Changing Workplaces Review – Final Report: Potential Impact on Franchises
The Final Report has just been released for the Changing Workplaces Review, containing recommendations for legislative changes to Ontario’s Employment Standards Act, 2000 and Labour Relations Act, 1995. A number of changes are either specific to franchises or may have an impact depending on the sector of the franchise and the way the franchise operates. Here we have summarized recommendations that are most relevant franchisors.
Recommendations concerning the Ontario Labour Relations Act, 1995 (“LRA”):
- Broader Based Bargaining: The Final Report recommends that the Ontario Labour Relations Board be given certain powers to implement a model of centralized bargaining, where the terms of a collective agreement between a franchisee and a union could be extended to apply (with or without modifications) to a newly certified bargaining unit of another franchisee of the same franchisor. The Board would also have the power to require that the franchisee employers bargain centrally through one employer bargaining agency, much like in the Ontario construction industry. In other words, franchisees of the same franchisor would be treated in an analogous way as a single employer with multiple locations. There is no doubt that this will facilitate unionization for franchisees operating under the same banner. Currently, union bargaining rights attach to individual franchisees and typically cover one location.
- Related and Joint Employers: It is recommended that employees of temporary help agencies who are assigned to perform work for clients of the agency (e.g. a franchisee) be deemed as employees of the client/franchisee for the purposes of the LRA. This would mean a trade union could rely on the support of the temporary help employees to certify the client.
- Successor Rights: Another LRA recommendation is that union successor rights be applied to the building services industries (security, food services, cleaning), and that a regulation-making authority should be added to the LRA to allow for the possible expansion of coverage into other services or sectors in the future. If this recommendation is adopted, then a non-union franchisee that takes over a new contract and replaces a unionized contractor in a prescribed industry or sector could be bound to the union as the successor employer.
Recommendations concerning the Employment Standards Act, 2000 (“ESA”):
- Who is an Employee and Who is an Employer: The Final Report recommends removing the pre-condition that an arrangement needed have the effect (intended or not) of avoiding the ESA before two businesses could be associated or related. In effect, removing this pre-condition will make it much easier for franchisors and franchisees to be deemed “related or associated” for the purposes of the ESA because most franchises arrangements are not structured around avoiding employee rights. The net effect of this recommendation may well be that a franchisee’s ESA obligations towards its employees could easily transfer from the franchisee to the franchisor, almost as if the franchisor was a “joint employer” with the franchisee.
- A sector-specific approach to the regulation of scheduling has been recommended, including a review of the existing exemptions on hours of work, overtime, and related matters. And, as a priority, establishing a committee to consider a sector-specific regulation in the retail and fast food sectors – both sectors in which many franchises operate.
- The Report also recommends that the ESA should be amended to provide an employee with the right, after one year of service, to request changes to his or her schedule (hours of work, flexibility, location, etc.), and the employer should be obligated to respond to such request at least once a year. This recommendation, if implemented, could affect a franchisee’s flexibility and discretion in scheduling shift work, for example.
- Recommendations Regarding Payment of Wages: The following recommendations made in the report are also relevant to franchises.
- Part Time, Casual, Temporary and Seasonal Employees: The ESA should be amended to provide that no employee by paid at rate lower than a comparable full-time employee of the same employer.
- Call-In Pay: The ESA should be amended to provide employees with at least three hours pay when required to report to work.
- Temporary Help Agencies: After six months of employment, temporary assignment workers should be paid equally to a comparable employee of the client performing similar work.
The Ontario government indicates that it has reviewed the recommendations and will be announcing its formal response within the next week. We will provide you with an update on the Ontario government’s formal response upon its release. In the interim, if you have an questions, or would like a copy of our more detailed analysis of the Final Report’s key recommendations, please contact Tim Lawson (416-601-8172) or Pat Pengelly (416-601-8292) of our Ontario Labour and Employment Practice Group, both members of our National Franchise Group.