WDW 244H1F 2003W

1
WDW 244H1F 2003W

• LABOUR RELATIONS
• Professor Frank Reid
• Centre for Industrial Relations
• Week 3
• The Legal Environment
• Course website http//individual.utoronto.ca/fran
  kreid

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Lecture Format

• Lecture times
• - UofT time zone, lectures start at 10 minutes
  past the hour and finish on the hour.
• - i.e. lecture starts at 610pm, breaks at
  700pm
• - resumes at 710pm, ends at 800pm.
• - timing of 10 minute break may vary to suit
  material
• Questions
• - Questions welcome during class or after class.
• - No questions during the 10 minute break,
  please.

3
The Political Environment

• Forces similar in many Western countries
• Reduction in size of govt. govt. deficit
• Globalization, deregulation, privatization
• Privatization of Air Canada, Ontario Hydro
• 1988 Goods and Service Tax (GST)
• Free trade
• 1989 Free Trade Agreement (FTA) with U.S.
• 1994 NAFTA with U.S. and Mexico
• Free Trade Agreement of the Americas (FTAA) ?
• User pay principle (e.g. higher tuition)

4
Legal Environment 3 regimes

• Ref D McPhillips, GPT, chap 8
• Three Regimes
• Common Law of Employment
• Applies to individual employment contracts in the
  absence of legislation
• Inferred from past court cases (i.e. legal
  jurisprudence)
• Statutory Law
• Legislation that applies to all employees, both
  union and nonunion
• Eg. Ontario Human Rights Code (HRC),
• Ontario Employment Standards Act (ESA)
• Collective Bargaining Legislation
• Applies to unionized employees
• E.g. Ontario Labour Relations Act (OLRA)
• Various public sector statutes Crown Employees
  Collective Bargaining Act (CECBA)

5
Federal vs Provincial Jurisdiction

• Sections 91 92 of the Constitution Act (1981)
  divide responsibility between federal and
  provincial governments.
• Based on the British North America Act of 1867
• Provincial jurisdiction
• Provinces given responsibility for property and
  civil rights which includes employment
  legislation
• 90 of employees in Canada are under provincial
  jurisdiction
• Federal Jurisdiction
• Federal govt given jurisdiction over certain
  industries which are interprovincial in nature or
  of national significance
• Includes federal govt employees and employees in
  banking, communications (TV, radio, post office),
  inter-provincial transportation (airlines,
  railroads), atomic energy, etc.
• Covers 10 of employees in Canada

6
Snider case prov v. federal jurisdiction

• Employment legislation was determined to be a
  provincial responsibility by a decision of the
  British Privy Council in 1926
• At that time Supreme Court of Canada was not
  highest court authority
• Snider et al. v. Toronto Electric Power
  Commissioners
• Canadian govt passed the Industrial Disputes
  Investigation (IDI) Act, requiring conciliation
  before a strike
• Toronto Electric Power Commissioners refused to
  recognize authority of a conciliation board
  established under the IDI Act
• Argued federal government did not have
  jurisdiction to apply the Act to municipal
  employees or enact law affecting civil rights
• British Privy Council declared IDI Act
  unconstitutional
• Result Labour relations and employment law
  became provincial responsibility because it
  pertained to property and civil rights.

7
Common Law Principles

• Governs terms and conditions of employment not
  covered by statutes.
• Implied by past practices and case law (legal
  jurisprudence).
• Under common law an employee can be legally
  dismissed for any reason (or no reason).
• But employees are entitled to reasonable notice
  before termination (unless there is just cause
  for dismissal).
• Amount of reasonable notice depends
• Age, tenure, labour market conditions,
  occupation, etc.
• In the case of wrongful dismissal, the courts
  will not reinstate an employee.
• Courts award monetary damages equivalent to the
  number of months of reasonable notice the EE was
  entitled to receive.

8
Predicting Wrongful Dismissal Awards

• A study of Ontario 67 court decisions in wrongful
  dismissal cases used regression analysis to
  determine that the amount of reasonable notice
• (T. Liznik, Worklife Report).
• Reasonable notice required (in months) could be
  predicted quite accurately (plus or minus one
  month, in 99 of cases) using the following
  simple formula
• notice in months 0.15 (salary in thousands of
  1981 dollars) 0.38 (years of service) 1.9 (if
  the person was a "top executive").

9
Wallace case unfair ER conduct

• Punitive damages not generally awarded in
  wrongful dismissal cases
• i.e. extra damages to punish Employer for bad
  behavior
• Supreme Court of Canada (1997) in Wallace v.
  United Grain Growers ruled that amount of notice
  could be increased if dismissed employee was not
  treated fairly, reasonably and decently
• Jack Wallace was dismissed without explanation at
  age 59 after 14 years as top salesperson in firm.
  ER then claimed he was dismissed for cause. (See
  vignette, GPT Chap 8)

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Constructive Dismissal

• Constructive Dismissal means that if the terms
  and conditions of employment are changed
  substantially without consent, the employee can
  resign and sue the employer for wrongful
  dismissal.
• Purpose is to prevent employers forcing an
  employee to resign (e.g. reduce salary by 50) to
  avoid the common law requirement of reasonable
  notice.

11
Statutory Regulation

• Originally conceived as stop gap measure to
  provide minimally acceptable terms of employment
  to non-unionized employees or those with low
  bargaining power
• In recent years has become more pervasive and
  more fully elaborated
• Mandatory
• Applies to all employees

12
Legal Environment in Ontario
Employment Standards Act
Human Rights Code
OHSA WSIA
Statutory Legislation
Pay Equity
Employment Equity
Repealed in 1995
Collective Bargaining Legislation
Labour Relations Act
Police Services Act
Fire Protection Prevention Act
Crown Employees Collective Bargaining Act
Public Sector Legislation
Education Act
Colleges Collective Bargaining Act
Hospital Labour Disputes Arbitration Act
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Employment Standards Act

• Sets out the minimum standards of employment and
  the rights and responsibilities of both employers
  and employees, both unionized and non-unionized.
• Minimum wage (6.85/hour)
• Minimum annual vacation (2 weeks per year or 4
  of pay in lieu)
• Statutory holidays (Eight)
• New Years, Easter, Victoria Day, Canada Day,
• Labour Day, Thanksgiving, Christmas, Boxing Day
• Hours of work and overtime premium (time and a
  half after 44 hours)

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Employment Standards Act

• Pregnancy Leave (17 weeks unpaid),
• Parental leave (37 weeks unpaid)
• Emergency Leave (10 days per year unpaid)
• for illness, emergencies, urgent matters
• Notice period for terminations, or pay in lieu of
  notice
• 3 months to 1 year service 1 week notice
• 1 year to 3 years service 2 weeks notice, and
  up to
• 8 years or more service 8 weeks notice

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Employment Standards Act

• Notice of mass terminations (50 or more EEs
  within 4 wks)
• 8 to 16 weeks notice to govt, depending on number
  terminated
• Severance Pay (1 week for each year employed, up
  to 26 weeks)
• provided EE has at least 5 years service and ER
  payroll exceeds 2.5 million
• severance pay is in addition to notice or
  termination pay in lieu of notice

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OHSA WSIA

• Occupational Health Safety Act
• A preventive system to protect workers against
  health and safety hazards on the job.
• Give workers a right to participate, to know and
  to refuse unsafe work. (uses the internal
  responsibility system)
• Workplace Safety and Insurance Act
• Purpose of workers compensation is to prevent
  and compensate employees for injuries and
  diseases that arise in the course of employment.
• A quid pro quo whereby employees who suffer
  work-related injuries give up their rights to sue
  for compensation under a no-fault insurance
  system.

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Ontario Human Rights Code

• Ref Guide to Ontario Human Rights Code
• www.ohrc.on.ca
• Part I Freedom from Discrimination
• Designed to prevent discrimination against
  individuals on the basis of membership in
  specific groups unrelated to employment.

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Employment Prohibited grounds

• Employment
• 5.-(1) Every person has a right to equal
  treatment with respect to employment without
  discrimination because of race, ancestry, place
  of origin, colour, ethnic origin, citizenship,
  creed, sex, sexual orientation, age, record of
  offences, marital status, family status or
  handicap.
• In Ontario, about three-quarters of all human
  rights complaints come from the workplace.

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Employment in HRC

• Employment is used in a very general way in the
  Code.
• Employees, independent contractors, and
  volunteers are covered.
• Complaints can be filed against, not only
  employers, but also contractors, unions or boards
  of directors.
• Employers and unions have a joint duty to ensure
  that workplaces are free of discrimination and
  harassment.
• The right to equal treatment with respect to
  employment covers applying for a job, being
  recruited, training, transfers, promotions, terms
  of apprenticeship, dismissal and layoffs.
• It also covers rate of pay, overtime, hours of
  work, holidays, benefits, shift work, discipline
  and performance evaluations.

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Systemic Discrimination

• Refers to criteria that have an adverse impact on
  designated groups
• Example Height Weight Requirements
• Minimum standards for height and weight are
  sometimes used to screen out certain job
  applicants, such as women and racial minority
  groups. Such standards are only allowed if they
• (1) are reasonable, genuine and related to the
  job duties and
• (2) cannot be changed because of cost, health or
  safety reasons.

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Systemic Discrimination

• Example Language and Accent
• An employee who has been discriminated against
  because of "language" or "accent", can make a
  complaint based on a number of grounds, such as
  ancestry, ethnic origin, place of origin and
  race.
• An employer can require that an employee speak
  English fluently if it is a genuine job
  requirement. But an employer cannot use language
  or accent as a way to screen out racial
  minorities or persons of particular ethnic
  origins where language fluency is not really
  essential to the job.
• For example, an employer refuses to hire a person
  from Spain as a school bus driver because he does
  not speak fluent English. However, being fluent
  in English is not essential to the job. This
  could be discrimination because of place of
  origin.

22
Federal Legislation CPP

• Canada Pension Plan (CPP)
• QPP in Quebec
• Compulsory pension plan financed by equal ER and
  EE contributions, introduced in 1960s
• ER and EE each contributes about 4.5 of earnings
  up to a ceiling level per employee of about
  40,000/year
• A pay-as-you-go plan rather than self financed
• Allowed low premiums in early years

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Federal Legislation EI

• Employment Insurance (EI)
• Compulsory insurance financed by EE and ER
  contributions (ER 1.4 times EE)
• Almost 2 of earnings for EE and 3 for ER (up to
  ceiling level of about 40,000 per EE)
• Provides EI benefits of about 50 of earnings (up
  to ceiling level) to workers who lose their job
• Rationale for ceilings prevents unseemly high
  EI benefits being paid to wage EEs

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Worksharing with STC

• Program introduced in 1982 as a special feature
  of employment insurance (EI) i.e. worksharing
  with short-time compensation.
• A redistribution of given amounts of work, EI
  benefits and leisure aimed at avoiding temporary
  layoffs.
• E.g. unions proposed this option in response to
  potential layoffs at Air Canada in October 2001.

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How Does WS w/STC Work?

• Scenario suppose a firm with needs to reduce its
  workforce by 20.
• Two Options
• Layoff Lay off 20 of its employees or
• WS w/STC Shorten the workweek from 5 days
  per week to 4 days, and the EEs receive EI
  benefits on the 5th day when they are not
  working.

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History of WS w/STC

• First used in Germany in 1927 and currently used
  in several European countries.
• Introduced in California in 1978 and currently
  used in many States (California, New York,
  Washington, etc.).

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The Canadian STC Program

• Firm must be in business for at least two years.
• Magnitude of work reduction must be between 10
  and 60.
• Work reduction must not be seasonal.
• Expected duration of work reduction not more than
  26 weeks (potential extension of 12 weeks).
• Employees must be qualified under usual EI
  criteria.

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Canadian STC Program

• Usual waiting period (2 weeks) for EI benefits
  waived for worksharing employees.
• Employees can draw conventional EI if laid off at
  end of STC worksharing program (double-dipping).
• Program participation requires joint application
  by employer and
• The union in unionized workplaces or
• A substantial majority of EEs in non-unionized
  workplaces.

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ER Viewpoint on WS w/STC

• For the Employer
• Option
• Layoff 4 employees working 5 days/week
• Worksharing 5 employees working 4 days/week
• The Employer receives and pays for 20 employee
  days of labour under both options.

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Govt Viewpoint on WS w/STC

• For the Government (EI costs)
• Option
• Layoff 1 employee drawing EI 5 days/week
• Worksharing 5 employees drawing EI 1 day/week
• The Government pays 5 employee days of EI
• under both options.

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EE Viewpoint on WS w/STC

• Option (Assume EI benefits 50 of wage)
• Layoff For the Laid Off Employee
• 50 x weekly wage 5 days leisure
• For the other Employees
• 100 x weekly wage
• Worksharing Each employee gets
• 4 days at 20 of weekly wage
• 1 day at (50)(20) of weekly wage
• 80 10
• 90 of weekly wage plus 1 extra day of leisure
• Many employees will actually be better off
  under WS because they get a 20 reduction in work
  for only a 10 reduction in income..

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Prediction of EEs Reaction

• Assume typical employee was working the desired
  number of hours before the STC program.
• Economic theory predicts that the typical
  employee will prefer the STC program even if not
  threatened by layoff.
• Employee is getting a 20 reduction in work for
  only a 10 reduction in pay.

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Evidence on EE Reaction

• Surveys of employees on STC showed that 94
  supported STC and would participate again.
• For employees who would have been laid off, there
  are additional important psychological and social
  benefits.
• Avoid stress and loss of self-esteem that are
  often associated with layoffs.

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Impacts on Management

• Employers receive the same level of labour under
  either option and pay for the same number of
  hours, however
• WS can be more costly due to
• WS program administrative costs.
• Increased employee benefit costs that are a fixed
  amount per employee, eg. dental plan.
• Note no increased costs for benefits that are a
  percentage of earnings (e.g. pensions)
• Increased payroll taxes if they are a fixed
  amount per employee due to ceilings, eg. CPP, EI,
  etc.

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Impacts on Management

• WS can be less costly due to
• Elimination of seniority wage effects.
• Saving on costs of layoffs and recalls.
• Save on costs of hiring and training
  replacements.
• Improved productivity by avoiding bumping.
• Improved employees morale by reducing the
  negative impact of layoffs.
• STC had mixed impacts on labour costs, but on
  average, resulted in a small net reduction (0.5)
  in measured labour costs.

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Impacts on Government

• In theory, the Government is paying out the same
  level of EI benefits under either option.
• The costs of worksharing are higher due to
• The Double-dipping provision.
• Waiting period for benefits was waived.
• An estimated 30 of employees whose layoffs were
  prevented by STC would not have applied for EI
  benefits if they had been laid off.

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Impacts of WS on Society

• Cost savings due to reduction of the social costs
  of unemployment, eg. decrease in stress related
  diseases, crime, etc.
• Difficult to quantify (but not zero).
• Benefits and costs to society as a whole are
  actually less difficult to quantify because many
  wash out.
• E.g. increased ER expenditure on dental benefits
  under WS is a cost to the employer but a benefit
  to employees (washes out for society as a whole).
• E.g. increased government EI costs also are a
  benefit to employees (wash out for society as a
  whole).
• Benefits estimated to exceed cost (B/C 1.3).
• Increased equity most important benefit (not
  quantified).

38
Pay Equity vs Employment Equity

• Pay Equity Act
• Enacted by the Liberal government in 1987.
• Known as Comparable Worth in the US.
• Objective Equal pay for work of equal value.
• Currently in effect in Ontario.

• Employment Equity Act
• Enacted in 1993 by the NDP.
• Known as Affirmative Action in the US.
• Objective Identify and remove barriers to
  selection, hiring and promotion of targeted
  minority groups.
• Repealed by the Harris government in 1995.