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Retail Sector in the Crosshairs of the Changing Workplaces Review Final Report: 10 Ways Retailers Could Be Impacted

Premised on the theory that vulnerable workers and precarious employment exists in Ontario and needs to be addressed, the Final Report of the Changing Workplaces Review contains 173 recommendations, many of which focus specifically on the retail sector.  Below we identify ten recommendations that are likely to have a significant impact on retailers.

As previously mentioned on this blog, the Government of Ontario has now released the Final Report of the Changing Workplaces Review, which recommends a number of changes to Ontario’s Employment Standards Act, 2000 (“ESA”) and Labour Relations Act, 1995 (“LRA”). The Final Report specifically identifies the retail sector as an area for reform because of its high concentration of low-wage earners in part-time, temporary and/or contract employment.  Accordingly, many of the recommendations are specifically designed to address the apparent problem of vulnerable workers in precarious employment.

Here are ten ways the recommendations may impact the retail sector:

  1. More Certainty in Scheduling. The Final Report asserts that uncertainty of work schedules is a key contributing factor in making work precarious. As a result, it recommends that sector specific regulations be adopted to provide workers with more certainty in scheduling, prioritizing the retail and fast food sectors for change.
  2. Consolidation of Bargaining Units at Multiple Locations of Same Employer: The Final Report recommends the Ontario Labour Relations Board be given the general power to consolidate bargaining units employed by the same employer. The Final Report specifically notes that the intention of this recommendation is to target sectors with historically low union rates such as retail and food services, that generally have small bargaining units (if any), with the same employer, in multiple locations. It notes that this recommendation will provide employees and unions with increased bargaining power. This could have a profound impact on the proliferation and strength of unions in the retail sector.
  3. Equalization of Pay Between Part-Time and Full-Time Workers. Viewed by the Final Report as the epitome of “vulnerable and precarious employment”, it recommends that no part-time employee be paid at a rate lower than a comparable full-time employee of the same employer, unless the employer can establish a demonstrable reason for the difference.
  4. A More Proactive Model of Enforcement of Employment Standards: While many in the retail sector will be familiar with the Ministry of Labour’s (“MOL”) periodic “compliance blitzes”, the Final Report recommends a shift in the MOL’s mandate away from a complaints-driven model to one where spot-checks, audits and inspections at employer premises become the norm. It also recommends the MOL take on more of a prosecutorial role by engaging in more targeted and more public campaigns against high profile employers and those “top of industry”, who are , viewed to influence the compliance of those employers below them. The Final Report specifically lists major retailers, leading brands and those who manage supply chains as the intended target of such compliance measures.
  5. Change to the Managerial Overtime Exemption: Perhaps a more positive recommendation for the retail sector, if not all employers, the Final Report recommends the test for managers be changed to a “salaries plus duties” test where, in order to be exempt from overtime, a manager would have to perform defined duties and earn at least 150% of the minimum wage per week. The Final Report indicates that the current managerial test is not well defined and focuses on the wrong factors, such that positions that are obviously managerial in character could be excluded from the overtime exemption because of occasional situations where non-managerial duties are performed when stores or restaurants are busy.
  6.  Changes to Wage Calculation: The Final Report recommends a number of changes that will affect the calculation of wages, including:
    • Elimination of the Student Minimum Wage;
    • Significant limitations on the use of overtime averaging agreements; and
    • A change to the “three-hour rule” to ensure workers receive at least three hours at their regular rate of pay when required to report to work (as opposed to the higher of 3 hours at minimum wage, or the employee’s regular wage for time worked).
  7. Expansion of “Related Employers”: The Final Report recommends removing the pre-condition that affiliated businesses need not have the “intent or effect” of defeating the purpose of the ESA to be considered “related” for the purpose of the ESA. This may mean that many business models that were not considered related for the purposes of the ESA, such as parent-subsidiary relationships, may be captured by this expanded definition and therefore be open to more scrutiny.
  8. The Extension of Health and Dental Benefits to all Workers. While the Final Report does not recommend an equalization of benefits between part-time and full-time workers, it does recommend that the Government study how a minimum level of such benefits can be extended to all workers, regardless of employment status.
  9. A Complete Revision to Public Holiday Scheduling and Pay: While not providing specifics, the Final Report recommends that the standards regarding Public Holidays be revised so that they are simpler and easier to understand. The Final Report notes that the scheduling, pay and substitution elements of Public Holidays are not only unduly complicated, but that the requirement for premium pay is an added burden for retailers who need to be open on public holidays.
  10. Revisions to Personal Emergency Leave: The Final Report recommends that Personal Emergency Leve be extended to all employers in Ontario, including those with less than 50 employees. It also recommends the creation of a separate, 3 day, bereavement leave entitlement and an expansion of the entitlement to leave for family medical reasons.

It is important to repeat that these are only recommendations. It remains to be seen how the Government of Ontario will react and respond to the Final Report in the coming weeks.   However, given the magnitude of the Changing Workplaces Review, there is an inevitability to significant changes being proposed to Ontario’s ESA and LRA, if not a total overhaul.  We will provide our update as soon as we find out.

In the interim, the Labour and Employment Group at McCarthy Tétrault LLP has reviewed the Final Report and released a paper titled The Changing Workplaces Review & the Potential Effects on Employers.  If you would like a copy of this paper, or have any questions about the Changing Workplaces Review and how it will impact your business, do not hesitate to contact Trevor Lawson and Matthew Demeo, or any lawyer in our Ontario Labour and Employment Law Group.



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