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

III. Smart Compliance

5. Dealing with Other Part III Infractions

a) Limitation Periods

Commission recommendations:

• Part III should be amended to establish a six-month limitation period within which complaints concerning unpaid wages or benefits must be initiated. The limitation period should run from the date on which the complainant discovers non-payment. The amendment should allow for the possible extension of the limitation period on defined grounds, including fraud or coercion.
• Part III should be amended so as to set a 36-month limit on the period in respect of which the Labour Program collects unpaid wages. (R. T.5.3, T. 5.4)

At the moment, the Code does not specify when a complaint regarding unpaid wages must be filed. In practice, Part III complaints are generally filed within one year of the alleged infraction, although the complaint may involve incidents that go back for three years (time for which records must be kept) or even further, if records are available. In other Canadian jurisdictions, the time limit for filing a complaint ranges from six months to two years. In some cases, no time limit is specified.

One possibility would be to codify a requirement that complaints be filed within six months. There could be a power to extend the time limit for matters which could not have reasonably been discovered earlier. On the other hand, given the Commission’s recommendation to allow the recovery of unpaid wages dating back 36 months, perhaps it would be more consistent to impose a 36-month time limit to file any complaint—be it with respect to unpaid wages or another labour standard.

An issue that arises with any discussion of time limits to file complaints is whether or not inspectors would have the discretion to extend the time limit in certain cases (e.g., where they consider it appropriate in the circumstances or where the subject-matter of the complaint could not reasonably have been discovered earlier.)

For discussion:

• What should the time period be for filing labour standards complaints regarding pay and leave provisions in Part III? Is six months too short a time? Is three years too long?
• Should inspectors (or a more senior official) have the ability to extend time limits in certain cases? If so, when would it be appropriate to do so?

b) Administrative Penalties and Surcharges

Commission Recommendations:

• Inspectors and Hearing Officers should have the power to levy penalties of fixed but significant amounts for first offences, escalating for second or subsequent offences.
• Before bringing an appeal from any order of an inspector, an employer must deposit an administrative surcharge equal to 10% of the amount owing, or $100, whichever is the greater. If the appeal is successful, both amounts should be returned to the employer. (R. 9.21, 9.28)

Almost all provinces have some form of administrative monetary consequences—whether called payment order surcharges, administrative monetary penalties or an additional deposit on appeal. The introduction of a similar system federally would likely address the widely recognized problem that the current system lacks any disincentive for non-compliance when the end result is that the employer is ordered to do what it should have done in the first place. For this reason, the Commission recommended that Part III be amended to allow inspectors and Hearing Officers to impose a graduated range of remedies, and that similar powers be conferred on the Canada Industrial Relations Board.

The Commission also recommended the use of an administrative monetary penalty scheme, which exists in several provincial jurisdictions, as well as under the Employment Equity Act (EEA) and other federal statutes. The systems vary widely, as do the maximum penalties. For example, under the EEA, the penalty is $10,000 for a first infraction and $50,000 for subsequent ones. The administrative penalty schemes in Ontario and British Columbia involve tariffs, setting out much lower initial penalties for various types of infractions, but increasing with repeated violations.

A possible model for a federal administrative penalty scheme could include a schedule that sets penalties for infractions as follows:

• unjust dismissal: no additional financial penalty
• wage and leave infractions: the greater of $100 per complainant or 10% of the award (with the average being approximately $2,000), to increase by an amount to be set by regulation where:
  
  • the penalty is not paid within a certain time period;
  • a second infraction occurs at the same time or within a set period (e.g., six months). Where there are more infractions, the case should be remitted to the Director who would have greater discretion to increase the penalty; or
  • an appeal is filed (although the amount would be reimbursed if the employer wins the appeal);
• unfair employment practices: the Director would have discretion to set penalties based on each violation, within a certain range (e.g., $10,000 for a serious violation and $50,000 for a very serious violation.) Part III could designate the regulatory power to specify the category into which each contravention falls. Within each category, the penalty would be set based on criteria such as degree of negligence, harm occasioned and the employer’s history.

As for who would have the power to award each penalty, inspectors could have the ability to impose a penalty for wage and leave infractions up to and including the third infraction in the past 36 months. After the third infraction, the Director would have the ability to impose an escalating amount of monetary penalties. Decisions of the inspectors would be appealed to the Director; decisions of the Director would be appealed to the CIRB. Another possibility would be to have any penalty imposed by the Director upon the recommendation of an inspector.

For unfair employment practice penalties, the Director could impose the financial penalty if the matter did not require a hearing. The appeal would likely lie with the CIRB. If the matter required a hearing, either the Hearing Officer or the CIRB, whichever had jurisdiction over unfair employment practice hearings, would retain the right to impose a penalty.

Another of the Commission’s recommendations was that an employer be required to deposit an administrative surcharge with the Labour Program when appealing any decision of an inspector. The Commission made this recommendation to discourage employers from using appeals as a means to exhaust an employee’s resources or patience, or to delay payment of money that is owing. Some provinces have adopted this type of provision. Part III already provides that employers may not appeal a wage order of an inspector unless they deposit the amount ordered with the Minister of Labour (s. 251.11(2)).

For discussion:

• Would the introduction of an administrative monetary penalty scheme with specified financial penalties for different types of infractions be an appropriate disincentive for non-compliance with Part III?
• Is it reasonable to require employers who repeatedly contravene Part III to pay financial penalties on an escalating scale? If so, what time period should be considered when considering whether or not the employer has “repeatedly” contravened Part III? Is 36 months appropriate?
• Who should have the power to impose a penalty under an administrative monetary penalty scheme? Where should the right to appeal lie?
• Should employers have to deposit an administrative surcharge in order to appeal any decision of an inspector?

c) “Cease and Desist” Orders

Commission Recommendation:

Inspectors and Hearing Officers should have the power to order offending employers to cease and desist from future violations. (R. 9.26)

Giving inspectors and Hearing Officers greater powers to order proactive remedies, including the ability to issue cease and desist orders, would be in keeping with other Commission recommendations giving those working in the front lines the appropriate powers to ensure compliance. A number of provinces have already given such powers to redress bad practices to either the Director or to inspectors.

One possibility would be to give such powers to the Director who would issue such orders upon a recommendation of an inspector. There would be a right to appeal to the CIRB. The Director’s decision could be binding unless the CIRB grants a stay. On the other hand, it may be appropriate to reserve such powers to the CIRB.

For discussion:

Should the Director have the power to issue cease and desist orders upon the recommendation of an inspector? Or should such powers be reserved to the CIRB?

d) Orders for Costs

Commission Recommendations:

• Inspectors and Hearing Officers should have the right to order full compensation for employees whose Part III rights have been violated, including some compensation for advocacy and other costs incurred in seeking redress.
• Inspectors and Hearing Officers should have the power to order the employer to pay the Labour Program’s cost of investigations and hearings, according to a fixed tariff. (R. 9.25, 9.27)

Unjust dismissal Adjudicators and Wage Referees already have the ability to order payment of complainants’ costs. Inspectors could be given the power to include in any payment order the complainants’ out-of-pocket expenses.

Some would argue that it is a good idea to recognize the out-of-pocket expenses that are incurred by complainants in pursuing their complaint. Because the amounts that can be awarded to employees under Part III are relatively small, a complainant may net no financial compensation at all when his or her out-of-pocket expenses are taken into consideration. For instance, employees might incur such expenses by taking time off work to attend a hearing, travelling to a hearing, or hiring a lawyer or other advocate to represent them. The prospect of such expenses could deter employees with legitimate complaints from seeking recourse under Part III. On the other hand, the Commission’s proposal may have minimal impact as the Labour Program carries the case during wage recovery inspections.

Another issue is whether inspectors and Hearing Officers should have the power to order an employer to pay the Labour Program’s costs of investigations and hearings, where the employer is found to have violated Part III. This could be a useful deterrence measure. However, implementing this recommendation might potentially add significant administrative burdens, while generating only a small amount of revenue.

For discussion:

• Should inspectors, or any other Labour Program official, be given the same authority as unjust dismissal Adjudicators and Wage Referees to order the payment of a complainant’s costs?
• Would granting the ability to inspectors or Hearing Officers to order the payment of the costs of a complainant generate sufficient revenue to make the order worthwhile?
• Are out-of-pocket expenses often a deterrent that prevent employees from pursuing their rights under Part III?
• Should an inspector or Hearing Officer have the authority to order the payment of the Labour Program’s costs?

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Date Modified:

2012-02-15