Changes to employment law would upset labour market balance

The BC NDP government’s activist policy agenda continues to keep the B.C. business community on its toes.

The latest example is the government’s plan to overhaul the Employment Standards Act (ESA). While the ESA is a relatively low-profile statute, it has significant implications for employers. Among other things, it defines the basic rules governing hours of work, overtime, vacation entitlements and employee terminations for most non-union workplaces in the province.

As stated in the act, its purpose is to ensure employees in B.C. receive “at least basic standards of compensation and conditions of employment” and to “promote the fair treatment of employees and employers.” The ESA also states its purpose is to “foster the development of a productive and efficient labour force that can contribute fully to the prosperity of British Columbia.” We are concerned forthcoming changes to the act will undermine the principle of balance and the desire to foster a productive workforce.

The consultation paper released by the Ministry of Labour identifies several areas where changes are being contemplated.

To get a sense of what the NDP government may have in mind, CEOs and human resource managers may want to scrutinize a paper produced by the BC Federation of Labour (BC Fed) last year. Responding to a major British Columbia Law Institute report on employment standards, the BC Fed set forth a wish list of legislative and regulatory changes that go well beyond the law institute’s recommendations. The current union-friendly government will likely look favourably on the ideas proffered by B.C.’s union leaders. Unfortunately, many of these ideas, if implemented, will work to the disadvantage of employers.

First, the BC Fed believes the Employment Standards Act and the associated regulations should apply to both union and non-union workplaces. This seems odd because in a unionized setting, the proper mechanism to address working conditions is a collective agreement, rather than a government-mandated regulatory scheme. After all, that is the paramount purpose of unions: to negotiate the terms of employment for members.

Unions would be hostile to any suggestion that the ESA be imposed and somehow limit the scope of collective bargaining, so it is unclear why it should apply in unionized environments. The ESA should be limited to governing human resource policies and practices in non-union workplaces, where employees may lack the protections afforded by a collective agreement.

Second, the BC Fed advocates rescinding exemptions from the act’s hours of work and overtime provisions that were provided to the agriculture and advanced technology sectors many years ago. If the government accepts this recommendation, it would have a significant negative impact on farm businesses as well as many high-tech firms. For companies that produce and sell sophisticated technology products and services, the ESA would disrupt the project-based work models that have evolved in segments of the consulting and advanced technology sectors.

Third, the BC Fed favours much tighter rules around maximum hours of work, overtime pay and notice periods for shift changes. It is important to recognize that in today’s increasingly complex economy, workplace flexibility is important. For example, many employers and employees enter into mutually beneficial agreements to work longer periods, balanced by longer stretches of days off.

Curtailing flexibility will undermine the capacity to get large projects completed efficiently and tilt some companies toward using contractual relationships rather than relying on permanent employees.

Fourth, the BC Fed wants the government to legislate additional statutory paid holidays, longer paid vacation periods and more generous paid sick leave. Adopting these proposals would translate into many hundreds of millions of dollars of extra costs for B.C. employers and may discourage permanent hiring in favour of shorter-term contracts.

Finally, the BC Fed calls for new restrictions on the ability of employers to lay off personnel and more generous compensation for workers who lose their jobs. Apparently, the organization’s officials believe that employers should have to “justify” terminations to the Ministry of Labour.

Policy-makers in both Victoria and Ottawa continue to adopt measures that make it costlier to employ people. In the past two years, business has been required to absorb a higher legislated minimum wage, escalating Canada Pension Plan premiums and the province’s new employer health tax (which itself will add more than $1 billion to the private sector’s aggregate payroll bill). Loading more costs onto employers through additional legislative and regulatory changes runs the risk of dampening labour demand and making it harder for aspiring workers to find gainful employment.  

Jock Finlayson is the Business Council of British Columbia’s executive vice-president and chief policy officer; Ken Peacock is the council’s chief economist.