Employment Standards Legislation (PDF)

Employment Standards Legislation 6 LEARNING OUTCOMES After completing this chapter, you will be able to: Understand the purpose of Alberta’s Employment Standards Code and British Columbia’s Employment Stan...

Employment Standards Legislation 6 LEARNING OUTCOMES After completing this chapter, you will be able to: Understand the purpose of Alberta’s Employment Standards Code and British Columbia’s Employment Standards Act in setting minimum rights for employees. Identify the minimum standards that apply to wages, hours of work, statutory or general holidays, overtime pay, vacation, and statutory leaves. Identify the protections available to employees who exercise their rights to statutory leaves, including maternity or pregnancy leave, parental leave, family leave, bereavement leave, compassionate care leave, and reservist/reservists’ leave. Understand how the statutory rights and protections are enforced. 157 158  Part II Legal Issues in Hiring and During the Course of Employment Introduction Employment standards legislation sets out minimum terms and conditions of work, includ- ing hours of work, overtime premium pay, statutory holidays, vacation time and pay, and maternity or pregnancy leave and parental leave. It also establishes minimum requirements with respect to termination notice and termination pay, which are discussed in Chapters 13 and 14. An employer is free to exceed these statutory minimum standards, but it may not, even with the employee’s agreement, fail to meet them. That is why we often refer to these minimum standards as the “floor”—you cannot go below them. For example, employment standards legislation requires that employees receive overtime pay after working a certain number of hours in a week. (In Alberta the number is 44 hours, and in British Columbia [BC] it is 40 hours.) If the employer and employee agree that overtime pay is required after only 35 hours, the parties are bound by this more generous term. However, if they agree that the employer is not required to provide overtime pay until the employee works 48 hours, the agreement contravenes the legislation and is not enforceable. Alberta allows for averaging arrangements that can impact how an employee’s hours of work are calculated (discussed further below). However, overtime rates must still be paid for hours in excess of 44 per week. If the employee subsequently files a complaint, or the province’s employment standards agency learns of the statutory contravention in some other way, the employer must pay the employee the overtime premium pay owing, plus interest, and may have to pay a penalty to the government through the Employment Standards Branch (BC) or Employment Standards (Alberta). The employee’s initial agree- ment to the lower term will not be a defence. To a certain extent, employment standards legislation displaces the common law prin- ciple that the parties are free to negotiate their own terms and conditions of employment. Its rationale is that many employees lack the bargaining power to negotiate acceptable working conditions with the employer. The government is thus setting and enforcing min- imum rights that we, as a society, require in the interests of workplace fairness. Employment standards legislation can have a significant impact on both employers and employees, and because it affects minimum wages and working conditions, it is frequently reviewed by gov- erning parties in all provinces. Changes are made to address social and economic conditions or to reflect the ideology of the party in power at a given time. It is important that employers keep abreast of the changes to ensure they are in compliance with any revisions to employ- ment standards minimums. Changes to employment standards in Alberta’s Bill 32 and BC’s Bill 19 (see the following In the News and FYI boxes) are examples of this evolution. IN THE NEWS A Return to Balance or Empowering the Powerful? Alberta’s Bill 32—Restoring Balance in Alberta’s Workplaces Act, 2020 Balancing power between employers and employees is not easy. The Government of Alberta cur- rently believes that legislation in the province favours employees too much. They plan to address those concerns through Bill 32: The Restoring Balance in Alberta’s Workplaces Act, 2020. The Bill aims to foster economic recovery in the province and “get Albertans back to work” by reducing regula- tory burdens on employers. But others view the Bill as an attack on workers with several significant changes to the Employment Standards Code.  Chapter 6 Employment Standards Legislation   159 First, Bill 32 changes “averaging agreements” into “averaging arrangements.” Averaging agreements between an employer and an employee “average” the employees’ work hours over a span of weeks or months. These agreements generally reduce the amount of overtime pay the employee receives. For example, if an employee works 60 hours one week and 20 hours the following week, the hours are “averaged” over a two-week span so that the employer pays the employee for two 40-hour weeks, saving the employer from paying any overtime. Bill 32 changes these averaging agreements by allow- ing employers to unilaterally impose averaging arrangements on employees without the employees’ consent. It also extends the length of time for averaging from 12 weeks to 52 weeks. A second change to Bill 32 concerns rest periods. It brings back the approach that existed prior to amendments made by the previous NDP government. Employees must now work 5 hours to qualify for a 30-minute break. Employees must work 10 hours to qualify for a second 30-minute break. If the employer and employee don’t agree on when the employee will take a break, the employer can make the decision unilaterally. Other changes proposed in Bill 32 include the following: The employer can deduct overpayments from an employee without written authorization from the employee so long as it is within six months of the overpayment occurring. The employer must still notify the employee, but authorization from the employee is no longer required. Daily wages for general holidays are now calculated by averaging the employee’s wage for the four- week pay period prior to the general holiday. Periods of leave are now explicitly included when calculating an employee’s years of employment for vacation entitlement. If an employee is terminated, the employer now has up to 31 consecutive days to provide the em- ployee with their final pay. Changes to notice requirements for group terminations. Changes to layoff notice requirements and the layoff period, which has increased to 90 days within a 120-day period. SOURCE: Littlewood, 2020. FYI Pandemic Leads to New Standard Requiring Five Days Paid Sick Leave in BC Pursuant to Bill 19, effective January 1, 2022, all employers in BC were required to provide a minimum of five paid sick days per calendar year. These amendments to the BC Employment Standards Act (ESA) were precipitated by the impacts of the global pandemic whereby employers and employees alike began to expect individuals to remain at home if ill. Bill 19 was designed to respond to concerns for workers who didn’t have any paid sick leave and would then be forced to choose between missing out on pay when ill or attempting to hide their illness and attend work, thereby putting others at risk of becoming sick. Bill 19 was a significant amendment in that, previously, employers were only required to provide three unpaid days for illness. BC was the first jurisdiction in Canada to legislate this min- imum level of paid time off for illness, but many other provinces have now followed suit. Employers must provide the entitlement to paid sick leave after 90 days. This leave entitlement resets at the beginning of each calendar year, which means that unused days do not carry to the next year of employment. As the provision of paid sick leave is designed to support the ill employee as well as reduce the risk of transmission to other employees in the workplace, the ESA’s paid sick leave applies equally to part-time, temporary, or casual employees. Finally, the ESA’s paid sick leave does not apply to unionized employers who have collective agreement entitlements that meet or exceed five days. 160  Part II Legal Issues in Hiring and During the Course of Employment It is also important to remember that these are minimum standards. Individual employ- ment agreements (and collective agreements) often set higher standards, and court decisions set higher standards for certain matters covered by the employment standards statutes. The most notable example of courts setting higher standards is in cases of wrongful dismissal. The minimum notice periods in the legislation are far lower than what courts award (see Chapter 13). In other words, employment contracts cannot avoid or lower the minimum stan- dards set in legislation. Under section 4 of the Alberta Employment Standards Code (ESC) and section 4 of the BC Employment Standards Act, minimum standards cannot be avoided by the agreement of the parties, nor can they be avoided by the silence of the parties. The 2008 BC Court of Appeal case Macaraeg v E Care Contact Centers Ltd has clarified the issue as to what extent the minimum requirements of the ESA should be deemed to be implied terms of all or most employment contracts. (See the Case in Point in Chapter 5.) The Court ruled that the minimum requirements of the statute are not implied terms of the employment contract. If an employee is seeking some redress under the ESA for a term that was not covered by the employment contract, the employee must apply to the Employment Standards Branch for a remedy, not sue the employer in court. Likewise, appeals of deci- sions by the branch are heard by the BC Employment Standards Tribunal, not the courts. In Alberta, section 3 of the ESC indicates that nothing in the Code affects any civil remedy of an employee or employer or “an agreement, a right at common law or a custom” that provides to an employee benefits that are “at least equal” to those under the ESC or “imposes on an employer an obligation or duty greater” than those provided under the legislation (s 3(1)(b)). This means that not only are employers required to meet at least the minimum standards, but it is also possible for employees to use the courts rather than Employment Standards processes to enforce those standards. There is no similar provision in the ESA, but the same principles apply in BC. Normally, an employee who believes the ESC has been violated files a complaint with Employment Standards. A decision is issued, and if either party disagrees with the decision, an appeal may be filed and heard by a chair or vice-chair of the Alberta Labour Relations Board (or the Employment Standards Tribunal in BC). However, when an employee pur- sues a complaint through the courts, an issue arises regarding the application of a higher standard than what is available under the ESC. As noted above, the courts have primarily exceeded the minimums established by the ESA or the ESC in cases of wrongful dismissal. However, in an Alberta Court of King’s Bench decision, a similar approach was applied to overtime pay. In Scheffler v Mourits Trucking Ltd (2023), Justice Little held that an employee who brought a civil claim for unpaid overtime, rather than going through the ESC’s complaint process, was entitled to greater overtime pay than the maximum set out in the ESC. Justice Little laid out the evolu- tion of case law and concluded that since Mr Scheffler did not employ the collection mech- anisms of the ESC, the limits within the ESC do not apply: Beginning with Kenney v Browning-Ferris Industries Ltd, 1988 CanLII 3548 (ABQB), a case where an employee sued for overtime pay, Justice Conrad, as she then was, held that an employee “is limited to his rights under the Employment Standards Act and cannot enforce his statutory rights in the courts” (para 59). She did so on the basis that, while the statute preserved existing civil remedies, such as the right to severance pay on termination without cause, overtime was a creation of statute only. Justice Lee in Riviera Hotel (1991) Corporation v Samborsky, 2006 ABQB 222, followed Kenney in part. He, too, found that there was no common law entitlement to overtime but held that an employee who successfully sued for overtime in Provincial Court was entitled only to six months overtime as a result of there being a six month maximum in the Employment Standards Code.  Chapter 6 Employment Standards Legislation   161 More recently in Walker v Alberta Communication Cable Services Inc., 2018 ABPC 46, Judge Haymour, in obiter, followed Rawlins J’s reasons in Fedor that the Code was the only source of en- titlement to overtime pay, unlike notice or pay in lieu which are common law remedies. He therefore found that the six month limitation in the Code applied whether the remedy was sought within or without the Code, though that determination had no bearing on the issue he needed to decide. I conclude, however, that while the Code establishes the right to overtime, it would be inequit- able to constrain an employee’s recovery to the six month limit under the Code when an employee uses conventional litigation instead of the Code. In my view, the remedies and their restrictions pre- scribed under the Code apply only when an employee engages the resources and collection mech- anism available under the Code. Section 90(3) of the Code restricts an employee’s claim for overtime to six months, but ­section 90(1) states that that relates to “[a]n order made under this Division”. Mr. Scheffler has not made this claim under that Division and therefore has not employed the resources and collection mechanism under the Code. (at paras 18-22) While Scheffler v Mourits Trucking Ltd applies only in Alberta at this time, this decision has significant implications because it may encourage employees to pursue civil remedies rather than going through the established and more efficient Employment Standards adjudi- cation processes. Employers should be careful to ensure that they track and pay overtime appropriately. While minimum statutory standards apply to all employees, they are most relevant in entry-level positions and lower-paying jobs, where individual employees often lack bargain- ing power. However, the legislation has evolved over time, and it now contains a range of statutory standards and protections, such as maternity or pregnancy leave, parental leave provisions, and now paid sick leave, that set the standard for most workplaces. Moreover, legislative changes are ongoing. The global pandemic has led to numerous amendments in BC, including the introduction of unpaid time off to care for a child with COVID-19 (ESA s 51.12(2c)) or up to three hours of paid time off to be vaccinated against COVID-19 (ESA s 52.13). BC has also designated September 30 as a statutory holiday to honour the National Day for Truth and Reconciliation. FYI Key Features of Employment Standards Legislation 1. Alberta’s ESC and BC’s ESA set minimum standards; an employee cannot waive their rights under these statutes and agree to standards of work that are less generous than those in the legislation. These standards include minimum wages (referenced in the regulations), hours of work and over- time, vacation entitlement, statutory holidays, statutory leaves of absence, and termination notice or termination pay. 2. If an employer promises an employee a greater right or benefit than that provided under the employment standards legislation, the greater right or benefit will be enforced if there is a com- plaint. Enforcement is carried out by employment standards officers in Alberta and BC. A greater right or benefit must be related to a specific entitlement. For example, an employer cannot forgo paying employees for statutory holidays by insisting that the overall compensation scheme is “a greater right or benefit” because the employees receive $10 per hour above minimum wage. 3. The legislation covers most employees. However, specific exemptions apply to certain occupations and industries. For example, the hours of work standards do not apply to managerial and super- visory employees, and independent contractors are not covered. In Alberta, employees in a farm- ing or ranching operation are also exempt from certain parts of the ESC. (Continued on next page.) 162  Part II Legal Issues in Hiring and During the Course of Employment 4. Enforcement of rights is a complaint-based process. Employees who believe their rights have been infringed must file a complaint with the Employment Standards Branch (BC) or Employment Stan- dards (Alberta). 5. Unionized employees are covered by employment standards legislation. However, the ESC in Alberta states that most of the significant minimum standards in the statutes do not apply if dif- ferent standards have been negotiated into a collective agreement (e.g., hours of work or overtime provisions). In BC, if a collective agreement contains any provision respecting the following mat- ters, and the provisions meet or exceed the requirements of the ESA, the corresponding parts of the ESA do not apply: hours of work and overtime; statutory holidays; annual vacations; paid sick leave; and seniority retention, recall, termination or layoff, and liability resulting from length of service. If a collective agreement does not contain any provision relating to one of these subject areas, or if it does not meet or exceed the requirements of the ESA, the corresponding part or section of the ESA is deemed to be incorporated into the collective agreement. The rest of the ESA applies to unionized employees in BC (with the exception of the enforcement provisions, as noted immedi- ately below). In both provinces, unionized employees must usually follow the grievance procedure in their collective agreement to pursue their rights, rather than file a complaint with the Employment Standards Branch (BC) or Employment Standards (Alberta) (see Chapter 3). 6. With a few exceptions, such as group termination provisions in BC (s 64 of the ESA), employment standards legislation binds all employers, regardless of size. General Requirements Application In Alberta, the ESC applies to “all employers and employees, including the Crown in right of Alberta and its employees, except as otherwise provided in this Part” (s 2(1)). The vast majority of employees in Alberta fall under the jurisdiction of the ESC. The following is a list of groups of workers who are outside the jurisdiction of Alberta’s ESC: employees covered by another act to the extent that the other act states that the ESC or a provision of it does not apply to them (except for any provisions relating to maternity leave, parental leave, or reservist leave); these employees include academic staff employed by institutions covered by the Post-secondary Learning Act or employees who are mem- bers of a municipal police service appointed pursuant to the Police Act, among others; employees who fall under federal jurisdiction and who are already covered by the Canada Labour Code, including those employed in chartered banking, broadcasting and telecommunications, interprovincial and international pipelines, grain eleva- tors, airports and air transportation, railways, First Nations, and federal government departments and agencies, among others; international employees and interprovincial employees who are working out of the prov- ince (generally, the jurisdiction is based on the location where the work is performed); employees whose terms and conditions of employment are incorporated into the terms of a collective agreement covered by the Alberta Labour Relations Code, unless the collective agreement does not provide for the minimums set out in the ESC, in which case the terms of the ESC apply; and  Chapter 6 Employment Standards Legislation   163 individuals who are determined to be independent contractors or self-employed workers (according to established tests, as discussed in Chapter 2). In BC, the ESA applies to “all employees other than those excluded by regulation” (s 3). Sections 31-32 of the BC Employment Standards Regulation (ESR) list persons who are not covered by the ESA as follows: members of professional associations, such as doctors, lawyers, architects, and engin- eers (a total of 15 professions are identified); persons receiving employment insurance benefits while working under job creation projects; secondary school students working in a work experience program authorized by their school board or working for a school board; a “sitter” (employed solely to attend to a child or a disabled, infirm, or other person in a private residence, not a daycare facility, for an average of 15 hours or less per week in any 4-week period); and persons receiving income assistance or benefits under the Employment and Assistance Act while participating in an onsite training or work experience program. Sections 33-45 of British Columbia’s ESR go on to exempt a wide variety of employees who are exempt only from some parts of the ESA or are subject to special rules. For example, managers are not covered by the hours of work and overtime pay provisions. To fall within the scope of the exemption, the position must be truly managerial, carrying the power to hire and make independent decisions. Simply giving an employee the title of “manager” will not make them exempt from those requirements. Similarly, professional employees, such as teachers and college instructors, as well as firefighters and police officers, are exempt from provisions regarding minimum wage, maximum hours of work, overtime pay, paid statu- tory holidays, and vacation pay. Record Keeping In both Alberta and BC, all employers, regardless of size, are required to keep accurate records about employees. In Alberta, section 14 of the ESC specifies which records must be maintained. This includes, for example, hours worked; wage and overtime rates; earn- ings; deductions from earnings and why those deductions have been made; and the name, address, and birth date of the employee. Furthermore, these records must be maintained for at least three years and made available to employment standards officers, as requested, for any inspection, investigation, or inquiry. In BC, section 28 of the ESA specifies a similar range of employee records that employers must keep at their principal place of business and retain for four years after the date on which they were created. There can be significant penalties for failing to keep these records. Accurate records can assist the parties in resolving disputes. For example, if an employee alleges that an employer owes them overtime pay and the employer has no reliable records, an adjudicator will usually accept the employee’s claim. Wages Payment of Wages Both provinces require employers to establish regular pay periods. In BC, section 17 of the ESA requires payment of all wages at least semi-monthly and within eight days after the end of the pay period on or before the regular payday. In Alberta, the ESC provides employers 164  Part II Legal Issues in Hiring and During the Course of Employment with a little additional time. Payment of wages must be made no later than ten consecutive days after the end of each pay period (s 8(1)). By contrast to the ESA’s semi-monthly rule, the ESC further states that a pay period must not be longer than one work month (s 7(2)). Payment may be by cash, cheque, draft, money order, or (if certain conditions are met) by direct deposit into the employee’s account at a bank or other financial institution. Partial payment is prohibited. In BC, when employment ends there are two rules. If the employer terminates the employment, it must pay all wages owed within 48 hours of termination. If the employee terminates, the wages are due within six days (s 18). A quick look at the definitions in the ESA also confirm that a “day” is considered to be a calendar versus a business day. In Alberta, when employment ends payment must be made no later than 10 consecutive days after the end of the pay period in which the termination occurred, or 31 consecutive days after the last day of employment. Deductions from Wages and Vacation Pay Section 12 of Alberta’s ESC and sections 21-22 of BC’s ESA prohibit an employer from withholding or deducting any wages payable to an employee unless the deduction is: 1. permitted or required by statute, as in the case of deductions for income taxes, employment insurance (EI) premiums, and Canada Pension Plan contributions; 2. permitted or required by a court order, as in the case of a garnishment order requir- ing the money to be paid to a third party to whom money is owing (e.g., a child support payment); 3. authorized by a collective agreement to which the employee is bound; or 4. personally authorized in writing by the employee (such authorizations must be clear and specific regarding the amount to be deducted; in BC, this exception is, by s 22(4), limited to assignments of wages to meet certain credit obligations). In Alberta, an employer can also deduct wages to recover overpayment of earnings resulting from a payroll calculation error or to recover vacation pay that was paid to the employee in advance of the employee being entitled to it. It should be noted that despite any written authorization from an employee, employ- ers cannot make deductions that contravene the legislation. For example, an employer in Alberta (per s 12(3) of the ESC) cannot make a deduction from wages to pay for faulty workmanship. Similarly, an employer cannot make a deduction for cash shortages or loss of property unless the employee is the only one with access to and total control over the cash or property. For example, if more than one person has a key to a locker where tools are kept, an employee cannot be held financially responsible for loss of the tools from the locker. Nor could an employer deduct from a server’s paycheque the cost of dishes that were broken in a restaurant. Hutchins v Atlantic Provincial Security Guard Service Ltd shows that employers gener- ally are restricted from making wage deductions unless they fall within one of the spe- cific statutory exemptions. In Hutchins, the Court ruled against an employer that deducted money from an employee’s wages because of unexplained damage to a rented vehicle in the employee’s possession. The Court ruled against the employer because the damages did not fall within the statutory provisions.  Chapter 6 Employment Standards Legislation   165 Employer’s Ability to Deduct Wages Limited CASE Hutchins v Atlantic Provincial Security Guard Service Ltd, 1995 CanLII 8876 (NBLEB) IN Facts POINT Hutchins, an employee of Atlantic Provincial Security Guard Services, was in possession of a rented van during the course of his employment when his shift ended on Friday. He obtained permission from his employer to keep the minivan for personal use on Saturday and Sunday. The employer failed to inform Hutchins that he would be responsible for the $40 cost of the weekend rental. After another rental in the course of his employment, he returned the vehicle with a damaged back door. The cost to repair the door was $424. Hutchins, who was the only driver of the vehicle, denied all knowledge of the damage. The employer demanded that he pay for the damage through a deduction from wages. When Hutchins refused, the employer terminated his employment. The employer withheld both the $40 and the $424 from his final pay. Relevant Issue Whether the employer violated the ESA by deducting $40 and $424 from the employee’s wages in these circumstances. Decision The Board found that the $40 deduction was appropriate since the employee requested the use of the van and derived a personal benefit from the employer’s goodwill. However, the $424 deduction was inappropriate. There was no evidence to suggest that the employee damaged the van negligently or intentionally. Because the New Brunswick ESA (like the Alberta ESC) provides for employer deductions only in clear and carefully defined circumstances, the employer was not entitled to deduct the $424. The appropriate remedy for the employer was to pay the wages owing and to sue the employee for damages. In BC, an employer cannot make a deduction from wages to pay any of the employer’s business costs, even if the employee has agreed to it (s 21(2)). That section allows for excep- tions to be made by regulation, but the current regulations do not make any exceptions. Another difference between the two provinces is that in Alberta employers are permitted to recover a genuine wage advance or an unintentional overpayment (as noted above), whereas in BC such a deduction is forbidden unless the employee authorizes it in writing (Health Employers Assn of BC v BC Nurses’ Union ). In the absence of such an agreement, the employer would have to file a grievance or bring a claim against the employee and prove the overpayment. Although Alberta does allow such deductions without authorization, employers must follow several rules: Alberta employers must document calculations of such a deduction and disclose them on the statement of wages, overpayments should be recovered from the em- ployee as soon as possible, and any recoveries should be handled in a manner that is consistent for all affected employees and that minimizes the disruption to the affected employees. Wage Statements Both provincial statutes specify the information that an employer must provide on each wage statement and when it must be provided. An employer must furnish the employee with a written statement (or emailed statement if the employee is able to make a paper copy) on or before the employee’s payday. In Alberta, under section 14 of the ESC, the statement must include the following infor- mation (among other details): the period for which the wages are paid; the regular and overtime hours of work; 166  Part II Legal Issues in Hiring and During the Course of Employment the wage rate and the overtime rate; the earnings paid, showing separately each component of the earnings for each pay period; the amount and purpose of each deduction; time off instead of overtime pay provided and taken; and the net wage amount. In BC, under section 27 of the ESA, the statement must include the following (among other details), unless the wage statement would be identical to the previous statement (in which case a new detailed statement is not required until there is a change): the hours worked by the employee in the pay period (regular and overtime), the wage rate (regular and overtime), the gross and net wage amount and how they were calculated, and the amount and purpose of each deduction. Special requirements apply to vacation pay statements. Variances from Standard Employment Arrangements In Alberta, section 74 of the ESC provides the director of employment standards with dis- cretion to grant a variance with respect to a scheme of employment in particular situations. The director may also revoke, amend, or vary an approval at any time. In BC, sections 72 and 73 of the ESA allow for an employer and its employees to apply to the director of employment standards for a variance of at least ten requirements under the ESA that can differ from the legislated minimum standard. Employers and employees can agree to vary these standards in such matters as: 1. the minimum daily hours of work and maximum hours before overtime is due, 2. overtime wages, 3. the hours that employees must be free from work, 4. split shifts, and 5. special clothing requirements. The director of employment standards has wide discretion to grant the application for variance. The director must be satisfied that a majority of the employees who will be affected by the variance are aware of its effect and consent to it. The director has the power to attach certain conditions to the variance. Minimum Employment Standards Minimum Wage Minimum wage is the lowest hourly wage that an employer can pay an employee. Most employees are subject to minimum wage requirements, regardless of whether they are full- time, part-time, or casual employees and regardless of whether they are paid on an hourly basis or on commission, piece rate, flat rate, or salary. In Alberta, minimum wage requirements are referenced in section 138(1)(f) of the ESC and are addressed in the accompanying regulation; in BC, they are referred to in section 16 of the ESA and specified by regulation. The minimum wage rates are set out in the regula- tions to each statute and are typically raised every few years to keep up with inflation and  Chapter 6 Employment Standards Legislation   167 the increased cost of living, though the rates tend to increase in fits and starts and are some- times a source of intense political debate. In BC, the discussion and debate about the appropriate level to set the minimum wage at has received more attention than any other provision in the ESA over the last two decades. This stands to reason due to the high cost of living in several of the province’s cities. While raising the minimum wage is an important part of supporting individual workers, the prov- incial government has also sought to balance out the fact that an increase to this minimum standard has an economic impact on employers. In 2017, the provincial government set out to remove the political debate from this process by creating the Fair Wage Commission (FWC). The FWC established a series of stepped increases to bring BC’s minimum wage up to $15 per hour, which was achieved by June 2021. In addition, the FWC recommended that the minimum wage be increased annually, based on BC’s average rate of inflation. The prov- incial government has followed this approach, which has meant that the minimum wage has grown from $15.20 per hour in 2021 to $17.40 per hour, effective June 2024.1 The minimum wage in Alberta has not changed since 2018, when it was raised to $15.00 per hour. Students under the age of 18 can be paid $13.00 per hour. Alberta (along with Saskatchewan) now has the lowest minimum wage rate in Canada. In 2019, the Alberta minister of labour and immigration appointed a Minimum Wage Expert Panel to review, analyze, and publish data on the labour market impacts of the series of increases that occurred between 2015 and 2018. Key conclusions reached by the panel and published in February 2020 included the following: The number of minimum wage earners increased from 2.3 percent of the workforce to 11.5 percent between 2014 and 2018, which is the highest proportion of workers earning minimum wage in Canada. The number of jobs lost that may be associated with the wage increase was some- where between 23,000 and 26,000. Losses were primarily for those aged 15-24 and were concentrated outside of urban centres. There are currently no plans to further adjust the minimum wage in Alberta. Minimum Reporting Pay On occasion, employees who come in to work their scheduled shift are sent home before the end of the shift because, for example, business is slow or an expected shipment does not arrive. In this situation, a special rule applies. A common example might be in the service industry, such as with a restaurant where a rainy day leads to fewer customers than were expected. In Alberta, it is called the “three-hour rule” because an employer must pay an employee who is sent home after working less than three hours the greater of three hours at the ap- plicable minimum wage or the employee’s regular wage for the time worked. The following example illustrates how the calculation works: Yassi is scheduled to work an eight-hour shift at a retail store in Alberta. Business is slow, and the employer decides to send her home after only two hours. Yassi earns $16 per hour, so payment at her regular rate would be 2 × $16, or $32. If the applicable minimum wage is $15 per hour, the three-hour rule means that she is entitled to receive 3 × $15, or $45, because that amount is greater than $28. 1 To find the minimum wage rates in BC, visit ​. 168  Part II Legal Issues in Hiring and During the Course of Employment This rule does not apply to an employee who reports to work after being advised in advance not to report, an employee who is only available to work for less than three hours, or an employee who works from home. It is also inapplicable if the employer has no control over the reason that work is unavailable, as in the case of a fire or power failure. There are some (limited) categories of employees for whom the three-hour minimum is reduced to two hours—for example, school bus drivers, caregivers who provide home care, and adoles- cents who are 12 to 14 years of age when employed on a day that they are required to attend school, among others. In BC, the special rule is called the “two-hour rule,” but it is somewhat different. The rule is that there is a minimum of two hours for which an employer must pay an employee scheduled to work on a given day—regardless of how long the scheduled shift is. In the event that the employer cancels a scheduled shift or sends an employee home early, two rules apply, depending on the shift length: (1) if the employee was scheduled to work eight hours or less, the two-hour rule applies; (2) if the shift was for more than eight hours, a four- hour minimum payment rule applies. In all cases, these rules do not apply if the employee is unfit to work or violates health and safety rules—or fails to report to work. The four-hour rule is reduced to a two-hour rule if an employer must send an employee home or cancel a shift in advance due to reasons “completely beyond the employer’s control” (e.g., unsuitable weather conditions or a power outage; s 34(2)(b)). Of course, if the employee actually works more than the minimum amount (two or four hours) before being sent home, the employer must pay for the entire period actually worked (s 34(4) of the ESA). Hours of Work and Rest Employment standards legislation in each province makes some provision for the maxi- mum hours that an employer may assign to an employee or that an employee may agree to work in a given time period. In some provinces, including Alberta, the rules for “maximum hours of work” and “overtime” are separate issues. The maximum hours rule sets an absolute limit on the hours in a day or week that an employer can have the employee work; over- time refers to the threshold when overtime premium pay is required. BC takes a different approach, as you will see below. General Rule In BC, there is no fixed maximum number of hours in a day or week that an employee may work. The only absolute restriction on the number of hours an employee may work is set out in section 39 of the ESA: “an employer must not require or … allow an employee to work excessive hours or hours detrimental to the employee’s health or safety.” There is no definition in the ESA or ESR of “excessive,” and BC courts have not inter- preted section 39. The BC Employment Standards Tribunal has considered section 39 in several cases, and in each case rejected the employee’s claim that hours were excessive or detrimental to health. Two decisions of the Tribunal provide guidance on the mean- ing of section 39, albeit in general language (Kenneth Johnston BC EST # D071/10 and Deepthi Perera BC EST # D125/12 , confirmed on reconsideration in BC EST # RD071/13 ). The Tribunal emphasized that any claim under section 39 of exces- sive or detrimental hours requires particular proof—that is, evidence specific to the em- ployee who has filed the complaint. “Excessive hours” are those greater than “necessary” or “usual and proper” for the particular job. In considering whether hours are excessive, the  Chapter 6 Employment Standards Legislation   169 Tribunal considered the nature of the work, specific job responsibilities, the period of time over which the hours were worked (e.g., how often the employee worked more than regular hours), and any other circumstances related to the job and the work hours. The Tribunal rejected the argument that “excessive” can be defined by the ESA’s rules for the number of hours above which overtime is due, or by reference to any arbitrary limit (e.g., working more than 12 hours in one day). “Excessive” depends on the circumstances. To prove that hours have been “detrimental to the employee’s health or safety,” a complainant would have to provide evidence, such as a doctor’s report, that links an employee’s medical condition to the work hours. The director of employment standards and the Tribunal would not consider general studies about, for example, the effect of working night shifts: the evidence must be specific to the employee who has lodged the complaint. In Alberta, employees may be required to work up to 12 hours per day and even longer when an accident occurs, urgent work is required, other unforeseeable or unpreventable circumstances occur, or the director of employment standards issues a permit authorizing extended work hours (s 16 of the ESC). Agreement to Work Excess Hours In Alberta, section 128(b) of the ESC prohibits an employer from requiring any worker to work hours in excess of the hours of work permitted under the Code. In BC, as noted above, section 39 of the ESA also prohibits “excessive hours” (without specifying a number) or hours detrimental to health or safety. Hours Free from Work Employees are entitled to have a certain number of hours free from work. In Alberta, this involves the following, at minimum: eight consecutive hours off work between shifts (s 17(2)); or one day of rest every workweek, or two consecutive days of rest in each period of two consecutive workweeks, or three consecutive days of rest in each period of three con- secutive workweeks, or four consecutive days of rest in each period of four consecu- tive workweeks. This means that an employee can work up to 24 consecutive days, but then must take at least four consecutive days of rest (s 19). In BC, the minimum hours free of work are as follows: eight consecutive hours off work between shifts (s 36(2)); or 32 consecutive hours off work every workweek, or else the employee is paid one and a half times the regular wage for time worked during the 32-hour period the employee should have been free from work (s 36(1)). Emergencies In BC, section 36(3) of the ESA makes an allowance for employers to call in workers to work before their eight consecutive hours free from work have gone by in the event of an emergency. This exception does not override the requirement of 32 hours off each week. Eating Periods and Breaks Generally, the employer must provide a 30-minute eating period after a maximum of 5 consecutive hours of work. In Alberta, the employer may require an employee to work 170  Part II Legal Issues in Hiring and During the Course of Employment longer without a break if an accident occurs, urgent work is needed, or other unpreventable or unforeseeable circumstances arise (s 18). Also in Alberta, breaks can be paid or unpaid at the employer’s discretion. If breaks are unpaid, the employer cannot place restrictions on the employee during the break time, such as staying on the premises. Finally, in Alberta, a number of employees are exempt from the hours of work and rest period provisions, includ- ing managers, supervisors, farmworkers, specified professionals, and certain categories of salespeople, among others. In BC, the rules and exemptions are essentially the same, but an employer can require an employee to work, or be available for work, during a meal break as long as the meal break is counted as time worked by the employee. Contrary to popular belief, and while it is a common practice, an employer is not required to provide coffee breaks. However, if it does so and employees are required to remain at the workplace during the break, they are entitled to payment for this time. Overtime General Overtime Pay Rule The purpose of overtime pay is to compensate employees for additional time spent working and to discourage employers from requiring employees to work excessive hours. The higher overtime rate applies to hours worked over a prescribed threshold amount. In Alberta, section 21 of the ESC provides for a threshold of 8 hours on each workday in the workweek or 44 hours per week (called “the basic 8/44 rule”). Under section 22(1), employers must pay employees overtime pay at the rate of 1.5 times their regular rate of pay after they work in excess of 8 hours on each workday or 44 hours in the workweek, which- ever is greater. For example, an employee who makes $15.00 per hour is entitled to overtime pay of $22.50 (1.5 × $15.00) for every hour worked after 44 hours in the workweek. In BC, section 35 of the ESA provides for a threshold of 8 hours per day or 40 hours per week—unless the employer and employee have made an “averaging agreement” (discussed under the heading “Averaging Agreements,” below). The way the daily versus weekly over- time is calculated is similar to the system in Alberta with two differences. First, the weekly threshold is lower in BC: 40 hours. Second, there are two daily thresholds in BC. Under sec- tion 40 of the ESA, employers must pay employees overtime pay at the rate of 1.5 times their regular rate of pay for all hours worked above 8 hours in a given day, and double the regular rate if the employee works more than 12 hours in one day. (Recall that, unlike Alberta, BC does not set an absolute maximum number of hours of work per day.) As in Alberta, the calculation of overtime for hours worked during the week is sep- arate. For calculating the number of hours worked per week, section 40 counts only the first 8 hours worked each day, since employees already receive overtime for daily hours above 8 (s 40(3)). This means that an employee would have to work more than 5 days in a week to cross the weekly overtime threshold, even if the employee works 10 hours per day during the 5-day workweek. Of course, in that scenario, there would be no difference: in BC, this employee would earn overtime for 10 hours that week: 2 hours per day × 5 days. Why, then, do Alberta and BC set two thresholds (weekly and daily) rather than just a weekly threshold? The distinction protects both employees who work fewer days per week but longer hours (who benefit from the daily threshold), and employees who work more days per week but fewer hours per day (who benefit from the weekly threshold).  Chapter 6 Employment Standards Legislation   171 In some cases, a collective agreement or company policy may provide for overtime pay at a lower threshold, such as for all hours worked in excess of 35 hours per week. As with any agreement that exceeds the ESA’s or ESC’s requirements, this lower threshold for overtime overrides the minimum requirements of the legislation. An employer cannot lower an employee’s regular wage to avoid paying overtime. For example, if an employee’s regular pay is $15 per hour, the employer cannot lower the rate to $14 and then pay 1.5 × $14 for overtime hours worked. And as noted above, employees cannot “contract out” of the minimum standards under legislation, so they cannot give up their right to overtime pay. Some job categories do not qualify for overtime pay under the legislation. The most sig- nificant of these exemptions relates to any person whose work is supervisory or managerial in character, but there are quite a number of jobs that are excluded from overtime pay and other rules governing hours of work, as the next section explains. Occupations Not Affected by Overtime Rules There are a number of occupations for which an employer is not obliged to pay workers overtime or for which the legislation specifies a different calculation of overtime. Alberta’s ESR lists persons, including managers, to whom the employer is not obliged to pay overtime or keep records of hours of work and overtime, such as architects, account- ants, chiropractors, dentists, engineers, lawyers, optometrists, psychologists, veterinarians, and information systems professionals, among others. BC’s ESR also lists persons, including managers, to whom the employer is not obliged to pay overtime (and to whom none of the “hours of work” rules in part 4 of the ESA apply). These persons range from taxi drivers to teachers and professors to wilderness guides. Since these rules change over time, employers should always check with their local Employment Standards office if they have any doubts about whether an employee is entitled to the regular overtime provisions. Employers should also take care not to make the com- mon mistake of assuming that employees who are paid a salary rather than an hourly wage are excluded from overtime. As the next section of this chapter indicates, salaried employees are just as entitled to overtime pay as hourly wage earners. The exemption from overtime depends on the nature of the work, not on the means of payment. Managers and supervisors are the largest category of employee that is not entitled to overtime pay. There is considerable case law on the exact definition of “manager.” One of the trickiest issues in this case law is how to classify a person in a managerial or supervisory role who also performs non-supervisory or non-managerial tasks—and vice versa: workers whose responsibilities sometimes include supervision of other employees. This can be a difficult question, especially when an employee’s job responsibilities change, as the Ontario case of Tri Roc illustrates. Overtime Pay for Managerial Employees CASE Tri Roc Electric Ltd v Butler, 2003 CanLII 11390 (ONLRB) IN Facts POINT Butler began to work for the employer in 1999. By the end of 2000, he became involved with several large electrical projects. In addition to his regular duties, he assumed some supervisory and admin- istrative functions. He became responsible for keeping track of all hours worked by the employees at (Continued on next page.) 172  Part II Legal Issues in Hiring and During the Course of Employment his site. He approved their time sheets, occasionally made recommendations for hiring and firing, and suggested wage rates for the new employees. Although Butler consistently worked more than 44 hours a week, his employer refused to pay him overtime because it viewed him as being employed in a supervisory capacity. Relevant Issue Whether the employee was a supervisory or managerial employee and thus exempt from the over- time pay requirements of the Ontario ESA. Decision The Board held that under the old ESA, Butler was not entitled to overtime pay because the essential character of the job was managerial. Consequently, he was not entitled to any overtime pay for work performed before September 4, 2001 (the time at which Ontario’s new ESA came into force). However, from September 4, 2001 onward, Butler’s duties could no longer be classified as super- visory or managerial because he “regularly” performed non-managerial duties, such as working with tools and completing electrical work, in the ordinary course of his employment. He was therefore en- titled to receive overtime premium pay for work performed after the new statutory wording related to the supervisory/managerial exemption came into force. Tri Roc established that under the ESA in Ontario, any employee who regularly performs non-managerial duties is eligible for overtime premium pay. The same principle applies in both Alberta and BC. Salaried Employees Salaried employees, whose wages are not based on the number of hours worked but rather on an annual salary, and who do not fall within the managerial or supervisory exemption, are entitled to overtime pay if they work more than the applicable threshold number of hours per week. In Alberta, this is 44 hours per week, and in BC, it is 8 hours per day or 40 hours per week, as described above. For example: Thuy works in Alberta. Her salary is $600 per week. Because she worked 50 hours this workweek, she is entitled to 6 hours at the overtime rate. To calculate her overtime pay, divide $600 by 44 hours to determine her hourly rate ($600 ÷ 44 = $13.64 per hour). Thuy’s overtime rate is therefore $20.46 per hour (1.5 × $13.64). Her total overtime pay is $122.76 ($20.46 × 6 hours). If Thuy worked in BC, a different threshold would apply for when overtime is triggered (40 hours for the week), but the same calculation would convert her salary to the appropriate hourly overtime rate. Averaging Agreements BC’s ESA permits an employer and employee to agree in writing that the employee’s hours of work may be averaged for the purpose of determining the employee’s hours of work with respect to entitlement to wages or overtime pay. To be valid, such agreements must meet a number of requirements stipulated in section 37 of the ESA. Overtime pay is then payable after the employee has worked an average of 40 hours a week over the agreed period, which can be anywhere from one to four weeks. Averaging agreements have obvious advantages for the employer because they poten- tially lower the amount of overtime pay. At the same time, employees may find an averaging agreement attractive if they prefer to work excess hours in some weeks and fewer in others. An averaging agreement makes this schedule more practical.  Chapter 6 Employment Standards Legislation   173 An averaging agreement must be in writing, set out the employee’s work schedule, be signed by both the employer and employee, and include an expiry date. Section 37 of the ESA sets out a number of specifications as to how these agreements should work, so it is a good idea for any employer who intends to use an averaging agreement to check the applic- able ESA section carefully to ensure that the agreement is in compliance with those specifi- cations. Employers must retain records of any averaging agreement for four years after the employment terminates. An expiry date does not prevent an employer and employee from agreeing to renew or replace the averaging agreement. However, the agreement cannot be revoked or cancelled before the expiry date unless both parties agree in writing. Unlike what is required in some provinces, in BC the parties are not compelled to get approval from the director of employment standards for implementing an averaging agreement. In Alberta, section 23.1 of the ESA provides for “averaging arrangements” as opposed to “averaging agreements.” The difference is that in Alberta, the employer may require an em- ployee or group of employees to average their hours for any period of time from 1 week to 52 weeks to determine entitlement to overtime pay (or time off in lieu of overtime pay). The employer is required to provide two weeks’ notice in writing, and the notice must include the number of weeks over which the averaging will occur, include a schedule setting out the daily and weekly hours of work for the averaging period, and specify the manner in which the overtime pay/time off with pay will be calculated. FYI Class Actions and Overtime Claims Overtime pay is a common source of employment standards claims. The provisions can be compli- cated to apply. For example, an employer may misclassify an employee as a manager when they are not or fail to keep track of overtime hours worked. Overtime claims have also become headline news. Two legal developments in Ontario and elsewhere in Canada have contributed to this: 1. Amendments to the law have made it easier to file class action claims. A class action is a form of lawsuit in which a group of plaintiffs who have a common complaint combine their claims and sue the defendant in a single lawsuit (Bongarde Media Co, 2009, at 3). As a result, the dollar amounts involved in class actions are often in the millions (or hundreds of millions). 2. Since the Macaraeg v E Care Contact Centers Ltd decision in BC’s Court of Appeal, employees are restricted to filing ESA claims, including claims for overtime, through the Employment Standards Branch. They may not pursue entitlements of the ESA through the civil courts, whether as class action suits or not. The employer’s obligation to meet the ESA’s requirements is not in fact an implied term of every employment contract but is instead a statutory right to be enforced through the proper administrative agency. A review of class action claims based on overtime pay illustrates their potential magnitude. The claim made in Fresco v Canadian Imperial Bank of Commerce (2012) amounted to $600 million against CIBC on the basis that the employer routinely refused to pay overtime to tellers and other front-line workers. The Ontario Court of Appeal certified this class action, and the Supreme Court of Canada refused to hear the case, solidifying the notion that class actions based on unpaid overtime can proceed. Ultimately, CIBC settled this claim for $153 million in 2023 (Benchetrit, 2023). In McCracken v Canadian National Railway Company (2012), a claim was made for $300 million on the basis that employees were incorrectly classified as supervisors and managers. Not all class action claims are allowed to proceed. For a class action to be brought, a plaintiff rep- resenting the class has to get a civil court judge to “certify” it. This requires the plaintiff to prove that, among other things, there are common issues of law or fact involved, a representative plaintiff will adequately represent the class, and a class action is the preferred proceeding. (Continued on next page.) 174  Part II Legal Issues in Hiring and During the Course of Employment In Corless v KPMG LLP (2008), employees claimed $30 million on the basis that managers set perform- ance targets that could not be met in a standard workweek, but the resulting overtime was never paid. The Corless litigation was certified as a class action proceeding in 2009 as part of a $10 million settlement to current and former KPMG employees. In Fresco v Canadian Imperial Bank of Commerce, Fresco, the rep- resentative plaintiff, claimed that she was owed some $50,000 for the 2 to 15 hours a week of additional work she was required to perform as a teller and personal banker since 1998. Although the case involved nearly 31,000 current and former non-managerial employees, each with specific facts regarding unpaid overtime, the Court was satisfied that there was a common issue capable of being determined on a class- wide basis, as noted above, which was supported by the Supreme Court of Canada’s refusal to hear the case. Fulawka v Bank of Nova Scotia (2012) is another case in which an Ontario court certified a class action claim for overtime. Scotiabank and the employees reached a settlement in 2014, worth about $95 million. By contrast to those three overtime cases, in McCracken v Canadian National Railway Company, the Ontario Court of Appeal refused to certify the claim because the defendant argued that many of the claimants were managers, and thus not entitled to overtime. Even though all of the plaintiffs held the same job title (“first line supervisor”), there were in fact 70 different positions grouped under the title. The Court concluded that determining their managerial status required a position-by-position assess- ment, so proceeding as a class action would not avoid duplication of fact-finding and legal analysis. Arguments about managerial status were not, however, a barrier to certification in Rosen v BMO Nesbitt Burns Inc, another case involving plaintiffs who might be classified as managers. In this decision from 2013, the employees had enough in common for the Court to hear arguments about whether they were managers or not as a class, rather than individually. Employers are wise to benefit from the lessons of these past cases, recognizing that costly and time-consuming cases can have a significant impact. Baroch v Canada Cartage, out of Ontario, was settled in 2021 for $22.25 million after it was determined that there was not a clear, company-wide policy governing overtime. These cases suggest that lawsuits based on overtime claims will likely remain a significant issue in larger workplaces. The fact that many employees, working in hybrid or remote arrangements, may have less clearly defined hours of work can inadvertently lead to extended workdays. Without proper monitoring, practices, or overtime policies, these arrangements could lead to valid claims of unpaid overtime under employment standards legislation. Employers should take the following steps to ensure compliance: 1. Make sure that employees are classified properly so that only those who are truly managers or supervisors are exempt from overtime pay. (Note that even employees who are exempt by statute may be entitled to overtime pay under their employment contract2 or an office policy.) 2. If possible, don’t schedule non-managerial employees for more than 40 hours a week in BC or 44 hours a week in Alberta (or whatever the limit for non-overtime hours is under the terms of their employment agreement), and make sure that employees leave work at the end of those hours. Allowing an employee to stay late, even though it is not required or asked of the employee, potentially makes the employer liable for paying any resulting overtime. 3. Review job descriptions and performance targets to determine whether overtime hours are inher- ent in the workload. 4. Ensure that agreements to extend the hours of work or to average overtime pay fully comply with employment standards legislation—“almost” in compliance does not count. 5. Maintain accurate records of the hours worked and the amount paid. Without documentation, it will be difficult to prove that legislative requirements were met. 6. Have a clear policy regarding travel time and the amount of electronic work being done during off hours. Some employers ban the use of smartphones or similar devices for work purposes between certain hours or limit them to emergency use (Loewenberg & Lisi, 2008, at 5). 7. Clearly communicate and consistently enforce the overtime policy, including provisions related to limitations on monitoring and reviewing email after hours (commonly called the right to disconnect). 8. Ensure that employees who may work remotely or under a hybrid arrangement have clear expec- tations related to their hours of work that are consistent with overtime policies. 2 The BC Supreme Court upheld a decision by the BC Employment Standards Branch whereby a manager’s contract contained provisions to be paid overtime, even though he would otherwise have been exempt under the BC ESA. Kamloops Golf & Country Club Ltd v British Columbia (Director of Employment Standards) (2002).  Chapter 6 Employment Standards Legislation   175 Banking of Overtime Pay In Alberta, under the averaging arrangements in section 23 of the ESC where the em- ployer may require that the employee receive paid time off work instead of overtime pay, the ­employee takes time off with pay instead of receiving overtime pay. For this time off, the employee is paid at the same wage rate that they would have been paid had they worked and received “straight-time” wages from the employer. In BC, section 42 of the ESA allows an employer and employee to agree that the em- ployee will receive paid time off work or credit overtime work to a time bank instead of overtime pay. Such agreements can arise at the written request of the employee, and the em- ployee must receive 1.5 hours of paid time off for each hour of overtime worked (and double hours if the employee works more than 12 hours in a single day). For example, if the em- ployee works 48 hours in a week and therefore is entitled to 8 hours at the overtime rate, that employee may agree in writing to take 12 hours (1.5 × 8 hours) of paid time off in lieu of overtime pay. Without such a written agreement, the employer must provide overtime pay (at 1.5 times the employee’s regular rate of pay) to compensate for overtime hours worked. In both provinces, if an employee requests to close the time bank or leaves employment, the employer must pay any banked overtime owing. Vacation Vacation pay and vacation time are separate entitlements. An employee may be entitled to vacation pay but not vacation time, depending on whether the employee has worked a full year for the employer. The relevant provisions in Alberta’s ESC are sections 34-44, and in BC’s ESA the relevant provisions are sections 57-60. Vacation Time Employees in both provinces are entitled to at least 2 weeks’ vacation time per year after they have worked for an employer for a full 12 months. In both Alberta and BC, the min- imum increases to three weeks after five consecutive years of employment. An employee who resigns before completing a full year of employment is not entitled to vacation time, only vacation pay. In Alberta, employers must allow employees to take their vacation in an unbroken period (within the 12 months after it is earned), unless they request otherwise, in which case the vacation may be taken in periods of not less than one-half day. If the employer and the employee are unable to agree on a mutually satisfactory date to start the employee’s annual vacation, the employer is entitled to decide when vacation time will be taken. In these cases, the employer must provide at least two weeks’ written notice of the date on which the employee’s annual vacation is to start. In some cases, an employer is entitled to decide when a vacation must be taken, regardless of the employees’ preferences. For ex- ample, the employer can designate a plant shutdown for a week at Christmas, during which all employees take a vacation. However, the employer must give the vacation time within 12 months after it is earned. In BC, an employer must allow its employees to take their vacation time in periods of one or more weeks, at the employee’s discretion. Although the ESA does not specifically say so, the employer is entitled to decide when vacation time will be taken—as in the above ex- ample of a plant shutdown for a week at Christmas. Also, as in Alberta, the employer must give the vacation time within 12 months after the employee becomes entitled to it. For ex- ample, if Carlos starts work on January 1, 2024, he becomes entitled to two weeks’ vacation 176  Part II Legal Issues in Hiring and During the Course of Employment after December 31, 2024, and his employer is required to provide him with two weeks’ vaca- tion to be taken by December 31, 2025. Periods of Inactive Service In Alberta, section 44 of the ESC states that an employee’s annual vacation can be reduced in proportion to the number of days that the employee was absent from work. This includes maternity and parental leaves and other leaves. In BC, inactive service (including that arising from layoff; sickness; injury; approved leaves; or statutory leaves such as jury, pregnancy, parental, family responsibility, compas- sionate care, or reservists’ leave) is included in calculating the 12 months’ employment (s 56 of the ESA). An employee who is on a statutory leave does not lose the right to take vacation time, although the employer may choose not to give vacation pay for that time. Vacation leave may be taken after the statutory leave expires or at a later date if the parties agree. The employee does not have to shorten the statutory leave or risk losing some or all of their vacation time. Vacation Pay Under the legislation in both provinces, employees are entitled to vacation pay that is at least equal to 4 percent of wages earned (excluding the vacation pay) during the 12-month period for which the vacation pay is given. However, after 5 consecutive years of employ- ment, vacation is paid at 6 percent of total wages. For example, if Eli earns $25,000 a year within the first 5 years of his employment (starting with his date of commencement), he is entitled to receive 4 percent of that amount as vacation pay, which is $1,000. For full-time employees, 4 percent of earnings typically equals 2 weeks’ pay. Where an employee works irregular hours, has worked many hours, or was laid off in the previous 12 months, 4 per- cent of earnings could be considerably more or less than 2 weeks’ wages. For the purposes of determining vacation pay in Alberta, “wages” do not include over- time earnings (unless there is an overtime arrangement in place allowing for banked over- time hours to be paid at straight time when they are given; these straight-time earnings are included as wages when calculating vacation pay). Also excluded are general holiday pay, pay in lieu of termination notice, and unearned bonuses. For the purposes of determining vacation pay in BC, “wages” do include overtime pay, statutory holiday pay, termination pay, and commissions. The entitlement to vacation pay begins from the first hour of employment. An employee who leaves at any time must be given all vacation pay earned to that point. For example, an employee who works only 7 days is entitled to 4 percent of the wages earned during those 7 days. However, in BC (not Alberta) the employee must have been employed for at least five calendar days. Many employers offer more vacation time and pay than the statutory minimum. In fact, employers usually provide at least 3 weeks’ vacation time and 6 percent vacation pay even before 5 years of service. With many sectors experiencing competition for talent, particu- larly during times of low unemployment, and recognition of the importance of leisure time for health and well-being, workplace trends point to offering employees more paid time off. Even four weeks’ vacation at an 8 percent rate is becoming common for employees with as little as 3 to 5 years of service. In Alberta, section 41 of the ESC permits an employer to pay vacation pay at any time, but no later than the next regularly scheduled payday after the vacation has commenced.  Chapter 6 Employment Standards Legislation   177 If it is requested by the employee, vacation pay must be paid in full at least one day prior to the start of the vacation. In BC, section 58(2) stipulates that vacation pay must be paid at least seven days before the beginning of the employee’s annual vacation, or on the employ- ee’s scheduled paydays, if such was agreed to in a written contract or collective agreement. Vacation Entitlement and Statutory Leaves of Absence In Alberta, section 44 of the ESC states that an employer can reduce an employee’s vaca- tion time and vacation pay in proportion to the number of days that they were, or would normally have been, scheduled to work but did not. As noted above, in BC an employee continues to earn credits toward vacation time during statutory leaves of absence, such as pregnancy, parental, and bereavement leaves. In both cases, the impact of those leaves on vacation pay depends on the terms of the contract of employment. For example, where either a collective agreement or an individual contract provides that the employee earns two paid vacation days for every month of ser- vice, both vacation time and pay are earned through service and therefore continue to ac- cumulate during statutory leaves. However, where vacation pay is based on earnings, the amount of vacation pay is affected by statutory leaves because it is calculated as a percentage of wages earned, and an employee does not usually earn wages during a leave. For example, an employee on maternity or par- ental leave for the year preceding the vacation time would probably have no earnings from the employer. Therefore, vacation pay would not be owing. General Holidays (Alberta) General holidays (called “statutory holidays” in BC) are particular days, specified in the employment standards legislation, as paid days off for most workers in most circumstances. Sections 25-33 set out the provisions relating to general holidays in the ESC. Nine General Holidays As set out in the definitions in section 25 of Alberta’s ESC, the nine paid general holidays that employees are entitled to each year in Alberta are New Year’s Day, Alberta Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Remembrance Day, and Christmas Day. Section 25 also provides that other days may be designated as general holidays by the Lieutenant Governor in Council or by agreement between the employer and employees or by the employer. As of 2024, Alberta does not recognize the National Day for Truth and Reconciliation as an official general holiday, but lists it among several others (including Boxing Day and Easter Monday) as an optional general holiday. If such days are recognized by an employer, all employment standards rules related to general holidays apply. Qualifying for Paid General Holidays Most employees in Alberta are eligible for general holidays. However, employees who work in certain industries, such as hotels, restaurants, and hospitals, may be required to work on a general holiday. If a holiday falls on a day that is normally a workday for the employee and the employee did not work on the holiday, they are entitled to their average daily wage. If a holiday falls on a day that is not normally a workday for the employee and they work on the holiday, they are still entitled to 1.5 times their regular wage rate for hours worked. 178  Part II Legal Issues in Hiring and During the Course of Employment If a holiday falls on a day that is normally a workday for the employee and they worked on the holiday, they are still entitled to the same amount of general holiday pay as before. There are two options for paying employees holiday pay: 1. The employee gets 1.5 times their regular wage for hours worked and average daily wage. 2. The employee gets their regular wage rate for hours worked and average daily wage with one day off work. The following four examples show how the Alberta provisions work: Izumi works 8 hours a day, 5 days a week, earning $200 per day and $1,000 per week. She qualifies for the general holiday and has been given a day off on the general holiday, so her holiday pay is $200—in other words, she receives her typical day’s pay. Owen earns $20 per hour working part time on an as-required basis. Some days he works eight hours, while others he works two or three hours. In the relevant 9-week period before the public holiday, he worked a total of 15 days and earned $1,000, and 5 of those 15 days fell on the same day of the week on which the general holiday falls. His holiday pay is $66.67 ($1,000 ÷ 15). This reflects his average daily wage over the period before the holiday. Joshua is in the middle of his parental leave. Although he receives parental benefits under the fed- eral employment insurance program, he has no wages from his employer in the relevant period. He is not entitled to public holiday pay since he did not earn any wages or vacation pay during that period. Fatima works 8 hours a day, 5 days a week, earning $25 per hour or $1,000 per week. Her em- ployer has asked her to work on a general holiday, and she works eight hours that day. Her employer is obliged to pay her $500 for that day (1.5 × $200 = $300 plus $200, an average day’s pay). Alterna- tively, she may receive her daily pay rate of $200 and be provided an additional day off with pay at her regular daily rate. Statutory Holidays (British Columbia) Sections 44-48 of the ESA set out the rules for statutory holidays in BC. Eleven Statutory Holidays As set out in the definitions in section 1 of the ESA, the 11 paid statutory holidays that employees are entitled to each year are New Year’s Day, Family Day (third Monday in February), Good Friday, Victoria Day, Canada Day, British Columbia Day (first Monday in August), Labour Day, Thanksgiving Day, National Day for Truth and Reconciliation (September 30), Remembrance Day, and Christmas Day. IN THE NEWS National Day for Truth and Reconciliation Becomes a Statutory Holiday in BC On March 9, 2023, BC’s provincial government introduced a new statutory holiday in honour of the National Day for Truth and Reconciliation, effective September 2023. This holiday was first observed federally in 2021, on a date chosen to coincide with Orange Shirt Day, named to commemorate a story told by Phyllis Webstad, whose prized orange shirt was taken from her on her first day at St Joseph Mission Residential School near Williams Lake. This statutory holiday comes as a result of a Call to Action from the Truth and Reconciliation Com- mission, which asked the federal government to establish a day to honour residential school survivors, their families, and their communities. BC, Prince Edward Island, New Brunswick, Manitoba, the North-  Chapter 6 Employment Standards Legislation   179 west Territories, Nunavut, Yukon, and the federal government formalized September 30 as a statutory holiday. Several other provinces, including Newfoundland, Ontario, and Alberta, have left businesses to decide whether to close, but have not designated this day as a statutory holiday. Qualifying for Paid Statutory Holidays Most employees in BC are eligible for statutory holidays. However, employees who work in certain industries, such as hotels, restaurants, and hospitals, often work on a statutory holiday. Section 44 of the ESA stipulates that every employee in BC who has been employed for at least 30 calendar days before a statutory holiday and who has worked or earned wages for 15 of the 30 calendar days preceding the statutory holiday (or worked under a corres- ponding averaging agreement) qualifies for statutory holiday pay. If an employee is given a day off on the statutory holiday, or else is given a day off on an- other day of the year instead of the statutory holiday, that employee must be paid an amount equal to at least an average day’s pay for that day off. The amount to be paid is determined by a formula (set out in s 45(1) of the ESA) based on the amount paid or payable to the employee for work done and wages earned over the 30-calendar-day period preceding the holiday divided by days worked over that period. This average day’s pay applies whether or not the statutory holiday falls on the worker’s regularly scheduled day off. If the employer asks the employee to work on a statutory holiday, section 46 requires that the employer must pay (1) 1.5 times the regular wage for the time worked up to 12 hours, (2) double the regular wage for time worked beyond 12 hours, and (3) an average day’s pay as per the formula in section 45(1). The following three examples show how the BC provi- sions work: Mark earns $20 per hour working part time on an as-required basis. Some days he works eight hours; on others he works two or three hours. Suppose that Mark does not work on the statutory holiday, and that in the 30-calendar-day period before the statutory holiday he worked a total of 15 days and earned $1,000. His holiday pay would be $66.67 ($1,000 ÷ 15). This reflects his average daily wage over the period before the holiday. Note that if he had worked fewer than 15 days within the 30-calendar- day period before the statutory holiday, he would not be entitled to any holiday pay. Ali works 8 hours a day, 5 days a week, earning $25 per hour. His employer has asked him to work on a statutory holiday, and he works eight hours that day. In the previous 30 days, he worked 20 days, earning $4,000, making his average day’s pay $200. His employer must pay him $500 for the statu- tory holiday (1.5 × $200 = $300, plus $200, an average day’s pay). If Ali had worked over 12 hours on that statutory holiday, say, 14 hours, he would be paid $750 (1.5 × $25 × 12 = $450, plus 2 × $25 × 2 = $100, plus $200). Sucheta qualifies for statutory holiday pay, and she has agreed to take a day off on another day of the year instead of the statutory holiday. That other day is treated as if it is a statutory holiday. If in the 30-day period before the substituted day of holiday she works 20 days and earns $4,000, the employer must pay her $200 ($4,000 ÷ 20), an average day’s pay. (A common example of such a switch is when a holiday such as Remembrance Day occurs mid-week, and the employee and employer wish to shift the holiday to make a long weekend.) The ESA allows employers to substitute another day off for the statutory holiday if both the employer and employee agree to the substitution (s 48). However, that does not affect the employer’s obligations or employee’s rights with respect to the substituted day—that is, that day must still be treated as if it were a statutory holiday (s 45). 180  Part II Legal Issues in Hiring and During the Course of Employment Statutory Leaves of Absence (Alberta) A statutory leave allows an employee to take time off work for a specified purpose. An employer is not required to pay an employee while the employee is on statutory leave. However, employ- ees who exercise their right to statutory leave are entitled to certain other statutory rights and protections, most importantly the right to return to work at the end of the leave period. Alberta’s ESC provides for a wide range of leaves, including maternity and parental (which covers adoption), reservist, compassionate care, death or disappearance of a child, critical illness of a child, long-term illness and injury, domestic violence, personal and fam- ily responsibility, and bereavement leaves. Collective agreements and employment agree- ments may provide for additional leave days, such as short-term disability or personal days. Also, section 23 of the Jury Act states that an employee must be allowed sufficient leave to serve as a juror when summoned. Maternity Leave Sections 45-49, 52, and 53 of the ESC govern maternity leave. A pregnant employee has the right to take up to a combined total of 62 weeks of statutory leave, including 16 weeks’ unpaid time off work for maternity leave and 37 weeks for parental leave. The employee may be eligible for employment insurance benefits during this time, but the employer is not required to pay the employee during the leave. Section 45 of the ESC stipulates that a pregnant employee who has been employed by the employer for at least 90 days is entitled to maternity leave without pay. The employee must provide six weeks’ written notice of the date they will start their maternity leave, according to section 47. It is up to the employee, not the employer, to decide when to start maternity leave. However, section 46 does set some parameters on when maternity leave may be taken. The earliest a maternity leave can begin is 13 weeks before the employee’s due date, and the lat- est it can begin is on the actual birth date. If during the 13 weeks immediately preceding the estimated due date, the pregnancy of the employee interferes with the performance of their duties, the employer may give the employee written notice requiring them to start their leave (s 49). The leave must last until at least six weeks following the date of delivery unless the employee and the employer agree to shorten the period and the employee obtains a medical certificate indicating that resumption of work will not endanger the employee’s health (s 46(2)). If an employee needs to stop working early for health reasons, they do not have to start their maternity leave when they stop working; the employee may