If you own a business in Ontario, you’re probably worried about how the newest of Ontario labour laws, Fair Workplaces, Better Jobs Act, 2017 (Bill 148) will impact your bottom line. This is because, as of Monday, Jan 1st, you are required to do a major overhaul to your employment contracts or face hefty fines, reputational damage, and major issues with your staff.
In our previous blog post, we discussed the many different implications of the newest of Ontario Labour Laws: Bill 148. Today, we are going to give you some tools and insights to help you on your path toward compliance!
Ontario Labour Law Bill 148 & The Threat of Unhappy Employees
Let’s look at a small manufacturing company who serve the growing demand for organic packaged foods. To be compliant with Bill 148 they must quickly revamp their scheduling practices, employee leaves, and wages paid to their staff quickly.
Raeshine is an established organic dairy products company with about fifty employees. They supply organic milk and cheese products across eastern Canada, with their products appearing on the shelves of mainstream grocery, specialty gourmet food boutiques, and health food stores. They also have 2 of their own retail outlets in some trendy Toronto neighbourhoods. The company’s small staff of 50 employees are fill a range of positions in their head office, the adjoining warehouse, in their 2 retail stores.
The warehouse has 3 shifts for their hourly workers: an early morning shift focused on loading trucks, a day shift, and a small night shift who pick and pack the orders for delivery the following morning. The office staff are mostly salaried employees, but there are part time contractors covering marketing, accounting, and HR. The retail stores are staffed with full-time and part-time staff paid who are paid minimum wage.
Raeshine has been in business for over 25 years and has become a trusted and familiar brand. They provide quality products, and as the competition for organics has intensified, they have carefully managed their distribution relationships to maintain their shelf presence. Margins are razor thin and they work hard on their volume pricing plans and on their channel marketing to meet their annual budget targets. Employees have been under pressure over the years to increase their productivity, and feel that their wages have not kept up with the demands placed on them. Company owners have allayed threats of unionization with competitive salary and benefit packages offered to the head office staff.
The Rise of Unionization and New Scheduling Rules
Now that the Fair Workplaces, Better Jobs Act, 2017 is here, Raeshine must act quickly to increase their prices in order to cover their increased labour costs. Any delay or misstep now could be disastrous. Unhappy employees could affect product quality, customer satisfaction, and endanger the company’s good name in the industry.
Some of the production staff at Raeshine are NOT very happy. They don’t feel they’re being heard and now wish to be represented by a union. Bill 148 has removed certain barriers to unionization. A union can now request a full employee list, including even those on leave or working remotely. This is a dangerous exposure to management who are concerned that they may have to lay off staff as a result of Bill 148, a move which could expedite the entry of a union into the business.
While worrying about unionization, Raeshine also faces a scheduling crisis. The food business has seasonal peaks and valleys which translates into variations in the number of hours warehouse staff work. Equally challenging to staff who are involved in getting orders out the door are the volume deals the company offers to its largest clients to meet its revenue targets. The deals create sales spikes which result in longer shifts and added shifts so that workers can get these orders out the door quickly. These additional work hours are often scheduled without much notice to the affected staff. In the past the company counted on everyone pulling together to meet the demands of sales spikes. But, these ups and downs in scheduled hours were not popular as they created havoc in the workers personal lives. Many of them had young families and were caring for aging parents.
The new rules with Ontario Labour Laws: Bill 148 state that an on-call employee can refuse a shift without penalty if given less than four days’ notice. On-call employees will now also have to be paid for at least three hours for every twenty-four hours that they are on-call, whether they are actually called in to work or not. These changes translate into higher labour costs for Raeshine both in their warehouse and in their retail stores.
Additionally, the many new extensions to pregnancy, family emergency, and medical absence can create gaps in the production line. This translates into lower productivity if Raeshine is not prepared and adequately staffed for its demand peaks when more is expected of its small staff. Raeshine risks unfulfilled orders or missed shipping dates without a fully functioning production line.
The Rise of Wages, Prices, and Equal Pay
The retail staff wages present additional challenges to Raeshine. These workers will see a welcome bump in their paycheques with the new increase to minimum wage. Raeshine will increase their prices to compensate, and this will cause an immediate decrease in sales. This means that products will stay on shelves longer, sit in the warehouse longer, and spoilage costs will be higher – all coming at a time when labour costs have spiked upward. Over time, it is expected that demand will normalize, but Raeshine must factor in the cash flow requirements to meet the higher wages they must now pay at a time when sales will be lower.
Furthermore, there are additional changes for casual and contract workers that business owners must be aware of. Prior to Bill 148, independent workers were not considered employees. As a result, they did not qualify for benefits or salary pay. Now, since they may qualify as employees under Bill 148, they are eligible for paid vacation and sick days, health benefits, and severance. Plus, contractors and casual workers who were paid less than their employee counterparts, must now be paid at the same rate as similar-position employees. It is now up to the employer to prove the difference between an independent contractor and employee. The misclassification fines can reach $50,000, and penalties include imprisonment . Staff provided through a temp agency will also be eligible for equal pay to full-time staff for similar work.
Raeshine realizes they can’t afford to delay in developing their compliance plan! But, with only one part-time HR personnel, they understand that they need more HR resources on this task! Their current part-time HR staff member also handles admin and accounting. Raeshine management estimates that the work involved to overhaul their employment contracts, develop new job descriptions, revamp production schedules, revise the benefits plans, and develop the budgets to help them through the transition, will take skills they don’t currently have in house.
The Alarming Implications of New Ontario Labour Laws
If you want to support your staff, maintain productivity, and protect both the profits and the company, consider your options to quickly understand your risks and develop your plan.
Your staff is most certainly feeling anxious about their employment status in light of these changes, especially in light of all the recent media coverage. A disgruntled employee is no longer required to warn you before filing a claim with the Employment Standards Act. If a standards officer finds you in violation, the increased penalties will cost upwards of $1,500 per infraction. And a top performer will be proactively seeking new opportunities that do not carry the perceived risks that your firm may represent.
What will be the fall out with your customers if you pass along a price hike and then a story leaks to the media about a pending threat of unionization? …. Are you prepared for the implications of Ontario Labour Laws: Bill 148 Fair Workplaces and Better Jobs? Learn more about the implications here!
As a business owner your best defence is preparation. We are offering free webinars designed to help you get on track quickly with the changes to Ontario labour laws and what Bill 148 now imposes on your business.