Evaluation of the Labour Standards Program

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Highlights

This evaluation examines the performance of the Labour Standards program of Employment and Social Development Canada (ESDC). It covers a five-year period from 2011 to 2012 to 2015 to 2016 and complies with the 2016 Treasury Board Policy on Results.

This program enforces the labour standards, established under Part III of the Canada Labour Code and the Canada Labour Standards Regulations, for federally regulated workplaces.

Key findings and recommendationsFootnote 1

Modernizing federal labour standards

The program has made some contributions to modernizing the Code through various program activities, such as stakeholder consultations and various updates to the Code. However, there is still room for improvement to modernize federal labour standards to further address emerging challenges in employment practices, such as the rise in precarious* employment.

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

Reactive activities

The program's enforcement* measures (for example inspections) are not strong enough and are not entirely effective in ensuring compliance with the Code. In addition, a backlog of complaints has hindered the program's ability to address complaints and provide services in a timely manner.

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

The program conducts minimal proactive* work (for example inspections and educational activities), particularly in high-risk* sectors. There is also indication of a downward trend in proactive activities during the evaluation period.

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.

Management response

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:

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 and evaluation overview

Program overview

The Labour Standards program is administered by the Labour Program at ESDC and has two components, namely the Workplace DirectorateFootnote 2 and the Regional Operations and Compliance DirectorateFootnote 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 conditionsFootnote 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 five lines of evidence, which can be found in Annex D.

Key findings

Modernizing federal labour standards

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 trendFootnote 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 technologyFootnote 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 growingFootnote 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 consultationFootnote 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

Reactive activities

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 TransportFootnote 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)

Figure 1: Percentage of Employers with a Violation (Calendar years 2011 to 2015)

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

Text description
Year Percentage
2011 7.3%
2012 7.3%
2013 6.3%
2014 5.8%
2015 5.3%
Average 6.4%

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 evidenceFootnote 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 reviewFootnote 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.

Proactive activities

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)

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.

Text description
Year Assignments Hours
2011-2012 16% 12%
2012-2013 14% 9%
2013-2014 10% 7%
2014-2015 8% 5%
2015-2016 10% 8%
Average 12% 9%

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-assessmentFootnote 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).

Gender-Based Analysis+

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 lackFootnote 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.

Recommendations

The program continues to make significant efforts in establishing and protecting employees' rights to fair and equitable conditions of employment. In order to further support the achievement of program outcomes, the following recommendations are offered:

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.

Annexes

Annex A: Other Findings

There is a lack of consistency in the delivery of services and a lack of alignment of program activities across the country.

Between 2013Footnote 16 and 2017Footnote 17, issues related to the alignment of program activities between the Headquarters and the regions were reported. For instance, the regions had uneven work distribution and a governance structure that did not meet strategic objectives. The Audit of the program reported the absence of a standardized process to ensure quality control across the country.
Program officials noted that there is a need to provide timely and standardized training across the country. In particular, training needs to be provided before changes to the Code are implemented.

The metrics established to track compliance are not fully accurate, and the system in place does not support the program in tracking and measuring expected outcomes.

To support monitoring and reporting activities, the program could benefit from tracking information, such as frequently violated provisions and the implications of increased enforcement* activities on the levels of compliance.
In the meantime, a new system (the Integrated Labour System) is being implemented by the Labour Program of ESDC to resolve data-related issues and enhance system capacities.

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

Labour Standards Program logic model

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

Text description

Annex C presents the Labour Standards program logic model, which outlines the program's inputs, activities, expected outputs, and the outcomes it intends to achieve or to which it intends to contribute.

1. Inputs

  • Input 1.1 Funds
  • Input 1.2 Labour Program personnel

2. Activities

Inputs 1.1 and 1.2 are expected to produce the following activities:

  • Activity 2.1 Educate employers and employees
  • Activity 2.2 Respond to complaints and requests for permits and waivers
  • Activity 2.3 Perform inspections

3. Outputs

Activity 2.1 is expected to produce the following output:

  • Output 3.1 Educational sessions and informational materials

Activities 2.2 and 2.3 are expected to produce the following output:

  • Output 3.2 Application of compliance and enforcement measures

4. Immediate Outcomes

Output 3.1 is expected to produce the following immediate outcome:

  • Immediate Outcome 4.1 Employees and employers are aware of their rights and obligations under Part III

Output 3.2 is expected to produce the following immediate outcome:

  • Immediate Outcome 4.2 Employers deterred from violating Part III

5. Intermediate Outcomes

Immediate Outcomes 4.1 and 4.2 are expected to contribute to the following intermediate outcome:

  • Intermediate Outcome 5.1 Employers are compliant with their obligations under Part III

6. Ultimate Outcome

Intermediate outcome 5.1 is expected to contribute to the following ultimate outcome:

  • Ultimate Outcome 6.1 Fair and equitable workplaces are achieved through the enforcement of labour standards legislation and regulations

Annex D: Evaluation methodology

Evaluation questions

  • To what extent does the program respond to the need to establish minimum working conditions for employees under federal jurisdiction?
  • To what extent is the current mix of proactive and reactive assignments effective in encouraging compliance with the Code?
  • To what extent does the use of different mechanisms of enforcement (for example investigation of complaints, inspections, issuance of Assurance of Voluntary Compliance (AVC), Letters of Determination, Payment Orders, filling orders or prosecution in federal court) help to correct and/or prevent a breach of the Code?
  • To what extent are training and policy and regulatory development in headquarters aligned with the operational requirements of the program in the regions?
  • To what extent are the regulations implemented by the program adequate to accomplish its stated outcomes?
  • To what extent do the programs effectively target the sectors/areas/sections of legislation where non-compliance is higher?
  • To what extent have recent changes to Labour Standards legislation and front-end service delivery affected the program's performance?
  • Are there other types of activities which would be more cost effective?

Lines of evidence

Literature review

  • An examination of issues during the evaluation period was conducted, including a review of recent issues and emerging issues.
  • Limitations: There was a limited amount of literature available in relation to the federal Labour Standards program.

Document review

  • An analysis of internal documents produced by the program during the evaluation period was conducted to better understand program activities.
  • Limitations: There may be a gap in the information available given that the document review is solely based on available documents.

Administrative data review

  • An analysis of administrative data from the Labour Program's LA2000 database was conducted.
  • Limitations: The evaluation team did not have direct access to the program database and relied on the program to help prepare aggregate data, therefore, the data analysis may not be comprehensive.

Key Informant Interviews

  • Interviews were conducted with 41 key informants, including ESDC program officials, labour law experts, employer and employee representatives, and provincial labour officials.
  • Limitations: The views of key informants are subject to bias. Additionally, the limited sample of respondents does not allow for a solid assessment of the views of respondents.

Surveys of employers and employees

  • In total, 187 employers and 407 complaint filers (employees) responded to the surveys, which assessed respondents' awareness of activities, understanding of procedures, and satisfaction.
  • Limitations: Limited samples did not allow for sub-group analysis (for example gender, sector). In particular, employee surveys were limited to complaint-filers.

Annex E: Historical Development of Part III of the Code

historical development of part III of the code

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

Text version

Annex E presents a timeline of the historical development of Part III of the Canada Labour Code. It highlights key amendments and updates made to the Code, by year, as follows:

  • 1965 – Canada Labour (Standards) Code passed and replaces Annual Vacations Act (1958).
  • 1971 – Name changes to Canada Labour Code, Part III. Hours of work amended to allow industry-specific regulations.
  • 1978 – Modified work week; annual leave: enhanced; general holiday (boxing day added); bereavement leave; sick leave; unjust dismissal; payment of wages.
  • 1982 – Group termination (strengthened, joint planning committee); severance pay (improved access).
  • 1985 – Child care leave; sexual harassment; maternity leave; minimum wages (repealed provisions for the handicapped); unjust dismissal; general holidays; enhanced protection from discipline due to pregnancy, sick leave, and garnishment proceedings; improved benefit protection while on maternity, child care, or sick leave.
  • 1993 – Modified work schedules; parental leave; work-related illness and injury; wage recovery; deductions; improved access to maternity-related leave and accommodation in employment for pregnant employees; improved benefit protection while on leave of absence.
  • 2000 – Maternity and Parental Leave: combined leaves established.
  • 2003 – Compassionate Care Leave.
  • 2008 – Reservist Leave.
  • 2012 – Severance Pay: repealed mandatory retirement – entitlement regardless of eligibility for a pension.
  • 2013 – Sick Leave (increased period of absence); Leave Related to Critical Illness; Leave Related to Death or Disappearance; Interruptions to Maternity and Parental leaves.
  • 2014 – Vacation Pay: revised payment upon termination. Complaints regime established. Wage Recovery Appeals. Long term disability plans. Fines for offences and punishments. Interruptions to compassionate care leave, leave related to critical illness and leave related to death or disappearance.
  • 2015 – General Holiday: amended to simplify calculations and remove restrictions to allow more employees to qualify.

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).
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