Excluded employees from hours of work provisions - IPG-049

Effective date: May 22, 1992

Revised date: January 9, 2023

On this page

• Subject
• Issue
• Interpretation
• Summary
• Appendix A – Examples of managerial determinations by courts and adjudicators
• Appendix B – Management function questionnaire

Subject

This Interpretation, Policy and Guideline (IPG) is intended to clarify which employees are excluded from Division I (Hours of Work) of the Canada Labour Code (Code) pursuant to subsection 167(2) of the Code.

Note: “employees” also includes “interns”. Student interns are not subject to the interpretation of this IPG.

Subsection 167(2) states that:

• (2) Division 1 does not apply to or in respect of employees who
  • (a) are managers or superintendents or exercise management functions, or
  • (b) are members of such professions as may be designated by regulation as professions to which Division I does not apply

An employer is in contravention of the Code if they:

• knowingly misclassify an employee, or
• have a history of misclassifying employees

In order to be in compliance with the Code, employers must ensure that they take corrective measures to avoid misclassifying employees.

Any employer who knowingly misclassifies an employee is in contravention of the Code. The employers will be subject to enforcement action, up to and including an administrative monetary penalty (AMP).

For additional information, consult the Misclassification IPG-105.

Issue

There is a need to clarify:

• the term manager
• the distinction between a manager and an employee who is a superintendent or exercises management functions, and
• excluded professions

Interpretation

The term “manager”

Pursuant to paragraph 167(2)(a) of the Code, managers are excluded from the hours of work provisions available under Division I. Judges and adjudicators have interpreted the term narrowly, thus limiting the extent of its exclusionary effect.

While the Code does not define "manager", judges and adjudicators have adopted an approach whereby they analyze the job responsibilities of an employee. This determines whether that employee performs a number of enumerated management functions.

The following is a list of the types of management functions examined:

• independent action, autonomy and discretion
  • a key aspect of being a manager is having the power to unilaterally make binding decisions in matters of importance. Adjudicators often describe this as the "power of independent action, autonomy and discretion". In contrast, employees who are not managers merely:
    • make recommendations
    • provide input into the decision-making process, or
    • make decisions which may be overridden by a superior
  • to support a finding that an employee is a manager, powers of independent action, autonomy and discretion must be exercised. Such powers do not have to be absolute as long as real decision-making authority exists in matters of importance [see Matters if importance below]. For example, the employee does not have to be completely independent of outside review. The more an employee makes important decisions, the likelier that person is a manager. Conversely, the likelier that employee is a supervisor, or non-manager if they:
    • follow pre-determined guidelines
    • act in consultation with others
    • make recommendations only
    • simply make minor decisions, or
    • acts with restricted discretion
• matters of importance
  • managers exercise decision-making powers in matters of importance, such as:
    • company policy and planning
    • budget decisions, and
    • contract negotiations on behalf of the employer
  • they also attend top level management meetings or part of the governance structure of the organization
• staffing
  • managers have the authority to make final decisions to:
    • hire
    • fire
    • promote
    • transfer, or
    • discipline employees
  • simply interviewing candidates and providing non-binding hiring recommendations do not make an employee a manager
• supervision and control
  • managers have responsibility for day-to-day management and administrative functions. As well, they possess powers of supervision and direction over other employees
• job title and qualifications
  • the job title, level of prerequisites, salary, and job description of an employee may also signal a managerial role. However, use of the term "manager" in a job title does not signal that an employee is a manager
• public capacity
  • managers may act as spokesperson for their company. External perceptions of an employee's role may also be relevant to a determination of whether an employee is a manager. For example, is the employee perceived by third parties to be a manager?
• role in labour relations
  • managers may have the authority to act on management's behalf in collective bargaining negotiations and at grievance hearings

Summary

Determining whether an employee is a manager requires a thorough analysis of the facts of each case. This determines the number and degree of management functions performed by that employee. It is not necessary that each of the foregoing criteria be present in order for an employee to be manager. Rather, the management functions which are being performed must be weighed in terms of their importance and frequency. They must also be balanced against the management functions which are not being performed. If this analysis indicates the presence of management authority, then the employee should be deemed a manager.

Appendix A provides examples of cases where a determination was made on whether the employee was a manager or not.

The distinction between a manager and an employee who is a superintendent or exercises management functions

There was a Federal Court decision in Island Telephone v. Minister of Labour and Communications and Electrical Workers of Canada, Local 403 (referred to in Appendix A). It provides the first judicial ruling on the meaning of an employee who is a manager or superintendent or exercises management functions as that phrase is used in the Code. Each of the 3 terms referred to — "manager", "superintendent", and "exercises management functions" — was reviewed by the court, and is summarized below:

• manager
  • the concept of manager must be given a narrow meaning so as to include only those employees in senior management positions. The process to be followed when determining whether an employee exercises sufficient authority to be deemed a manager for the purposes of the Code was examined in question ”What is meant by the term manager?” above
• superintendent
  • the concept of superintendent must also be defined restrictively, although not as narrowly as manager. For an employee to be considered as a superintendent, that employee must exercise substantial authority and responsibility on behalf of the employer in relation to matters of significance to the enterprise. A superintendent does more than simply supervise subordinate employees and is a step above lower-level management
  • to make a determination as to whether an employee is a superintendent, reference should once again be made to the management functions listed above under “The following is a list of the types of management functions examined:”. If, after applying those criteria, it is evident that the employee exercises substantial authority, then that employee will be excluded from the hours of work provisions in Division I of the Code
• exercises management functions
  • the concept of someone who exercises management function is interpreted in the same way as the phrase "performs management functions", which is found in subsection 3(1) of Part I of the Code. This subsection states that an employee who “performs management functions” is not considered an employee for the purposes of being covered by a collective agreement. Jurisprudence from Canada Industrial Relations Board decisions involving subsection 3(1) are relied upon when applying paragraph 167(2)(a)
  • the management functions listed above under “The following is a list of the types of management functions examined:” must be relied upon when determining whether an employee exercises management functions. It is important to note that an employee must exercise more than some of the management functions listed in order to fall within the paragraph 167(2)(a) exclusion. Such an employee must exercise enough of those functions to have real decision-making authority in essential managerial matters
  • for example, one of the conclusions in the Island Tel case was that the employee played an important role in the management of the company. However, the role was not one that in itself had a determining influence on the employment of others, nor did it have any direct influence on the company's overall:
    • objectives
    • planning, and
    • policies
    Thus, the employee was not excluded from the hours of work provisions in Division I
  • to conclude, a legal distinction exists between the 3 concepts of management employees used in paragraph 167(2)(a). It is based on the level of authority exercised by an employee, with "manager" being at the top end and "exercises management functions" at the lower end. Each concept requires an employee to exercise substantial authority within the company, as determined by the management functions performed, and employees who do so are excluded from Division I of the Code. While each case must be assessed on its own facts, employees who are managers are excluded from Division I of the Code
  • here it is not clear that an employee is exempt from Division I of the Code, or when in dispute, use the Management Function Questionnaire (Appendix B). It gathers information to help make the determination. Ideally, this questionnaire is completed by both the employer and the employee. The responses to the questionnaire can be evaluated based on the factors mentioned above

Excluded professions

Paragraph 167(2)(b) states that “members of such professions as may be designated by regulation” are excluded from the application of Division I. Section 3 of the Canada Labour Standards Regulations identifies the profession:

• 3. Division I of the Act does not apply to members of the architectural, dental, engineering, legal or medical professions

Each of the professions named is associated with a professional association which provides accreditation for its members to occupy a position in that field and perform those functions. For the exclusion to apply, a person must both be accredited and be in a position where those functions are performed.

Examples of excluded professions

• An architect who is a member of the Northwest Territories Association of Architects occupying a position in the field of architecture is excluded
• A doctor in Québec accredited by the Collège des médecins du Québec and occupying a position in which the accreditation is necessary in order to fulfill their duties, is excluded as they work in the medical profession

Examples of non-excluded professions

• A paralegal in Ontario accredited by the Law Society of Ontario and occupying a position in which the accreditation is necessary in order to fulfill their duties, is not excluded as the profession of a paralegal, is not considered a legal profession
• A nurse who is a member of the College and Association of Registered Nurses of Alberta and is working as a nurse is not excluded as they work in the nursing profession

As well, an accredited professional working in a position unrelated to their professional designation is not excluded.

Appendix A - Examples of managerial determinations by courts and adjudicators

The Island Telephone Company Limited v. Minister of Labour (Canada) [1991] F.C.J. No. 978

Position:

• Trunks and Switching Foreman (Level 1 Manager) (also known as a Network Manager)

Job responsibilities:

• managed/supervised 17 employees
• authorized overtime only in accordance with established company policies and collective agreement
• recommended training
• had limited authority to purchase only routine tools
• did not establish a budget
• was not regularly engaged in advising management regarding collective bargaining
• handled first-level administration of collective agreements, including grievances
• his employee evaluations were subject to review/revision of a board of level 1 manager

Decision: neither a manager, nor a superintendent nor someone who exercises management functions

• role is important for the effective operation of the company, but lacks a determining influence on the employment, promotion or discipline of other staff, on their hiring, firing or continuing employment, or one that has in itself direct influence upon the company's overall objectives, planning and policies
• performed some management functions but did not exercise real decision-making authority in essential managerial matters
• the phrase, "performs management functions", in the definition of "employee" in subsection 3(1) of Part I of the Code, and the phrase, "exercises management functions", in paragraph 167(2)(a) of Part III of the Code, have the same meaning
• legislative trend is to narrow the range of employees excluded from the application of labour standards law

Canadian Imperial Bank of Commerce v. Bateman FC, May 8, 1991, T-830-91

Position:

• Regional Data Centre Manager

Job responsibilities:

• senior bank representative in Vancouver
• on fourth level of bank's administrative hierarchy
• unfettered power to make decisions regarding approximately 85% of the 200 employees supervised
• made performance appraisals with direct bearing on salary increases (had total authority within guidelines)
• had input into setting staff requirements and administering discipline

Decision: Manager

• exercised significant, but not absolute, administrative autonomy and discretion
• made recommendations that were generally accepted

Banca Nazionale Del Lavoro of Canada Limited v. Peter Lee-Shanok [1987] FCA A-1351-87

Position:

• Foreign Exchange Dealer

Job responsibilities:

• made independent decisions which were binding
• received a large salary
• was hired through an executive search

Decision: Not a manager

• job title, salary, and benefits are not determinative
• independent decisions were a function of the employee's job as a floor trader; did not necessarily indicate manager status
• job was operational in nature; employee did not administer anything

Avalon Aviation v. Desgagné [1981], FCA A-216-80

Position:

• Chief Engineer/Chief Inspector

Job responsibilities:

• co-ordinated all engineering activities
• had limited powers to hire and fire employees
• directed work of others
• was the highest paid employee
• had authority to order parts up to a maximum value of $250

Decision: Not a manager

• did not have sufficient power to make important decisions
• in important matters, was subject to direction of a superior

TNT Logistics North America v. Cobus et al. [2002] YM2727-1378 and YM2727-1381

Position:

• Contract Managers

Job responsibilities:

• limited management-type functions
• no roles in directing the overall operations of the company or in setting company goals or policies

Decision: Not a manager

• the intention of Parliament had been to narrow the range of employees excluded from the rights and standards of the Code
• a person is only excluded if they perform management functions of considerable significance in relation to the employment of others and/or the general purposes and policies of the employer
• a person performing some tasks that are managerial or supervisory does not automatically exclude that person from Division I of the Code

Mayhew v. Eastern Airlines Inc. [1981], 2 L.A.C. (3d) 231 (Can.)

Position:

• Supervisor, Passenger and Baggage Services

Job responsibilities:

• authority to call in additional people for overtime and could allocate employees as required
• had the authority to approve Travel Passes, schedule manpower and communicate with Corporate Personnel
• no authority to discipline or discharge employees but could recommend action

Decision: Not a manager

• the word "manager" should be given a relatively narrow interpretation, and implies the power to act independently and to use one's discretion
• the word "manager" in subsection 167(2) cannot be expanded to include employees of lesser authority and responsibility such as supervisors, even though they may exercise management functions

Vanshaw Tours Inc. v. Sustrate [2009] YM2727-2622

Position:

• Manager of a Tour Company

Job responsibilities:

• dealt with the affairs of the company as its manager
• took care of day-to-day operations
• had authority to make significant expenditures (for example, purchases up to $50,000.00)
• authority to make important administrative decisions
• powers to hire and discipline employees
• supervised and directed work of others (office staff and bus drivers)
• power to pay wages
• had the advantage of a healthcare plan which was not available to other employees

Decision: Manager

• exercised sufficient substantial autonomy and decision-making authority to be considered a manager within the meaning of paragraph 167(2)(a) of the Code
• was more than a mere administrator

McCracken v. Canadian National Railway Company, 2010 ONSA 4520, and; McCracken v. Canadian National Railway Company, 2012 ONCA 445

Position:

• Senior Manager, Corridor Operations (also known as Senior Operations Officer)
• was not entitled to overtime

Job responsibilities:

• duties and entitlements were subject to uniform and consistent compliance with the company’s policies and practices
• duty to manage the day-to-day operation of his territory through his unionized staff
• ensured the on-time performance of trains
• duty to deliver company commitments to customers
• duty to efficiently use locomotives and oversee repair of cars (mechanical)
• duty to repair and maintain trackage and signals (engineering)
• ensured safe haulage of merchandise to their destination (transportation)
• was entitled to benefits, including a defined benefit pension plan and a share purchase plan
• was the primary point of contact between management and the unionized employees
• did not have the authority to hire, terminate, promote, demote or transfer employees
• did not represent management in collective bargaining or in grievance procedures
• had limited authority to discipline, restricted to investigating and recommending minor discipline
• was not involved in setting budgets, policies or Service Plan
• had received days off in lieu of pay as compensation for the general holidays he worked

Decision: Unanswered by the judge – Guidance provided

• this case deals with certification of class actions
• the Code can be used as a vehicle to launch a direct civil class action claim
• employers should be mindful of their definitions of "managers" or "supervisors" and ensure compliance with the Code provisions as they will be held to be contractual stipulations of the employment relationship
• this case raises a public interest issue as to whether or not a misclassification case can properly be made the subject matter of a class proceeding
• the access to justice issue is much broader than the individual circumstances of the respondents
• being a manager relates to the nature of the work actually performed
• an employee’s title or job description is not determinative of whether the employee is a manager, and his or her status is determined by what the employee does or had been charged to do in the business enterprise
• an essential element of being a manager is that the person performs an administrative and leadership role and not just an operational role in the organization
• the degree of autonomy and decision-making authority needs to be significant, but it need not be absolute or unfettered, and a manager may have to report to and be supervised by more senior managers and officials in the organization
• at common law, there is no entitlement to overtime pay or holiday pay at a special rate. These are rights conferred by employment and labour law statutes
• there is no indication in the Code that Parliament intended to interfere with the court’s existing employment law or contract law jurisdiction
• it is open for analysis and argument about what Parliament intended
• the rights under Division I of Part III of the Code are not collective rights. As a group, first line supervisors are not entitled to the protections of the Code. Rather, first line supervisors are entitled to the protections of the Code as individuals, and their entitlements must be determined on an individual basis. It is particularly true because how the Code determines whether a person is a manager depends upon who the person is as an individual in the organization (his or her role) and upon what he or she does as an individual in the organization (his or her potential and actual actions)
• it is possible to determine, on a class-wide basis, the minimum standards for being a manager in an organization. It would not provide an answer to whether all the Class Members are managers or not, but it would divide the whole class into 3 groups; namely; (1) Class Members who satisfy the minimum standards for being a manager because of what they are and what they do; (2) Class Members who could not possibly satisfy the minimum standards for being a manager; and (3) Class Members whose status as a manager in the organization will still need to be determined
• the test or measure of a minimum standard (to determine whether an employee exercised management functions) would not require that the powers and responsibilities of each class member as managers be identical
• some elements should be taken into account when making such a determination, was the employee: representing the employer in collective bargaining or in discipline or grievance procedure; setting a budget; determining the organization’s policies; controlling day-to-day operations; determining staffing levels; supervising and reviewing the performance of subordinates; hiring and firing employees; dealing with emergencies; and the perception of other employees or the public that the employee exercised management duties and responsibilities

Northern Nishnawbe Education Council v. Michael McNear [2013] YM2727-2897

Position:

• Assistant Program Manager

Job responsibilities:

• took care of the day-to-day operations and program needs
• replaced the Program Manager in his duties when he was absent, and as such, had significant control of its day-to-day operations
• required to respond to and deal with emergencies
• provided help to the Program Manager
• required to participate in the evaluation of house counsellors
• requested to submit time sheets with regular and overtime hours, but enjoyed a substantial leeway in determining work hours
• supervised the performance of the house counsellors and team leaders
• made performance appraisals
• did not have the authority to hire, discipline and terminate
• was a member of the hiring committee for house counsellors
• did not exercise any financial control
• das in charge of training new house counsellors or team leaders
• das responsible to encourage team building and to deal with conflicts between staff
• ensured that the health and safety needs of the students were met
• communicated with communities and parents
• had power to redesign program aspects if necessary

Decision: Manager

• no evidence was provided that the organization interfered with or imposed limitations on an on-going basis on the management and operation of the organization by the Assistant Program Manager
• the immediate person higher up in the organization was the Director of Student Services
• exercised significant administrative autonomy and discretion in matters of importance, even though some decisions were subject to override by higher management

1484174 Alberta Ltd. also known as Action Express & Hot Shot v. Richard Coles [2013] YM2727-3360

Position:

• Dispatcher
• not authorized for overtime

Job responsibilities:

• mediated driver issues and complaints
• managed the fleet and the income of the owner/operators
• helped as the company contact for sales
• directed and assigned work of drivers
• no powers to hire and fire employees, but had the authority to send a driver home
• no authority to recommend pay increases
• had no input into budgeting and developing the company policy
• was not engaged in lease negotiations, financial audits, insurance coverage, tax planning or loss control

Decision: Not a manager

• neither a manager, nor a superintendent nor someone who exercises management functions
• did not exercise sufficient autonomy and independent decision-making powers in matters of importance
• did not independently run a major portion of the business on his own
• the owner/operators were not employees of the company but contractors, thus he was not supervising them but dispatching them
• a duty mentioned in the role of a dispatcher that related to managerial functions is not indicative of a managerial role

Total Oilfields Rentals Inc. v. Norman Reynolds [2014] YM2727-3213

Position:

• Dispatcher

Job responsibilities:

• received a monthly salary
• required the Branch Manager’s approval to take time off
• was using the company truck and had a company fuel card as well as a company cell phone
• was authorized to make significant expenditures under the approval of the Branch Manager
• was one of the 2 persons listed on the after-hours call list, to enable customers to get service between 5 pm and 8 am and on weekends
• no authority to postpone work for his own personal convenience
• was dealing only with equipment and paperwork
• had limited planning functions such as scheduling equipment repairs
• had power to process equipment rental tickets for customers
• supervised and assisted with loading/unloading of equipment
• organized the yard for things such as parking and rack sites
• did not have the authority to hire, discipline or suspend an employee
• did not exercise actual supervisory authority over employees and did not set their hours
• ensured that proper equipment was being worn by all personnel
• ensured that all work was done in a safe manner
• ensured that all company and government regulatory policies and procedures were followed
• had some flexibility to set prices for regular customers, but not for new customers

Decision: Not a manager

• did not exercise managerial authority
• the terms "manager" and "management functions" are not defined in the Code. The 2 terms have different meanings
• "Manager" has a narrow meaning relating to persons who have "power of independent action, autonomy and discretion"
• "Management functions" requires the person to have decision making authority in respect of essential managerial matters, such as directing the workforce; exercising independent action and discretion; the authority to give direct orders and to control the work force including the responsibility to discipline
• a significant financial responsibility is not proof of a managerial authority if it does not involve the exercise of any managerial authority or discretion. It is evidence of tasks which must be completed by an employee and the consequences of a failure to perform as required

Appendix B - Management function questionnaire

Subsection 167(2) - Part III – Canada Labour Code

This questionnaire aids in determining whether an employee is a manager, superintendent or person exercising management functions for the purposes of subsection 167(2) of the Canada Labour Code, Part III. If your answer does not fit in the space provided, continue your answer on a separate sheet of paper, noting the number and letter of the question you are answering.

1. This questionnaire is completed on behalf of

• Employee
• Employer

2. Job title/Job classification of position in question:

3. Industry or nature of employer's business:

4. Title or name of unit where employed:

5. What does the unit do?

6. Does this position supervise other employees?

• Yes
• No
  • If yes:
    • Number supervised:
    • Number in establishment:

7. Collective bargaining

1. Is the incumbent of this position subject to a collective agreement?
   • Yes
   • No
2. Are the employees of the unit subject to a collective agreement?
   • Yes
   • No
     • If yes, then is the incumbent of this position excluded from the bargaining unit?
       • Yes
       • No
     • If yes, then does the incumbent represent management at any step of the grievance procedure?
       • Yes
       • No
     • If yes, at what step? Of how many steps?

8. Level of management

At what level of management would you describe this position to be?

• Senior or top management
• Middle management
• First line
• Supervisory support
• Little management responsibility
• No management responsibility

9. Areas of responsibility (Check those areas where this position has responsibilities)

(a) Financial

• (i) Can set price of goods or services sold
  • On own authority
  • Can recommend
  • Within limits

Explain any limits:

• (ii) Can authorize purchase of goods, services or equipment
  • On own authority
  • Can recommend
  • Within limits

Explain any limits:

• (iii) Can authorize payments for employer's liabilities
  • On own authority
  • Can recommend
  • Within limits

Explain any limits:

• (iv) Banks – Can authorize the granting or denial of loans
  • On own authority
  • Can recommend
  • Within limits

Explain any limits:

(b) Planning

• (i) Position is party to:
  • developing of unit's budget
  • setting of unit's output levels or goals

(c) Direction and control of staff (if answer to question 6(a) is yes)

• (i) Can hire or dismiss staff
  • On own authority
  • On own authority, within limits
  • Can recommend
  • Cannot recommend

Explain any limits:

• (ii) Can lay-off, recall, suspend or transfer staff
  • On own authority
  • On own authority, within limits
  • Can recommend
  • Cannot recommend

Explain any limits:

• (iii) Can order or authorize overtime work
  • On own authority
  • On own authority, within limits
  • Can recommend
  • Cannot recommend

Explain any limits:

• (iv) Can control own hours of work including taking leave or working extra hours
  • On own authority
  • On own authority, within limits
  • Can recommend
  • Cannot recommend

Explain any limits:

10. Conditions of employment

(a) On what basis is this position paid?

• By time worked
• Other

Explain other:

(b) If paid by time worked, what is the unit of time?

• Per hour
• Per day
• Per week
• Per month
• Annual salary

(c) Does this position have set standard hours of work?

• Yes
• No
  • If yes, what are they?
    • Per day
    • Per week
  • If no, explain why.

(d) Is a precise record kept of all time worked by this position?

• Yes
• No
  • If no, explain why.

(e) If employees were required to work overtime, would incumbent have to remain to supervise?

• Yes
• No
• Sometimes

If sometimes, explain what circumstances would require he/she to remain:

(f) If incumbent required to work extra time, how is he/she compensated?

• No added pay, adequately compensated by regular remuneration
• Paid for extra time at straight time rates or given time off
• Paid at a premium overtime rate of time and one-half or more
• Other, explain:

(g) What special benefits or privileges granted only to management does this position enjoy (List)

11. Job description

• Please attach latest job description for this position. Itemize below or on a separate sheet any duties performed or responsibilities assigned but not listed in the job description. Similarly, indicate any duties or responsibilities included in the job description but not actually performed or assigned. If no job description is available, please describe the extent to which the incumbent can control his/her own hours of work as well as those of other employees

12. Organization chart

• If available, please attach. If not available, please draw below or on attached sheet a chart of the organization in which this position is employed; showing the hierarchy to which it is responsible and the positions responsible to it.

13. Name and address of employer

• Name:
• Address:
• Postal code:
• Signature:
• Name (print):
• Title:
• Date: