EMPLOYER ACTION CODE: ACT
Amendments to the Canada Labor Code (CLC), expected to take effect in 2019, will introduce changes relevant to the design and administration of group benefits, time off and retirement programs. CLC applies to employees in federally regulated sectors (such as banking, telecommunications and airlines). Separate pay equity legislation will, among other things, require federally regulated private sector employers with at least 10 employees to establish and maintain a pay equity plan within set time frames. The Employment Insurance (EI) program within social security, which provides pay replacement benefits during parental leave and applies to all employees living in every Canadian jurisdiction except Quebec, will also be amended from March 2019 to implement a new EI parental sharing benefit.
Changes under the CLC include:
- New leaves of absence, such as five days of personal leave per year, three of which are employer-paid (for employees with at least three months of service). The leaves could potentially be used for personal illness or injury, family care and educational responsibilities, and urgent matters, among other circumstances.
- Employer-paid bereavement leave will be increased from three days to five days per year.
- Accommodation of the increased benefit period for parents who take the new EI parental sharing benefit (see below). The maximum aggregate amount of parental leave that both parents can take will be increased by five weeks (or eight if the employee takes the extended parental leave).
- The eligibility requirement of 30 days of employment for statutory holiday pay entitlement will be eliminated.
- Annual leave and annual leave compensation provisions will be amended so that minimum annual requirements are:
- Two weeks’ leave and vacation pay equal to 4% of annual salary for employees who have completed at least one year of employment with their employer
- Three weeks’ leave and vacation pay equal to 6% of annual salary for employees who have completed five consecutive years (currently six years) of employment with their employer
- Four weeks’ leave and vacation pay equal to 8% of annual salary for employees who have completed 10 consecutive years of employment with their employer (a new minimum standard)
- For individual terminations, the current requirement of two weeks’ notice (or pay in lieu) after at least three months’ consecutive employment will remain. However, an additional notice (or pay in lieu) of three weeks, after three years of consecutive employment, plus another week for every additional year of consecutive employment (up to a maximum of eight weeks) will be required. For collective dismissals, employers will have to provide eight weeks’ notice (or pay in lieu) to dismissed employees.
- Employees will be entitled to a 30-minute unpaid break for every five hours of work, a minimum eight-hour rest period between shifts and unpaid breaks for breastfeeding.
The effective dates for the amendments applicable under the CLC have not yet been determined because they must be set out in orders-in-council of the federal government (though some of the amendments cannot be effective before September 1, 2019).
Our Client Advisory provides a fuller explanation of the key changes to the CLC.
The new EI parental sharing benefit program applies to all except for Quebec residents and is effective from March 17, 2019. Provisions include:
- Eligible parents will be able to receive additional EI parental benefits provided both parents take a leave of absence from employment and claim them.
- Up to five weeks of additional EI parental benefits will be made available to parents who choose the standard benefit of 55% of covered pay (i.e., for 35 weeks plus up to the five additional weeks for a total of 40 weeks) or up to eight weeks if parents choose the extended benefit of 33% of covered pay (i.e., for 61 weeks plus up to the additional eight weeks for a total of 69 weeks).
- Both parents must choose the same parental benefits option (i.e., standard or extended), and they can receive the benefits at the same time or at different times. Parents can also choose to divide the total benefit period however they wish, except that neither parent can take more than 35 or 61 weeks, as the case may be.
Our Client Advisory provides a fuller explanation of the new benefit and leave rules.
Federally regulated employers will need to review their current HR programs and benefit plans to identify policies or processes that will need to change once the amended CLC provisions become effective and also consider how best to coordinate new statutory paid leave entitlements with existing time-off programs. All employers with employees outside of Quebec will need to review carefully how the new EI parental benefit changes could impact them and their employees based on applicable minimum employment standard leave rules (provincial or federal) and an employer’s particular benefit and HR policies.