Effective April 1, 2014, significant amendments made under the Jobs and Growth Act, 2012 to Part III of the Canada Labour Code came into force. Part III of the Canada Labour Code (the “Code”) sets out minimum standards for federally regulated employers, including such items as hours of work, minimum wages, holidays, vacations, notice of termination, and severance pay. Part III of the Code also sets out provisions to assist employees in recovering unpaid wages following termination of employment. These provisions are amended to provide a new statutory framework which includes a review procedure for payment orders and the dismissal of employee complaints, as well as time limits for making certain complaints and for the payment of vacation pay upon termination of employment.
New statutory framework and time limits
The amendments introduce a statutory framework for employee complaints regarding unpaid wages or other Part III violations (except unjust dismissal). Employees may file written complaints to a Labour Program inspector of Employment and Social Development Canada (formerly HRSDC).
For complaints for unpaid wages, including vacation pay, employees have six months from the last date on which the employer was required to pay the wages to file a complaint. For all other complaints, the complaint must be filed within six months from the day on which the issued complained of occurred.
Time limits also apply to the period that may be covered by an inspector’s payment order. Payment orders are limited to wages or other amounts owing for the 12 month period before the date the complaint was made, or the date the employment was terminated. In the case of vacation pay, the time limit is 24 months from the applicable date. For pro-active inspections, the time period is the 12 month period preceding the commencement of the inspection.
Labour Program inspectors have powers to deal with complaints or encourage settlement. An inspector may temporarily suspend a complaint if he or she believes that the employee must take additional measures before the complaint can be considered. An inspector may also reject a complaint in certain circumstances, such as where the complaint is frivolous, settled, or where a collective agreement would apply to the complaint.
Administrative review procedure
Where an employee complaint is rejected, or where a payment order is made, the inspector must notify the parties in writing and provide reasons for the decision. An administrative review of an inspector’s decision may be requested in writing, setting out the reasons for the request, within 15 days of such notification. In the case of an employer requesting a review of a payment order, the amount set out in the payment order must be submitted to the Minister.
The administrative review process may result in a confirmation, a variance, or a rescission of the inspector’s decision. The review decision may be appealed to a referee only on questions of law or jurisdiction. For complex matters for which an administrative review has been requested, the Minister may refer the matter directly to a referee.
Time limit to pay vacation pay on termination of employment
The Code currently requires employers to pay outstanding vacation pay “forthwith” upon the termination of employment. For wages or other amounts owing, the Code requires payment within 30 days from the time when the entitlement to the wages or other amounts arose. The amendments also apply the 30 day requirement to vacation pay.
The current Code provisions for complaints, the rejection of complaints, and payment orders, will continue to apply to all complaints filed before April 1, 2014. Any complaints filed after that date are subject to the amendments and the new framework.
Implications for employers
The amendments provide clarity and certainty to employers in the federal sector. The time period which payment orders can cover is limited to 12 months for wages, and to 24 months for vacation pay. This time limitation will remove the administrative burden and uncertainty associated with the current regime in which payment orders may be unlimited in their retroactivity. Similarly, the time limits for filing complaints under Part III of the Code will mean that employers will not have to defend stale or dated claims.