Significant Changes to the Employment Standards Code, A Highlight of Bill 32
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The Legislative Assembly in Alberta has passed Bill 32 – the Restoring Balance in Alberta’s Workplaces Act, a significant piece of legislation comprising amendments to employment laws in Alberta. Though his article will focus primarily on changes to overtime in the province, it will also highlight several of the most pressing changes that will impact employees and employers.
Of significance are the changes made to Hours of Work Averaging Agreements. In September of 2019, amendments were made to the Employment Standards Code (Alberta) (ESC) aimed at repealing Flexible Averaging Agreements. Since then, employers have slowly become aware of these changes and begun to adapt their relationship with their employees to match this new reality. Further adaptation will be required to ensure that employers are on side of these most recent amendments.
Background
First off, it helps to understand what an Hours of Work Averaging Agreement represents. Most will know the term “compressed (or condensed) work week” from past iterations of the ESC. These were renamed to Hours of Work Averaging Agreements in a previous review of the ESC. The ESC provides that an employee is entitled to overtime pay for the greater of every hour they work in excess of 8 hours daily, or 44 hours weekly. It is important to recognize that not all jobs are well suited to the “Monday-Friday, 9-5”. Many Albertans work evenings, weekends, and more importantly, alternative work arrangements that allow them to work schedules outside of the “normal” work week.
Let us take the example of Jim who delivers parts for a local shop. Jim works 8-hour shifts, but due to the needs of the business he works for, he is required to work 6 days of the week. Jim doesn’t work more than 8 hours every day, but because of his alternative schedule, he is entitled to 4 hours of overtime pay every week. Sadly, Jim’s employer is competing in a difficult market, and overtime is quite simply an expense he cannot afford. Faced with this reality, Jim and his employer come to an arrangement: the amount of hours he works per week will be averaged over a predetermined period of time; say 8 weeks. As long as enough days off are added on throughout the period to keep the average number of hours worked per week over that period of time below 44 hours/week, Jim will only be entitled to overtime for hours he has worked over 8 hours/day. This is known as an Hours of Work Averaging Agreement. The employee remains entitled to their overtime pay for any hours in excess of 8 hours they work in a day, while foregoing the overtime they may have been entitled to over the weekly period in a regular setting.
Now you might be saying to yourself: “well its only 4 hours of overtime… what’s the big deal?”. Sadly, Jim’s situation is only one of many. Take Donna for example: Donna works in Northern Alberta on an oil and gas site. She works a 10 day on, 10 day off rotation to cut down on commuting time. Over a 2-week period, she would be entitled to 12 hours of overtime despite never having worked more than 8 hours in a day or 10 days in a two week period. Over the course of a year, this would amount to a significant cost to her employer, and multiplied over many employees, could significantly alter the economics of the project she is working on, putting many jobs at risk.
These agreements have been viewed by many as a good compromise. Employees retain their daily overtime rights, while giving up their weekly overtime rights to ensure that certain workplaces can continue to exist. Often, these arrangements are entered into when the employee agrees to a job offer. It forms part of their employment contract and is agreed upon prior to commencing employment. In some situations however, employers have not been aware of this requirement, or the situation they found themselves in changed, and they must negotiate such an agreement with their employees.
These are two fairly common examples of Averaging Agreements. They can however vary drastically depending on the situation. Prior to coming to such an Agreement, an employer should strongly consider consulting with a lawyer to ensure the terms they are agreeing to with their employee are onside of the requirements of the ESC. Remember, in the event legal action arises, an employer can be liable for unpaid overtime.
New Developments
Several significant changes to Hours of Work Averaging Agreements were introduced under Bill 32. Firstly, “Averaging Agreements” will now be “Averaging Arrangements”. This is because employers now have the power to impose an averaging agreement on employees, provided they give 2 weeks notice of the proposed change to the employee. In addition, the period over which an employee’s hours can be averaged has been increased from 12 weeks to 52 weeks and no longer requires an end date. Finally, the employer will no longer need to provide daily overtime to the employee unless the Averaging Arrangement specifically provides for it. Despite the changes to daily overtime and the averaging of weekly overtime over a longer period of time, a daily number of hours worked is still limited to 12 hours.
These changes will impact employees and employers across several sectors of our province’s economy. Whether an employer is aware of the loosening of some of the restrictions that govern their conduct, or an employee is aware of the changes to their respective overtime entitlements, knowledge of the framework within which they must operate is essential to maintaining a positive working relationship between the parties.
Several other amendments were included in Bill 32. For brevity’s sake, we will not go into them in detail, but it serves to note that:
For the purpose of calculating holiday pay, average daily wage will not include vacation pay and general holiday pay;
Employers must provide at least 30 minutes of rest every 5 hours for shifts that are longer than 5 hours. The rest period can be within or immediately after the 5 hours of work. The employer and employee may mutually agree on an alternative time to take a break;
Individuals as young as 13 and 14-year-olds will be able to qualify for more types of work provided that an adult is present
Employers can now lay off employees for a period of 90 days within a 120 day period (up from 60 in a 120 day period). Separate rules apply for COVID-19 layoffs (180 consecutive days).
The vast majority of these amendments, and many more which have not been listed, will come into force on November 1st, 2020.
As COVID-19 has ravaged our economy, many employers are discovering the gaps that exist in their workplace policies. As difficult decisions are made to part ways with employees, litigation sometimes ensues which, though it is founded in constructive dismissal, often includes demands for unpaid overtime. Proper adherence to Alberta’s Employment Standards is paramount to operating a business of any size. The lawyers at Caron & Partners LLP understand this reality and stand ready to assist you in planning your transition to Alberta’s new Employment Law reality.