What is the Employment Standards Act

The Employment Standards Act (ESA) is a legislative framework in Canada that outlines the minimum standards employers must provide to employees, such as hours of work, minimum wage, overtime pay, leaves of absence, termination of employment, and severance pay.

While federal laws are outlined in the Canada Labor Code, employment standards are set by individual provinces and territories. For example, Ontario’s Employment Standards Act differs from Nova Scotia’s Labor Standards Code.

Note: This content pertains to Canadian employment laws. For the US, refer to information on the Fair Labor Standards Act (FLSA).

What is the purpose of the Employment Standards Act?

The purpose of the Employment Standards Act is to establish a fair and equitable working environment by setting the minimum terms and conditions of employment. It aims to balance the interests of employers and employees, promoting fair treatment for workers while considering the operational needs of businesses.

The ESA provides a framework for the resolution of Canadian workplace disputes and outlines the enforcement mechanisms to ensure compliance. The ESA is different from the Labor Relations Act, which outlines the rights of trade unions.

How the Employment Standards Act impacts employees

The Employment Standards Act impacts employees by providing them with a set of rights and protections in the workplace. These include entitlements to minimum wage, limits on hours of work, overtime pay, statutory holidays, vacation pay, various types of leaves (e.g., parental, emergency, sick, unpaid leave), and protections against wrongful dismissal. The ESA ensures that employees receive at least the minimum standards as outlined by law, safeguarding against exploitative work conditions and protecting human rights.

Employer responsibilities under the Employment Standards Act

Employers are responsible for complying with all provisions of the Employment Standards Act, which includes:

• Paying employees at least the minimum wage rates
• Adhering to regulations regarding hours of work and overtime
• Providing statutory holiday pay and vacation pay
• Granting job-protected leaves as required by the ESA
• Giving proper notice or severance pay when terminating employment
• Keeping accurate payroll records of employees' payment of wages, work hours, overtime hours, and other required information
• Furnishing employees with information about their rights under the ESA

Failure to fulfill these responsibilities can result in legal penalties, including fines and orders to pay compensation to affected employees.

How to ensure compliance with the Employment Standards Act

Organizations can ensure compliance with the Employment Standards Act by:

• Regularly reviewing and updating their HR policies and procedures to align with the latest regulations
• Training management and HR personnel on the requirements of the ESA
• Conducting internal audits to assess current practices against the standards set by the ESA
• Keeping accurate and comprehensive records of employment terms, wages, hours worked, pay periods, notice periods, exemptions, and leaves
• Seeking legal advice to navigate complex situations or when updates to the ESA occur

How the Employment Standards Act impacts global hiring

When engaging in global hiring and managing a global workforce, the Employment Standards Act of the relevant jurisdiction sets the local employment standards that must be adhered to for employees working in that area.

Multinational companies must be aware of and comply with the ESAs of all jurisdictions in which they operate, as these employment laws can differ significantly between regions. Companies must tailor their employment practices to meet the local standards, which may involve creating different policies and procedures for different locations.

Companies that want to hire internationally can use an Employer of Record (EOR) to hire, pay, and manage employees abroad, without having to handle compliance or entity set-up themselves. Learn more about Deel’s EOR model.

The Employment Standards Act and remote work

The Employment Standards Act influences remote work arrangements by still applying the same standards to remote employees as it would to those working full-time on-site. Employers must ensure remote workers receive their entitlements, such as the appropriate minimum wage, overtime pay, and job-protected leaves.

Additionally, with the rise of remote work, employers may need to consider how to manage and record hours of work, provide equipment and resources, and maintain a healthy work-life balance for remote employees, in compliance with the ESA.

Can an employee waive their rights under the Employment Standards Act?

Generally, employees cannot waive their rights under the Employment Standards Act. The employee rights and protections provided by the ESA are considered minimum standards, and any employment contract or collective agreement that provides less than these minimums is typically unenforceable.

However, in some cases, with proper legal agreements such as collective bargaining agreements, certain standards may be altered as long as the overall protection for the employee is not reduced.

How does the Employment Standards Act address overtime pay?

The Employment Standards Act addresses overtime pay by specifying the number of hours an employee can work before being entitled to overtime pay and the rate at which overtime must be paid.

Typically, overtime pay is higher than the regular rate of pay, often calculated at 1.5 times the regular rate for hours worked beyond the standard work week, which varies depending on the jurisdiction. Employers must comply with these regulations and accurately compensate eligible employees for overtime worked.

Types of leaves protected under the Employment Standards Act

The Employment Standards Act protects various types of leaves, including but not limited to:

• Maternity/parental leave
• Personal emergency leave
• Sick leave
• Family medical leave
• Bereavement leave
• Domestic or sexual violence leave

Each type of leave comes with specific qualifications, durations, and conditions under which they are granted. Employers are required to provide job-protected leave, meaning the employee should be able to return to the same or a comparable position upon the completion of their leave.

See also: Maternity and Paternity Leave Around the World in 2023

How are vacation pay and statutory holidays regulated by the Employment Standards Act?

Vacation pay and statutory holidays are regulated by the Employment Standards Act to ensure that employees receive a minimum amount of paid time off. The ESA outlines the percentage of wages that employees are entitled to as public holiday pay and the number of statutory holidays they are entitled to with pay.

Employers must follow these regulations by providing the required vacation pay, typically accrued over time, and recognizing statutory holidays, compensating employees who are eligible and required to work on these days as stipulated by the ESA.

See also: Paid Annual Leave Per Country: Global Guide

What are the consequences for employers who violate the Employment Standards Act?

Employers who violate the Employment Standards Act may face several consequences, including:

• Orders to pay compensation or unpaid wages to affected employees
• Administrative penalties or fines
• Prosecution, which can lead to further fines and even imprisonment for serious violations
• Damage to the company's reputation and potential loss of business
• Increased scrutiny from labor authorities and potential audits of the employer’s business and employment practices

It is essential for employers to maintain compliance with the ESA to avoid these negative outcomes and foster a lawful and ethical work environment.

How can employees address grievances related to the Employment Standards Act?

Employees can address grievances related to the Employment Standards Act by first bringing their concerns to their employer or HR department. If the issue is not resolved internally, employees can file a complaint with the appropriate labor or employment standards authority in their jurisdiction.

This body will investigate the complaint, and if a violation of the ESA is found, it can order remedies such as back pay, reinstatement, or other compensation. Employees are protected from retaliation for exercising their rights under the ESA.