Canadian Employment Law Today

Back to compliance basics 5 Employment Standards Act compliance traps that commonly create risks BY SAFINA LAKHANI T he source of many legal rights and obligations between employers and their employees in Ontario is the Employment Standards Act, 2000 (ESA), which serves as the backbone of the traditional employment relationship in Ontario. e ESA sets minimum compli - ance standards for all stages of the employ- ment relationship, from hiring to termina- tion. e minimum employment standards set out in the ESA are sometimes viewed as ob- stacles to business success. However, that need not be the case. e ESA is a bench- mark for an employer's obligations to its employees. As such, it allows an employer to standardize workplace arrangements and demonstrate the areas where it provides its employees with entitlements that exceed the minimum requirements. is enables orga - nizations to build stronger employer brands and attract, engage and retain their indus- try's top performers. However, employers must ensure that they consistently maintain compliance with the ESA. at's an area where many employ - ers fall short but shouldn't, because compli- ance is relatively straightforward if the right systems are in place across an organization. With that in mind, here are five common ESA compliance traps, and how to over - come them: Hours of work. In Ontario, most employ- ees may work for a maximum of eight hours per 24-hour period up to 44 hours per week before the payment of overtime is required. Such employees are entitled to a 30-minute unpaid eating break after every five hours worked, as well as 11 consecutive hours off for every 24 hours worked. Employers are also required to track the hours their em - ployees work. However, the hours of work rules set out above, do not apply to all em- ployees. For example, employees in certain occupations or whose work is managerial are exempt from these rules. Many organizations run afoul of these laws when they fail to track employee hours, provide adequate rest periods, or allow their employees to continue working when they say they don't want to take lunch or a break. In other cases, managers might urge employees to keep working beyond normal hours during busy periods and fail to update their records to reflect the actual number of hours worked. To overcome these compliance risks, em - ployers can take obvious steps such as re- cording employees' actual hours worked and requiring them to take breaks. But they can also apply for excess hours permits, allowing them to extend weekly work hours to more than 60 hours, in some cases. is requires an agreement with the employee and a com - mitment to enforcing rest periods, but can be an effective tactic to help maximize pro- ductivity when used in a limited way during particularly busy times of the year. Overtime standards. Scotiabank's recent $20.6 million settlement with more than 1,600 employees over unpaid overtime un - derscores the misconceptions and challeng- es that employers face when complying with overtime standards rules. In Ontario, overtime is calculated weekly and generally comes into effect when an employee works more than 44 hours per week, although there are certain industries that have different overtime thresholds. e overtime rule only applies to non-exempt hourly and salaried employees. Qualifying employees are entitled to premium pay of 1.5 times an employee's hourly wage. Organizations can incur significant over - time liabilities if they fail to manage over- time eligible employees effectively. Some examples of where employers encounter compliance issues include: • Failing to require that employees obtain ap - proval before working overtime • Failing to track their employees' overtime entitlement • Believing salaried employees are exempt from overtime • Providing employees with lieu time with - out first securing the employees' agreement in writing. Employers can avoid these hurdles by taking a few key steps. First, by drafting employment agreements that establish a 44- hour work week and ensuring that employee pay meets all minimum wage requirements. Second, by implementing an overtime pol - icy that mandates the tracking and pre-ap- proval of all overtime hours. Further, by ap- plying for overtime averaging agreements to provide additional scheduling flexibility and contain costs. Lastly, by leveraging exemp- tions and clauses such as the 50-per-cent rule — which mandates overtime payments only when employees work 50 per cent of their hours per week in a job covered by overtime pay rules. Vacation standards. Under the ESA, va - cation time and vacation pay are treated as distinct entitlements. Employees in Ontario begin accruing vacation pay from the time they start working and throughout their employment, to a total of 4 per cent of their wages. Vacation pay is added to their pay - cheques accordingly. Employees are eligible to use their vaca- tion time — a minimum of two weeks per year — after working for 12 months, but not all employers properly recognize that entitlement. Some unwittingly advance un - earned vacation entitlement and don't track vacation time, while others neglect to ensure employees take their vacation time at all. Others struggle to manage vacation requests against their operational needs. To avoid running afoul of the ESA, em - ployers should confirm entitlements and rules in their employment agreements and vacation policies, while also reserving the right to refuse vacation requests or imple - menting black-out periods to ensure ample staffing, especially during busy periods. But it's equally important to ensure that employees do take their allotted vacation, both from a compliance and productivity standpoint. Although employees can waive their vacation time (but not pay), remember that well-rested staffers tend to be stronger workplace contributors. In other words, in - sisting that employees take time to rest can help deliver significant bottom-line benefits. Leaves of absence standards. Employees in Ontario have the right to reinstatement to the same or a comparable position (if the same one no longer exists) under 10 job pro - tected leaves of absence: • pregnancy • parental leave • personal emergency leave • declared emergency leave • reservist leave • family medical leave IT MAY seem tough sometimes for employers to keep current with their legal responsibilities when it comes to things like just cause, human rights, and employment contracts. But when it comes to employment standards, things are fairly constant (other than when legislative changes happen). However, there are still common compliance mistakes employers make. BACKGROUND 4 Canadian HR Reporter, a Thomson Reuters business 2016 CASE IN POINT: EMPLOYMENT STANDARDS

• Cover