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3. Federal Labour Standards Review Commission

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

I. Responding to the Evolving Workplace

I. Coverage under Part III

4. Temporary and Part-Time Workers

a) Temporary Workers - Consideration for Permanent Employment

Commission Recommendations:

• Employers should be required to provide temporary employees with a statement setting out the nature of the relationship, its anticipated duration, and the conditions—if any—under which the employee may be considered for permanent employment.
• Temporary employees who have worked for an employer for continuous or non-continuous periods that cumulatively total one year — or longer if that is the normal probation period fixed by the employer for permanent employment in similar work — should be deemed to have completed the probation period and should be entitled to be considered for permanent employment on the same basis as probationers. The burden of proof of compliance with these requirements should rest on the employer. (R. 10.3-10.4)

Temporary workers represent about 5% of the total workforce under federal jurisdiction. In the Commission’s view, the unregulated use of temporary workers can pose a serious threat to the maintenance of labour standards. Temporary workers hired directly by an employer have many of the same problems faced by those hired through a temporary employment agency, such as reduced access to statutory and contractual benefits based on length of service. Temporary workers may also receive less pay than long-term employees doing comparable work.

Many employers hire temporary workers for legitimate reasons, for instance to replace a permanent worker who is on leave or to meet peak demand. However, some employers use a series of temporary contracts as a means of reducing their wage costs, providing fewer benefits, and getting around other statutory obligations. Workers hired on a series of temporary contracts have little to no job security and often no chance of advancement.

The Commission recommended that if temporary workers have been employed for at least one year in total, they ought to be considered for permanent employment on the same basis as probationary employees who have completed the probationary period. In practice, this recommendation could result in the elimination of the distinction between a temporary employee and a probationary employee who has completed the probationary term. Some have argued that the Commission’s proposal, if adopted, would unduly interfere with private contractual arrangements. Another concern about this proposal is that some employers may attempt to terminate the employment relationship before the one-year mark is reached, thereby increasing the vulnerability of the temporary employees.

However, the Commission’s recommendation could help alleviate some of the problems faced by “permanent temps.” Other industrialized countries have taken measures to regulate the use of temporary work. In the European Union, Directive 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work requires Member States to implement certain measures to prevent abuse of temporary contracts, such as imposing limits on the maximum number of times that contracts can be renewed or requiring objective reasons to justify a renewal.

In Canada, one option might be to provide temporary employees with the right to request that they be considered for permanent status, but not necessarily on the same basis as probationary employees. The right could be procedural in nature. Employees who have completed one year of service in total could have the right to submit a request and attend an interview with the employer in order to discuss it. The employer could have broad discretion to reject the request, but would have a duty to consider it and would have to provide the employee with written reasons for its final decision. Employees could file a complaint if the procedure was not adhered to, but there would be no right of complaint as to the grounds for the decision.

The Commission also believed that clarifying the terms of the contractual relationship would help avoid abuse of temporary employment. It therefore recommended that employers be required to provide temporary employees with an informative statement about their terms and conditions of employment. Some would view this requirement as administratively burdensome and, in any case, unlikely to provide real protection for temporary workers. In addition, there are employers who may be reluctant to specifically set out in writing, at the inception of the employment relationship, the conditions under which the worker will be considered for permanent employment. On the other hand, it has been argued that providing workers with this information would be relatively simple to do and would help to prevent misunderstanding later on.

For discussion:

• Should temporary employees who are employed for a year (or for a longer probationary period) have to be considered for permanent employment on the same basis as probationary employees in the workplace who have completed the probationary period? If not, should any other measures be taken to help alleviate the problems faced by “permanent temps” (e.g., providing employees with the right to submit a request to be considered for permanency and requiring employers to consider and respond to the request)?
• Should employers be required to provide temporary workers with a statement on their terms and conditions of employment? If so, should the statement include the nature of the relationship, its anticipated duration, and the conditions under which the employee may be considered for permanent employment?

b) Temporary Workers – Coverage under Part III

Commission Recommendation:

Temporary employees who have worked for the same employer for periods that cumulatively total at least one year should be deemed to have completed the period of service required for statutory rights under Part III as if their service had been “consecutive,” provided that the interval between successive periods of service does not exceed sixty days. (R. 10.5)

Some of the rights under Part III are contingent upon having completed a minimum period of service with the employer. For instance, employees must have completed at least 12 consecutive months of continuous service in order to be eligible for annual vacations, severance pay or statutory protection against unjust dismissal. It may be difficult for temporary employees to meet the continuous service requirements if they are hired on a series of contracts with breaks in between. Some employers may even deliberately arrange contracts in this way so as to ensure that temporary employees are not covered by these provisions of Part III. To help remedy this problem, the Commission recommended that temporary employees with at least one year of service in total should be treated as if they had completed their service in consecutive months. This rule would not apply, however, if the employee had a break in service of more than 60 days.

On the one hand, this recommendation could help redress some of the problems faced by “permanent temps”. It would likely provide them with greater access to Part III entitlements that are based on length of service. It would also clarify how long a break in service can last before the employee’s service is deemed to be “discontinued”. Case law has established that breaks in service are allowed, but no clear cut-off has been developed.

On the other hand, this recommendation might not be effective in some cases. Some employers might simply make sure that there are at least 61 days between contracts in order to avoid having to provide these Part III entitlements. It has also been argued that the allowed interval between periods of service should be much longer than 60 days. For example, this allowed interval would likely not provide much protection for seasonal workers, even if they are hired year after year by the same employer.

For discussion:

Should temporary employees who have completed at least one year of continuous service be considered to have completed their service in a period of consecutive months, provided that there is no break in service greater than a specified period? If so, what should be the allowable break in service? Should there be exceptions or any additional conditions or restrictions?

c) Equal Pay for Temporary and Part-Time Workers

Commission Recommendations:

• Part-time workers should receive the same pay as full-time workers with equivalent jobs.
• Temporary employees who have worked for the same employer for periods that cumulatively total at least one year should have access to the same pay that the employer provides to other employees with equivalent jobs, length of service and abilities. (R.10.5-10.6)

Approximately 12% of the federal workforce is made up of part-time[15] workers. The Commission noted in its report that a significant number of workers with low pay, few benefits and little job security are also part-time workers. Women are also disproportionately represented in this group.

Employers often have legitimate reasons to hire part-time or temporary workers. The Commission was clear that nothing should be done that might impair the use of these workers for legitimate reasons. However, the Commission noted that part-time and temporary workers tend to receive lower levels of pay than full-time and permanent workers. In order to ensure that these workers are not being exploited, the Commission recommended that they have the right to the same pay rate as that provided to other workers with equivalent jobs.

The pay differential protection would create a new Part III protection. It is based on the concept that the rationale for differential market pay rates can be clearly isolated. One view is that this provision may be problematic to enforce as it is difficult to establish whether particular jobs are “equivalent” or two employees have “equivalent” abilities, as so many factors contribute to determining “equivalency.” However, this type of comparison is regularly carried out as part of pay equity exercises.

An alternative might be to require equal pay for those who are performing the same, rather than “equivalent”, jobs. Indeed, Quebec’s labour standards legislation has required this since 1992. Employers in Quebec are prohibited from paying an employee at a lower rate than that paid to other employees who are performing the same tasks in the same establishment, for the sole reason that he or she usually works fewer hours each week. This provision does not apply to anyone earning more than twice the minimum wage rate.

For discussion:

• Should part-time employees receive the same rate of pay as full-time employees performing equivalent jobs?
• Should temporary employees have the right to the same rate of pay as permanent employees performing equivalent jobs, with equivalent length of service and abilities? If so, should the right of temporary employees to equal pay be contingent upon a minimum period of service?
• What criteria should be used to determine “equivalency”, and what would be the administrative burden in doing so?
• Would it be more appropriate to require equal pay rates for those performing the same tasks, in the same location? If so, should any restrictions or conditions apply?

[15] This data was obtained from the Statistics Canada Federal Jurisdiction Workplace Survey 2004, which defined “part-time workers” as those who work less than 30 hours per week.

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Date Modified:

2012-02-15