Evaluation of the Labour Standards Program

Key findings and recommendations^{Footnote 1}

Modernizing federal labour standards

Recommendation 1: Modernize and update federal labour standards to address emerging challenges in employment practices and the changing realities of the workplace.

Response:

The Labour Program agrees with the recommendation to modernize federal labour standards.

Action #1:

The Labour Program is implementing a series of legislatives changes that address the changing realities of the workplace:

• strengthening compliance and enforcement measures, including Administrative Monetary Penalties
• providing additional flexibilities to employees, including a right to request flexible work arrangements and new leaves
• protecting interns in federally regulated workplaces
• introducing a robust and modern labour standards, assuming Bill C-86 receives Royal Assent

Implementation of all legislative changes will take place in early 2019 and is expected to conclude before the end of fiscal year 2020 to 2021.

Action #2:

The Labour Program will establish a Strategic Regulatory Development Plan to prioritize labour standards regulations that need to be developed and/or amended.
This action will begin with stakeholder consultations by end of December 2019 and result in the establishment of a plan by March 31, 2020.

Reactive activities

Recommendation 2: Explore ways to address complaints efficiently, in order to reduce the backlog of complaints and improve service delivery times, and explore opportunities to implement and apply stronger enforcement measures to address and deter violations to the Code.

Response:

The Labour Program agrees with the recommendation to improve caseload management and strengthen enforcement measures.

Action #1:

The Labour Program will build on recent initiatives to reduce the complaints backlog and improve service times, including:

• assessing pilot initiatives to confirm their effectiveness and national application (March 2019)
• reviewing resource levels (September 2019)
• implementing new Labour Program case management system to improve the administration of complaints (March 2020)
• streamlining complaints handling procedures (end of fiscal year 2020 to 2021)

Action #2:

The Labour Program will implement new compliance and enforcement measures to better address non-compliance, specifically:

• initiating a number of new measures including fees on payment orders and internal audits (April 1, 2019)
• establishing an Administrative Monetary Penalties regime and naming of violators for both Parts II and III of the Code (March 2020)

Proactive activities

Recommendation 3: Use program data effectively to assess violations to the Code and their severity and to increase targeted proactive activities, particularly in high-risk sectors.

Response:

The Labour Program agrees with the recommendation to increase targeted proactive activities.

Action:

The Labour Program will set national and regional plans to increase outreach activities and target high-risk sectors, including:

• developing new outreach and educational materials (September 2019)
• aligning regional operational plans with national priorities (April 2019)
• engaging with stakeholders on outreach and operational matters (December 2019)
• conducting data analytics to determine data needs and identify high-risk sectors (December 2019)
• increasing resources to conduct proactive activities (March 2020)

Program overview

The Labour Standards program is administered by the Labour Program at ESDC and has 2 components, namely the Workplace Directorate^{Footnote 2} and the Regional Operations and Compliance Directorate^{Footnote 3}.

The objective of the program is to establish and enforce the labour standards under Part III of the Code and its Regulations, as well as to ensure fair and equitable conditions^{Footnote 4} of employment in federally regulated workplaces.

The logic model of the program is provided in Annex C and outlines the various activities, outputs, and expected outcomes of the program.

The average annual budget of the program between fiscal years 2011 to 2012 and 2015 to 2016 is $18,221,987. In particular, there has been a decrease in the program's budget by 32% between fiscal years 2013 to 2014 and 2015 to 2016. This is primarily due to the Strategic Review and Deficit Reduction Action Plan that led to a reduction in resources, while the scope of the program continued to expand.

Evaluation overview

The evaluation assesses the performance of the program, including the implementation of changes to the Code, program design, service delivery, proactive* enforcement, and performance measurement practices.

These issues are guided by evaluation questions and rely on 5 lines of evidence, which can be found in Annex D.

The nature of work is changing and is leading to a rise in precarious employment and global competition

New forms of employment are emerging

• There is a trend^{Footnote 5} toward non-standard employment, consisting of part-time, temporary and contractual arrangements
• These developments have led to a rise in precarious* work, which is usually associated with low, unstable income and few benefits

Technological changes are leading to non-standard work arrangements

• New global developments in technology^{Footnote 6} (for example greater online connectivity, telework, artificial intelligence, robotics) have led to the rise of virtual work and an increase in contract-based employment in Canada

Globalized economies are increasing competition among employers

• In a more globalized economy, there is the risk that Canadians will have to compete with international employees for work, both domestically and abroad. This may explain the growing^{Footnote 7} use of temporary foreign workers, as noted by key informants

There is a continuing need to update and modernize federal labour standards to reflect the changing realities of the workplace

The historical development of Part III of the Code from 1965 to 2015 is shown in Annex E, and is representative of the program's contribution to updating the Code and addressing emerging trends and challenges in employment practices.
Key informants stated that certain provisions of the Code are “outdated” and that the program was slow to react to change.

A recent consultation^{Footnote 8} (fiscal year 2017 to 2018) with various stakeholders (for example, Canadians, unions and labour organizations, and employer organizations) revealed one strong message: “The way Canadians work has changed, but federal labour standards have not.” (Source: 2017 Labour Stakeholder Consultation)

This consultation also revealed that organizations and individuals demonstrated a shared interest in:

• improving access to leave and annual vacation
• supporting work-life* balance
• protecting employees in precarious* work
• updating termination of employment provisions
• ensuring good wages and benefits

Overall, there has been improvements in the levels of compliance with the Code by employers, with significant variations across sectors

As shown in Figure 1, an average of 6.4%^{Footnote 9} of employers were found to have at least one violation in a given year during the evaluation period.

However, program data does not include the severity of violations. The program could therefore benefit from tracking this type of information.

The Road Transport^{Footnote 10} sector demonstrated the highest level of non-compliance between 2011 and 2015. In 2011, 9% of employers in that sector were non-compliant and 7% were non-compliant in 2015.

During this period, there has been an observed improvement in the levels of compliance in most sectors, with the exception of part of the Road Transport sector (other than trucking).

Figure 1: Percentage of employers with a violation (Calendar years 2011 to 2015)

Source: Labour Program's Labour Applications 2000 (LA2000) database system.

Current enforcement measures are not strong enough or effective in ensuring compliance with the Code, and a backlog of complaints has hindered the timeliness of services

Enforcement measures

The various lines of evidence^{Footnote 11} suggested that the program could benefit from devoting more resources to developing and consistently applying stronger sanctions and penalties against violations.

In particular, it was noted by key informants that the current enforcement* measures are not strong enough to deter non-compliance.

Timeliness of services

Program officials noted that a significant backlog of complaints has hindered the program's ability to address complaints in a timely manner.

• A review^{Footnote 12} of the program's monetary complaints process (fiscal year 2015 to 2016) highlighted the need for the program to focus on improving the timeliness of services to clients, the streamlining of processes, and quality control
• The set target for the time required to finalize monetary complaints and unjust dismissals* has not been consistently met
• The recent audit of the program (2017) found that service delivery standards are not defined, formalized, nor communicated

The program's workload has been primarily reactive with the program conducting minimal proactive activities

During the evaluation period, the program conducted several successful outreach activities, and consolidated its 1-800 inquiries to better serve clients seeking advice and guidance on compliance with the Code.

Although the program has set the target for proactive* activities to be 10% of inspectors' time, this goal has not been consistently met. As shown in Figure 2, there has been a decline in the percentage of, and time spent on, proactive assignments.

Program officials noted that increasing the number of proactive activities would risk the timeliness of reactive* activities due to limited resources. For instance, only 37% of surveyed employees considered the complaints resolution process to be timely and 35% found the wage recovery appeal process to be timely.

They also noted that proactive activities could help address challenges caused by repeat* offenders and those who are “purposefully” non-compliant with the legal obligations.

Figure 2: Percentage of proactive assignments and assignment hours (between fiscal years 2011 to 2012 and 2015 to 2016)

Source: Labour Program's Labour Applications 2000 (LA2000) database system.

There is a lack of proactive inspections in sectors where non-compliance is higher (for example, high-risk sectors)

Key informants agreed that trucking was a high-risk* sector due to high levels of non-compliance.

Some program officials stated that the program was too reactive* in nature to be able to target these areas. In addition to the lack of proactive* inspections targeted at high-risk sectors, program officials pointed to the lack of strong enforcement measures* to support these activities.

Program officials had diverging views on whether the program has been able to emphasize their communication and enforcement* efforts for high-risk sectors.

Evidence shows that the program has implemented a self-assessment^{Footnote 13} proactive initiative in the trucking industry in fiscal year 2015 to 2016. This initiative helped the program understand the level of compliance of employers with certain Code provisions.

The Federal Labour Standards Review (2006)^{Footnote 14} indicated that the program devotes minimal resources to proactive identification of high-risk sectors, and lacks the required statistical resources or expertise to do so.

Program officials noted that the program does not identify or address frequently violated provisions of the Code, such as overtime and vacation pay. In addition, the data review shows that the program does not compile and track data to support these activities.

Employers and employees were aware and satisfied with the available sources of information

Awareness

Approximately 88% of employers and 82% of employees reported awareness of the Labour Standards website. Other sources, such as publications, pamphlets, and telephone hotlines were also cited as commonly known sources by employees and employers.

Only 3% of surveyed employers used the program's education outreach in the past 2 years.

Usefulness

While survey respondents found common sources of information to be effective, employees (66%) were less likely to find these sources of information to be sufficient in comparison to employers (83%).

Most employers and program officials noted that inspections helped increase awareness and improve communication between the program and employers.

Timeliness

The majority of employees (70%) and employers (79%) considered other provided services to be timely (for example, telephone helpline, education outreach, counseling sessions, inspectors and Early Resolution Officers).

The Gender-Based Analysis+ (GBA+) revealed that the program could provide further support to vulnerable employees, develop more initiatives to support work-life balance, and promote awareness of labour standards to employers and employees

Vulnerable* workers need more protection as they are more likely to be in precarious* employment. For instance, the 2015 Federal Jurisdiction Workplace Survey highlighted that a higher percentage of women (14%) works part-time in comparison to men (8%):

• the literature revealed that employees from particular demographics (including women) working in particular contractual arrangements (part-time, temporary) may be more vulnerable*
• therefore, the program could provide further support to vulnerable* employees

The survey also highlighted that 20% of employees worked more than 40 hours per week:

• to support work-life* balance and employee well-being, the International Labour Organization (2014) has recommended the 40-hour maximum work week, as well as the development of more leaves and family-friendly policies
• moreover, the literature found that family-friendly policies are even more critical for women, as they often do unpaid domestic work at home, in addition to paid work

Due to the lack^{Footnote 15} of awareness with the standards, some sectors experience higher levels of non-compliance or unjust dismissals*.

• to ensure compliance, the program could continue to help employers and employees, particularly high-risk* sectors and vulnerable* employees, become better aware of labour standards

Modernizing federal labour standards

Recommendation 1: Modernize and update federal labour standards to address emerging challenges in employment practices and the changing realities of the workplace.

Reactive activities

Recommendation 2: Explore ways to address complaints efficiently, in order to reduce the backlog of complaints and improve service delivery times, and explore opportunities to implement and apply stronger enforcement measures to address and deter violations to the Code.

Proactive activities

Recommendation 3: Use program data effectively to assess violations to the Code and their severity and to increase targeted proactive activities, particularly in high-risk sectors.

Annex A: Other findings

Annex B: Definitions

Enforcement measures: The mechanisms through which labour standards are enforced, such as payment orders and inspections.

High-risk sectors: sectors where non-compliance is higher and workers are more vulnerable.

Precarious employment: “Precarious” work combines relatively low pay with one or more of the following: an unstable income, few benefits, limited legal protections, and uncertainty about future advancement, profit, or other opportunities (Source: Arthurs Report, 2006).

Proactivity: An approach to compliance and enforcement of labour standards which actively performs counselling, inspections and investigations of high-risk employers, regardless of complaints filed. Proactive activities, such as inspection assignments and educational activities, are conducted by the program to prevent violations from occurring.

Reactivity: A complaint-driven approach to compliance and enforcement of labour standards.

Repeat offenders: Employers who have violated labour standards multiple times, usually knowingly.

Unjust dismissal: Division XIV – Unjust Dismissal of Part III of the Canada Labour Code provides a procedure for making complaints against a dismissal that an employee considers to be unjust.

“Vulnerability” in the labour market is defined in economic terms: workers with low wages and benefits and in non-standard work arrangements and hours (Source: Chaykowski & Slotsve, 2008).

Work-life balance: This refers to the ability of employees to juggle both the responsibilities of work and their lives outside of work, as well as ensuring that they do not work over the maximum hours of work. Work-family balance is connected to employee well-being and gender equity.

Annex C: Labour Standards Program logic model

Source: Performance Information Profile – Labour Standards (August 2017).

Annex D: Evaluation methodology

Annex E: Historical development of Part III of the Code

Source: Content from Historical Development of Part III of the Canada Labour Code.

Annex F: References

• Arthurs, H. W. (2006). Fairness at work: federal labour standards for the 21 century. Ottawa: Federal Labour Standards Review
• Audit of Design and Delivery of Labour Standards Program (Canada Labour Code Part III) – November 2017
• Banks, K. (2015). Employment standards complaint resolution, compliance and enforcement: a review of the literature on access and effectiveness. Toronto: Ontario Ministry of Labour
• Block, R. N., Park, J. Y., & Kang, Y. H. (2013). Statutory leave entitlements across developed countries: Why US workers lose out on work–family balance. International Labour Review, 152(1), 125 to 143
• Canada Labour Code – Current to August 27, 2017 (Last Amended on June 22, 2017)
• Chaykowski, R., & Slotsve, P. (2008). The extent of economic vulnerability in the Canadian labour market and federal jurisdiction: is there a role for labour standards? Social Indicators Research, 88(1), 75 to 96
• International Labour Organization. (2014). Rules of the game: A brief introduction to international labour standards. Geneva, Switzerland: International Labour Office
• Information on Labour Standards: 1A – Filing a complaint. Employment and Social Development Canada Website (2017)
• Labour Program Stakeholder Consultation – Strengthening and Modernizing the Compliance and Enforcement Provisions in the Canada Labour Code (December 18, 2017)
• Labour Standards Dashboard Reports (2014 to 2015 and 2015 to 2016) – Period Ending March 31, 2015 and March 31, 2016
• Labour Standards Strategic Operational Plan (2016 to 2017) – Presented in May 2016 for Regional Distribution
• Lean Diagnostics – ESDC Labour Program Labour Code Part III Diagnostic of the Monetary Complaint Process (June 15, 2015)
• Performance Information Profile: Sub-sub-program 3.1.3.1: Labour Standards (ADM-Approved-Date: May 05, 2017)
• Results from the 2015 Federal Jurisdiction Workplace Survey – Workplace Information and Research Division, Strategic Policy Analysis & Workplace Information Directorate (January 2017)
• Technical Reports in support of this Evaluation (not published, however, available on demand):
  • Document Review (written by Mirna Abou-Rizk, Evaluator, ESDC) – June 2018
  • Literature Review (written by Salwa Khan, Junior Evaluator, ESDC) – June 2018
  • Administrative Data Review – June 2018
  • Key Informant Interviews – June 2018
  • Surveys of Employees and Employers – June 2018
• Tucker-Simmons, D. (2013). Open for business, closed for workers: employment standards, the enforcement deficit, and vulnerable workers in Canada. The Broadbent Institute
• Vosko, L. F. (2013). Rights without remedies: enforcing employment standards in Ontario by maximizing voice among workers in precarious jobs. Osgoode Hall Law Journal, 50, 845-873
• What We Heard – Modernizing Federal Labour Standards (Labour Program – August 30, 2018)