I work with businesses every day. It bewilders me still that employers, especially new employers, cut corners on the small costs needed to set up their workplace with proper contracts and policies. Then, they end up paying dearly when not being prepared, and compliant, comes back to bite them!
There are high costs for provincially regulated businesses in Ontario failing to comply with the Employment Standards Act, S.O. 2000, c.41. Some sectors have a reputation for unfair labour practices. A study done by the Chinese and South Asian Legal Clinic found many Chinese restaurant businesses to be non-compliant with the ESA. In other sectors (construction, renovation, pool and landscaping) employers that have been found to regularly misapply overtime regulations, are exposed to significant costs, and employees are owed tens of thousands of dollars. Then there are there the costs of bad publicity. Non-compliance and abuse of employees, such as the numerous employment lawsuits of Canac Kitchens can prompt the worst publicity.
Here are eight common workplace law failures. How many do you have?
1. Termination Notice and Pay
Upon termination an employee can qualify for written notice, termination pay instead of notice, or a combination. The amount of notice or pay depends on numerous factors including length of service. An employee becomes entitled to notice or termination pay once they have been continuously employed for three months. A person is deemed to be “employed” not only when they are actively working, but also whenever an employment relationship exists (employee on leave, off sick, or on lay-off). If the employment contract is improperly written and non-compliant with the ESA the termination costs can increase 300% or more.
2. Hours of Work and Overtime
There are limits to the number of hours employees can work in a day and in a week, which can be exceeded to meet the specific needs of the business, and only if the employee agrees. A common mistake is assuming an informal conversation where the employee(s) agree to the work is sufficient with the employee taking time off in lieu.. The best option is a written agreement with the employee setting out the hours of work over the specified maximums.
Exceptions to overtime pay exist. Beware making a mistake. Imagine paying an employee $100,000 for improper overtime for the last 10 years of work…and then pay it to all their colleagues…Such may be the cost of non-compliance.
3. Eating Periods
Do you give employees time to eat? Employees must not work more than 5 consecutive hours without a 30-minute unpaid eating period, and an 8-hour shift requires a lunch break.
4. Minimum Wage
The minimum wage is the lowest hourly wage an employee can be paid. In Ontario, the minimum wage is $14.00. Employees are entitled to this, with some exceptions (liquor service employees, full-time students, hunting/fishing guides, and homeworkers). Most employees include full or part-time, or casual workers and regardless of whether they are paid on an hourly basis, commission-based, piece rate, flat rate, or salary.
5. Vacation Time and Vacation Pay
Employees with less than five years of employment earn at least two weeks of vacation time after every twelve months and must be paid at least four per cent of the total wages they earned as vacation pay. At five or more years of employment, employees earn at least three weeks of vacation time and must be paid at least six per cent of the total wages they earned as vacation pay.
6. Public Holidays
Ontario has nine public/statutory holidays annually. Most employees are entitled to take these holidays off work with public holiday pay. Are you in compliance?
7. Leaves of Absences
Under the ESA, employees are entitled to unpaid, job-protected leaves of absence. Employees cannot be terminated for requesting or taking a leave of absence. Some leaves under the ESA include:
- Pregnancy Leave
- Parental Leave
- Family Caregiver Leave
- Critical Illness Leave
- Child Death Leave
- Domestic or Sexual Violence Leave
- Sick Leave
- Family Responsibility Leave
- Bereavement Leave
Each type of leave has its own entitlement conditions and how long an employee is entitled to be on such a leave. Non Compliance leaves employers open to punishing fines and potential liability.
8. Wage Statements
There are specific rules pertaining to the payment of wages. Ontario laws requires the employer to establish a recurring pay-period and a recurring pay-day in which the employee is paid for all wages earned during each pay-period. In addition, on or before the pay-day, the employer must provide the employee with a written statement which clearly states the gross and net amounts for wages in the pay-period, the wage rate, and the amount and purpose of each deduction from wages.
Compliance
Are you compliant? Businesses have an absolute obligation to comply with the ESA.
Many, if not most, small and mid-sized employers are not compliant. Entrepreneurs often build first and regret later.
I always recommend that businesses consult with me, or other counsel experienced in employment law, before setting up their workplace, to best manage risk and prevent problems from arising.
At Hum Law we work with you to proactively design policies to meet these standards. If you are interested in building a solution before you run into a problem, contact us to speak with someone today.