time, usually three to 12 months from the date that overtime is worked.

For discussion:

Should Part III be amended to allow an employer and employee to agree to substitute paid time off in lieu of overtime pay? If so, when should the paid time off be taken? Should there be any time limit after which banked overtime must be paid out?

c) Right to Refuse Overtime

Commission Recommendations:

• An employee should have the right to refuse overtime if this would require him or her to work more than 48 hours per week or more than 12 hours per day, except in the event of an emergency. Other thresholds for refusing overtime could be provided by regulation, ministerial permit, collective agreement, or a proposal approved through the workplace-level consultations. In order to facilitate transition to this new arrangement, employers that presently require employees to work overtime above these limits should be allowed to continue doing so for a period of one year following the coming into force of the new provisions.
• An employee should have the right to refuse work beyond his or her regularly scheduled work: if this would conflict with significant family-related commitments that the employee cannot reasonably be expected to alter or avoid; if this would interfere with scheduled educational commitments; and, in the case of part-time employees, if this would create a scheduling conflict with other employment. (R. 7.37-7.38)

The Commission made two distinct recommendations on the right to refuse overtime. First, it recommended that the maximum work week of 48 hours be retained, but that employees have the right to refuse work above this threshold. Employees would also be allowed to refuse work above 12 hours per day, except in an emergency. Different thresholds for refusing overtime could be set in a Ministerial permit, regulation, collective agreement or approved workplace proposal. The second recommendation is to allow employees to refuse work above their regularly scheduled hours (which could, for instance, be seven and a half hours per day), if this would create significant scheduling conflicts with family, educational or part-time work commitments. In either case, employees would have to give as much notice of their refusal as is reasonable in the circumstances.

The first recommendation is directed primarily at protecting employees from being forced to work excessive hours. The second recommendation is largely intended to ensure that employees can maintain a work schedule that allows them to meet other commitments.

First recommendation

Part III provides only for weekly maximum hours, not daily maximum hours. A right to refuse work above 12 consecutive hours per day could be seen as a compromise between giving employers flexibility in scheduling and giving employees some measure of protection against long daily hours that may adversely affect their well-being. Some might say that this recommendation does not go far enough: in many jurisdictions, employees cannot work more than 12 or 14 hours per day, subject only to exceptions such as an emergency or Ministerial waiver. Others would say that the recommendation, particularly when combined with a proposed minimum daily rest period of eight hours per day,[1] would unduly constrain employers in scheduling working hours. In some occupations, establishments or sectors, it is possible that a right to refuse work after 12 consecutive hours would not be reasonable; exceptions could be prescribed for these cases.

Part III allows the maximum work week of 48 hours to be exceeded by Ministerial permit, in cases of emergency, under a regulatory exception or by an averaging arrangement or modified work schedule. Of course, if none of these exceptions are applicable, employees cannot work more than the 48 hour maximum.

In practice, the Commission’s proposed right to refuse work in excess of the weekly maximum would apply mostly to averaging arrangements and modified work schedules.[2] This is because the right to refuse would not apply in an emergency and a different threshold could be set in a Ministerial permit or regulation.

It has been argued that providing employees with the right to refuse work above maximum hours is particularly justified in the case of averaging arrangements, which can be instituted by the employer without the employees’ consent. On the other hand, some would say that giving employees this right is not realistic in an establishment where working hours are irregular. In addition, providing employees with a right to refuse maximum weekly hours may undercut the flexibility measures that are granted to employers in Part III.

That being said, a different threshold could be set for occupations or sectors where a right to refuse work after 48 hours is not reasonable, or the provision could be excluded altogether by regulation. In the case of a Ministerial permit, which allows employers to exceed maximum working hours, a different threshold could be set for allowing employees to refuse work as part of the terms and conditions of the permit (e.g., a right to refuse could apply after 60 hours per week).

Second recommendation

The second recommendation by the Commission would provide employees with the right to refuse work above their regularly scheduled hours, whatever they may be, for family, educational or part-time work responsibilities. Some might say that this recommendation would be unfair to workers who do not have family responsibilities, or educational or part-time job commitments. In effect, these workers—for instance, single people without children who work full-time—could be expected to “pick up the slack” when their coworkers refuse to work above scheduled hours. Furthermore, it may unduly constrain an employer who needs to rearrange scheduled hours from time to time, or require some overtime work, in order to meet deadlines or provide service to clients. On the other hand, providing employees with the right to refuse overtime work would certainly help those who have important personal commitments that cannot be abandoned at the last minute, such as picking up a child from daycare or writing a final exam. Helping employees manage work and personal commitments may improve levels of job satisfaction and reduce the risk of burnout.

One possible option might be to limit the right to refuse overtime to cases where the employer has not provided some advance notice of the change in regularly-scheduled hours. This advance notice could provide some time to workers to rearrange personal commitments (although it may be difficult to change some of these types of commitments). An issue for consideration is whether a right to refuse overtime should apply in other circumstances besides those mentioned by the Commission, or whether any of the circumstances it proposed (i.e., family, educational and part-time work commitments) should be dropped or amended.

Provincial and territorial legislation on point

There is some precedent for these recommendations.

In Quebec, both types of “right to refuse” provisions exist. Employees are provided with the right to refuse excess daily and weekly working hours. They are also protected against reprisal by the employer if they cannot work more than their regularly scheduled working hours due to family responsibilities. However, there are some exceptions to these provisions.[3] In Saskatchewan, employees have the right to refuse to work above 44 hours per week. This provision does not apply in an emergency, defined as any sudden or unusual occurrence or condition that could not, by the exercise of reasonable judgment, have been foreseen by the employer. In the Yukon, employees may refuse to work overtime for “just cause”.

For discussion:

• Would it be appropriate to provide employees with the right to refuse work after 12 consecutive hours per day or 48 hours per week, except in an emergency? If so, how should an “emergency” be defined? What other exceptions, if any, should apply to the right to refuse? How much notice should employees have to provide of their refusal to work overtime?
• Would it be appropriate to provide employees with the right to refuse work above their regularly scheduled hours due to family, educational or part-time work commitments? If so, how should “family, educational or part-time work commitments” be defined? Are there any other grounds that might justify a refusal of work, or should any of the proposed grounds be dropped or amended? Should the right to refuse only apply where the employee has not been given advance notice of the change in working hours? If so, how much notice should the employer have to provide? Should there be other limitations (e.g., the employee must have taken all steps within his or her power to otherwise deal with the personal responsibilities)?

[1]Daily rest periods.

[2]Averaging arrangements and modified work schedules.

[3] The right to refuse excess weekly hours is subject to provisions that allow the staggering of work hours on a basis other than a weekly basis. As well, the right to refuse does not apply where there is a danger to the life, health or safety of employees or the population; where there is a risk of destruction or serious deterioration of property, or in any other case of superior force; or if the refusal is inconsistent with the employee’s professional code of ethics.

Employees may only exercise the right to refuse work beyond regularly scheduled hours due to family responsibilities if they have taken reasonable steps within their power to otherwise meet those responsibilities.

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Date Modified:

2012-02-15