Appendix 9 - Technical Recommendations

These recommendations respond to issues raised in discussions with labour and management representatives, and Labour Program staff. In some cases, they are the result of analysis which was undertaken in connection with the development of major recommendations which appear in the body of the Report. They are “technical” in the sense that they are deemed not to involve major issues of principle or policy, but rather to clarify the intention of the statute or facilitate its administration.

Chapter Five: The Employment Contract

Electronic Pay Statements

Under section 254, an employer shall, at the time of making any payment of wages to an employee, furnish the employee with “a statement in writing” setting out the period and number of hours for which the payment is made, the wage rate, details of wage deductions, and the actual sum being received by the employee. The part of this provision which stipulates that employers must provide such a statement “in writing” has been interpreted to mean that employers must provide pay statements in hard copy and not only in electronic format. Many employers have requested that they be allowed to provide employees a pay statement in electronic format, in part to save money and in part to conform to modern human resource practices. These employers have also indicated that their employees have the ability to download the pay statements should they wish to retain a hard copy. The federal government already provides its employees with downloadable electronic vacation and other leave statements and may similarly issue only electronic pay statements in the future. Some unions have expressed a general preference for paper records citing a concern for potential fraud and the inability of some employees to download hard copy.

Recommendation T5.1 Part III should be amended to permit employers to issue pay statements by electronic means subject to defined conditions, and to provide the Minister with the authority to make regulations related to the accessibility, privacy, retention and content of pay statements.

Liability of directors in cases of bankruptcy

The current Part III makes corporate directors liable for outstanding severance pay to which employees are entitled where the entitlement arose during the director's incumbency and where recovery of the amount from the corporation is impossible or unlikely. Entitlement to severance pay under the present Code arises only upon the termination of the employee by the employer. From time to time directors, knowing the corporation is falling into bankruptcy, will resign ahead of the bankruptcy and the resulting employment terminations, in part, to avoid severance pay obligations under Part III. Directors, with their insider knowledge, who undertake this maneuver, defeat the objectives of the director liability provisions (section 251.18).

Recommendation T5.2 Part III should be amended so as to prevent a corporate director from avoiding liability for unpaid wages, benefits or severance pay by resigning at a time when she or he knows or ought reasonably to know that the employer is likely to become insolvent.

Limitation period on complaints

Unlike many provincial labour standards laws, the Code establishes no time limits after which employees will be precluded from claiming unpaid wages or benefits. Delays in making complaints complicate the task of investigation and recovery, and in some cases, may be prejudicial to the employer.

Recommendation T5.3 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.

Retroactivity period for unpaid wage complaints

Part III establishes no limit on the number of weeks or months for which wages and benefits may be recovered. Because delay complicates investigation and recovery, and is potentially prejudicial to the employer, some limit should be established. As a matter of administrative practice, the Labour Program presently pursues complaints involving up to one year's unpaid wages. However, because the Code requires employers to maintain pay records for up to three years, this same period should be established as the period for which retroactive payment can be sought.

Recommendation T5.4 Part III should be amended so as to set a thirty-six month limit on the period in respect of which the Labour Program collects unpaid wages.

Production of agreement of purchase or transfer

Part III stipulates that continuity of employment is preserved for a variety of statutory purposes when a sale, lease, merger or other transfer of a business occurs. Consequently, employees who remain employed by the new business are not entitled to severance pay. However, some employees may actually stop working on the date of the transfer, and others shortly thereafter. It therefore becomes important to understand whether employment is terminated as a result of the change in ownership, or for other reasons. In order to clarify the situation, and determine the employee's eligibility for severance pay, an inspector may need to examine various documents. Currently, inspectors have no power to require the agreement of purchase, transfer or merger.

Recommendation T5.5 Part III should be amended to give inspectors power to order production of an agreement of sale or transfer so as to determine which party to the agreement is liable to employees for wages or other entitlements under Part III.

Chapter Six: Rights and Respect

Wage replacement for injured workers

Section 239.1 requires employers to subscribe to a plan that provides employees absent from work due to work-related illness or injury with wage replacement, equivalent to that provided under the workers' compensation legislation in the employee's province of permanent residence. In some cases, they are able to satisfy this obligation by securing voluntary coverage under a provincial workers' compensation scheme. However, some provincial schemes apply to employees working in that province, not those residing there. Consequently, employers may find themselves in violation of Part III because they are complying with the applicable workers' compensation schemes to which they subscribe.

Recommendation T6.1 Part III should be amended so that the minimum level of wages provided to injured workers under a wage-replacement plan is that of the province or territory where the work is performed, rather than that of the workers' place of residence.

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Date Modified:
2012-04-04