BC Law Institute Submission – ESA Review

August 2018

Mr. Greg Blue
Senior Staff Lawyer
BC Law Institute
1822 East Mall,
Vancouver BC, V6T 1Z1

Sent by email to gblue@bcli.org

Attn: BC Law Institute and members of the Employment Standards Act Reform Project Committee,

Re: Employment Standards Act Consultation

Thank you for the opportunity to respond to the consultation paper by the ESA Reform Project Committee on the Employment Standards Act.  The Coalition of BC Business agrees it is imperative to undertake such reviews periodically, and also that the ESA needs updating to reflect contemporary employment and business practices. The Coalition appreciates the time and energy spent on this review and would like to thank all members of the project committee and the BCLI for their dedication to this important undertaking.

The Coalition of BC Businesses is comprised of 14 BC business associations, representing 100,000 small- and medium-sized businesses who collectively employ over 500,000 workers.  On their behalf, the Coalition works on several important labour issues as we embrace the changing world of work.

It is critical to the Coalition that labour policies are based on the following principles:

  1. be fair to both employers and employees,
  2. provide flexibility in the workplace,
  3. not create unnecessary costs/burdens to doing business,
  4. and provide certainty/decisive direction on the rights of both employers and employees.

Increasing costs to BC’s small- and medium-sized businesses

When contemplating changes to the ESA, it is important to recall that many recent provincial government policies are stacking up and making it more difficult for small- and medium-sized businesses to be productive and competitive.

Least encouraging was the news that businesses will be footing the bill to the tune of almost $2 billion by 2020-21 to cover the full phase-out of MSP premiums through the Employers Health Tax (EHT) calculated based on payroll. In fact, this new burden, shifted entirely onto the shoulders of business owners, flies in the face of an innovative economy as tech companies tend to have high payrolls well before generating positive net income. For these start-ups, the EHT will be an added cost of doing business and disincentive to hire as they strive to become successful. For many business – especially small businesses – this new payroll tax will have a negative effect on job growth and investment.

When combined with the loss of revenue neutrality and increase of the Carbon Tax, increases to minimum wage and increases to the general corporate tax rate, businesses of all sizes—from dry cleaners on Main Street to family logging companies in the interior—are reporting serious challenges to their ability to invest and grow. Many have also expressed alarm that government implemented these changes without first adequately understanding the financial impact on the engines of BC’s economy.

Whatever changes are recommended on the ESA, there will likely be costs associated with them. It is vital that these costs be analyzed fully and transparently in consultation with BC’s business community before they are enacted.

Embracing the changing world of work 

The Coalition is generally supportive of the recommendations contained in the BC Law Institute’s comprehensive, multi-year ESA review. In particular, the Coalition supports those recommendations where the project committee achieved majority consensus. With that in mind, the Coalition wishes to highlight the following:

Recommendation 8:  The definition of a work week.  Allowing an employer to set its work week could have a big positive impact on national employers and those with multiple regional branches and a centralized payroll.  Allowing this would also provide flexibility to businesses, bring BC in line with what other jurisdictions are doing, and should not have an adverse effect on employees.  The Coalition supports this recommendation.

Recommendation 19: Flexibility of hours.  This recommendation would help bring the ESA in line with a practice that is already often used by many small- and medium-sized businesses.  Often there are informal arrangements between employers and employees that allow both to have more flexibility without triggering overtime.  Although this practice is technically illegal, it is common and should be redressed.  Moving forward with this recommendation would be beneficial and fair to both employers and employees. The Coalition supports this recommendation.

Recommendation 21: Hours of notice to change shift.  The Coalition is glad that the Project Committee recognized the importance of flexibility between an employee’ need for notice to change a shift and an employer’s ability to provide said notice.  Clarity and flexibility in employers and employees’ rights with an understanding to ability is paramount to success.  This recommendation will create a clear definition of rights.  The Coalition supports the majority intent of this recommendation.

Recommendation 22:  Employees right to decline a shift if not enough notice is given. This helps to further balance out recommendation 21, is fair, and protects the employee’s rights. This also provides clarity to the Act.  The Coalition supports this recommendation contingent on recommendation 21 moving forward with the majority intent.

Recommendation 28: Changes to Vacation Pay.  This recommendation provides clarity and allows business flexibility to chose which method of vacation pay it will use.  Moving forward with this recommendation would “legalize” what is already a common practice with many businesses.  The Coalition supports this recommendation.

Recommendation 29: Statutory Holiday Pay.  Altering the requirements to receive statutory holiday pay in this manner will create a financial burden on some Coalition members, particularly those that have part time employees.  Essentially this formula will increase the potential amount of additional part time employees that would be applicable to stat holiday pay.  As many small and medium sized businesses rely on part time labour, the Coalition does not support this amendment.

Recommendation 30: Minimum wage.  The Coalition has followed minimum wage policy discussions closely since the early 1990s.  Payroll is often the largest cost of running a business, and changes to the minimum wage—even seemingly small changes—have a major effect on a business’ success. As the Coalition noted in its presentation to the Fair Wage Commission in 2017, any significant increases to the minimum wage must be spread out over a number of years in predictable and affordable increments.  Once government’s $15 per hour target is met, the Coalition advocates that further increases be made annually in September and tied directly to the CPI. The Coalition would be pleased to see recommendation 30 amend the ESA to include this.

Recommendation 35:  Annual Vacation entitlements:  Maintaining the status quo on annual vacation entitlements provides predictability and continuity that businesses are able to budget towards.  The current methodology is also consistent with the majority of other jurisdictions within Canada.  The Coalition supports the majority opinion this recommendation.

Recommendation 35(a): Additional vacation time.  Increasing the amount of additional vacation time would be a major cost to BC’s small- and medium-sized businesses.  Given other recent tax and cost increases currently impacting BC’s businesses, the Coalition believes this to be prohibitively expensive at this time.  The Coalition does not support the minority position on this amendment.

Recommendation 68:  Administrative penalties.  Penalties were introduced to the Act originally as an incentive to compliance, but over time it has been noted that there have been occasional “honest mistakes” that have led to fines.  It is appropriate for the Director to be able to use discretion and have the option to waive penalties, especially in instances of inadvertent non-compliance.  The Coalition supports the majority decision on this recommendation.

Working together for a productive, innovative economy

Thank you again for undertaking this extremely important review. That you were able to achieve a high degree of majority and full committee consensus on many of the recommendations is impressive, and highlights clearly the need to modernize BC’s ESA in ways that promote the best interests of both employers and employees. The Coalition was equally impressed with the Project Committee’s diverse and knowledgeable membership, who together have exemplified a productive template for a comprehensive review that incorporates the diverse views of multiple stakeholders. It has been the Coalitions pleasure to be part of this process.

On behalf of the Coalition of BC Businesses, thank you again for your work.

Best regards,

Jeff Guignard
Chair, Coalition of BC Businesses.