Temp agencies to face new prohibitions under Canada Labour Code

Upcoming amendments to the Canada Labour Code will impose obligations on temporary help agencies with employees working for federally regulated employers (the Amendments). The date the Amendments come into force has yet to be announced, but the Labour Program from Employment and Social Development Canada anticipates they may be implemented as early as 2020.

Prohibitions

The Amendments include a number of provisions that prohibit employers from engaging in certain activities such as:

• charging a fee to a person for becoming its employee;
• charging a fee to its employee for assigning or attempting to assign him or her work for a client;
• charging a fee to its employee for any assignment or job preparation services, including those related to preparing resumes or job interviews;
• charging a fee to its employee for establishing an employment relationship with one of its clients;
• charging a fee to a client for establishing an employment relationship with an employee if the day on which the employee’s first assignment with the client started more than six months before the day on which the client establishes the employment relationship with the employee; and
• preventing or attempting to prevent an employee from establishing an employment relationship with a client.

If an employee pays any fees noted in paragraphs a) to d), then the employer will be required to pay him or her an amount equal to the fees incurred.

Additionally, employers will be prohibited from paying employees a rate of wages that is less than that paid by the client if:

• they work in the same industrial establishment;
• they perform substantially the same kind of work;
• the work performed requires substantially the same skill, effort and responsibility;
• their work is performed under similar working conditions; and
• any other factor that may be prescribed by future regulation.

However, a difference in the rate of wages paid to employees by the employer and the client may be permissible if the difference is based on seniority; merit; the quantity or quality of each employee’s production; or any other criterion that may be prescribed by future regulation. That being said, it should be noted the Amendments will prohibit a client from reducing its employee’s wage rate in order to comply with this provision. 

Non-compliance

Under the Amendments, if an employee believes his or her rate of wages is not compliant with the Code, and provides the employer with a written request for a review of his or her rate, the employer must conduct a review and provide the employee with a written response within 90 days. All employer responses must include: 

• A statement that the employer has increased the employee’s rate of wages in order to comply with the Code’s requirements. If this is the case, the employer will be required to pay the employee an amount equal to the difference between the two rates of wages, from the day on which the employee makes his or her written request for review up to the date on which the employer starts paying the employee the increased rate of wages.
• Alternatively, a statement with accompanying reasons detailing why the employer has not increased the employee’s rate of wages.

The Amendments specify that an employer will be prohibited from dismissing, suspending, laying off, demoting or disciplining an employee because the employee has made a lawful request for a review of his or her rate of wages. Likewise, employers will be prohibited from taking into account an employee’s lawful request for review in any decision to promote, train or provide an assignment to him or her.

If an inspection is carried out, or a complaint for non-compliance is made by an employee before the head of compliance and enforcement, the Amendments state that employer’s clients will be treated as if they were the employer.

Take-aways

While this legislation is not yet in force, temporary help agencies and their federally regulated clients should review their recruitment and compensation practices and ensure they do not contemplate any prohibited fees. In preparation for these new obligations, agencies and employers may wish to review their policies, practices and contracts to identify necessary changes to comply with the Amendments. Employers must also be aware of the obligation to provide equal treatment between employees, and ensure any difference in wage rate can be attributed to seniority, merit, or the quantity or quality of each employee’s production. 

We will keep monitoring developments in this area very closely in the coming months.

The authors wish to thank Kayla Quintal, articling student, for her contribution to this legal update.