Getting Ready for Hours of Work and Overtime Reform

Greg McGinnis

September 27, 2004

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As part of its election platform, the Ontario Government pledged to abolish the so-called "60-hour work week".  Having been elected, it has introduced legislation that makes certain changes to hours of work regulation, but does not, fortunately, entirely curtail the ability of employers and employees to work longer weekly hours on average hours for overtime purposes when circumstances require.

Bill 63, introduced into the Legislative Assembly on April 26, 2004, adds a bureaucratic gloss to the existing rules relating to excess hours and overtime averaging, but leaves employers and employees with some freedom.

Hours of Work

The basic structure of the reform to hours of work regulation is this:

• The normal daily and weekly maximums remain unchanged at 8 (or the regularly scheduled hours) in a day and 48 in a week. It will still be obligatory for employers and employees to make written agreements to work more than these daily and weekly maximums. However, effective January 1, 2005, employees will not be permitted to work beyond 48 hours in a week unless the employer has also obtained an "approval" from the government with respect to those employees.
• The process for obtaining an approval is supposed to be relatively straight- forward. The government expects to be able to accept applications online as well as by more traditional methods. Supposedly, applications will be accepted after October 1, 2004, although the Bill will not have been passed by then (the Legislative Assembly does not resume sitting until October 12, 2004). A copy of the application must be posted in the workplace in a conspicuous place. 
• In deciding whether to grant the application for an approval (with or without conditions) or to refuse it, the government will consider any relevant factors, including:
• Any current or past contraventions of the Employment Standards Act by the employer.
• The health and safety of the employees and
•  Any other factors prescribed by regulation.
• Approvals can also be revoked for the same reasons.
• In most cases if the government has not responded to an application for an approval within 30 days, the employer will be able to act as though the approval has been received pending the actual decision.
• Once an excess hours approval has been obtained, it is valid for no more than 3 years. There is even the option to request an approval to work greater than 60 hours in a week (with a maximum one-year expiry).
• There is no obligation to re-apply for an approval with respect to the same class of employee if new employees are hired within the time period that the approval is effective.

If the employer receives the approval, a copy must be posted in the workplace. The government will prepare a document that explains to employees their rights with respect to hours of work under the Act, and all excess hours agreements entered into after January 1, 2005 must contain a term verifying that the employee has been provided with a copy of this document. Non-union employees who have already signed an excess hours agreement by December 31, 2005 will have to be shown the document on or before April 1, 2005, although there appears to be no explicit obligation to keep any written record of having done so.

Overtime Averaging

The story is much the same for overtime averaging agreements. Under the current system, employers who wish to average hours for purposes of overtime calculation over a period of two or more weeks must enter into a written agreement with their employees to that effect. Under the new system, employers will also have to obtain an approval to average hours from the government, which will judge the application using the same three criteria listed above. In most cases, if 30 days have passed after the application has been filed with no response from the government, the employer will be able to act as though the approval has been granted pending the decision. Applications for approvals and the approvals themselves must be posted in the workplace. The Director of Employment Standards will place an expiry date on any averaging approval granted.

Our Concerns

There are some rather troubling aspects of both of these provisions:

1. There are no criteria for judging how the health and safety of employees will be affected by working weekly excess hours or granting an overtime averaging permit. Further, it is not at all clear how officials in the employment standards branch of the Ministry of Labour are qualified to make assessments regarding health and safety. Even the fact of an accident in a workplace would not necessarily suggest that excess hours on overtime averaging was a contributing factor.
2. There is no apparent limit on the type of contraventions of the Act that the government can consider in determining whether to grant an approval. Although one would assume the calculation of vacation pay, for example, should have no bearing on an application for an excess hours approval or an overtime averaging approval, there is nothing in the Act to prevent the Director of Employment Standards from considering such a contravention, or other apparently irrelevant contraventions. Further, there is no limit on how far back in the past the government can go looking for contraventions.
3. There is no obligation on the government to meet with an employer or to provide any "due process" before denying or imposing conditions upon an application for an approval, or to provide any reasons for its decision.
4. There is no process to review a decision denying or imposing conditions on an approval application.

Conclusion

Considering what can be at stake in an application for an approval, the decision of the Director of Employment Standards could have a profound impact on an employer;in some cases, seriously affecting the employer's ability to meet business or customer objectives. While most of those assessing the applications are likely to be fair and objective, they are liable to make mistakes, or at the very least interpret the provision in a manner that is not consistent between employers. There should be a process for reviewing their decisions quickly and without having to seek judicial review by the court.

This new approval system, together with the greater emphasis on enforcement, should cause employers to review their ESA compliance profile, especially in the area of hours of work and overtime. These are the areas that are likely to attract the early attention of the new investigators the Ministry is hiring to support their more aggressive enforcement practice.

For More Information
Contact Greg McGinnis at gmcginnis@sbhlawyers.com.

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Disclaimer: The information contained in Employment Law Dispatch is general information only and should not be relied upon as a substitute for legal advice or opinion.