In Ontario, the Employment Standards Act, 2000 (the “ESA”) governs an employee’s rights and entitlements across many areas of the employment relationship, from minimum wage to maximum hours of work and all the way to an employee’s entitlements to notice, Termination Pay and Severance Pay at the end of the employment relationship. The purpose of the ESA is to protect employees and ensure that they are receiving, at a minimum, certain entitlements which represent the absolute “floor” of what an employer can provide.
In that regard, the ESA specifically prohibits an employer from attempting to “opt out” of the requirements under the ESA, such as by asking an employee to sign an agreement that they will receive less than the current minimum wage or can be dismissed at any time without notice or Termination Pay. However, the ESA is by no means intended to limit an employer’s ability to provide an employee with entitlements greater than those prescribed. Section 5(2) of the ESA addresses this possibility directly:
If one or more provisions in an employment contract or in another Act that directly relate to the same subject matter as an employment standard provide a greater benefit to an employee than the employment standard, the provision or provisions in the contract or Act apply and the employment standard does not apply.
In other words, an employer can provide a greater benefit to an employee than is required by the ESA and, if they choose to do so, that greater benefit will apply. However, it is important that an employer ensure that the benefit they are providing is truly greater than what is required by the ESA. If it falls short, the ESA standard will apply.
This was the issue addressed by Arbitrator Mitchnick in Bristol Machine. In this case, the minimum benefit in dispute was the new requirement that came into effect earlier this year pursuant to Bill 148 regarding Personal Emergency Leave days. As of January 1, 2018, all employees (regardless of the size of their employer) became entitled to 10 personal emergency leave days to be used in case of personal (or close family member’s) illness, injury or medical emergency. The ESA expressly states that the first two of these ten personal emergency leave days must be paid.
The “greater benefit” in this case was that the employer paid Weekly Indemnity Benefits (Sickness and Accident Insurance) established in the collective agreement, which provided employees with 65% of their wages, up to a maximum of $700 per week, for seventeen weeks in the event of sickness or accident. The employer also provided Long-Term Disability Insurance to employees with at least 18 months of service, which, after the Weekly Indemnity Benefits had expired, provided employees with 65% of basic monthly earnings (up to a maximum of $2,500.00 per month).
The grievance arose when the employer refused to pay a number of employees who had taken sick days after the new requirements for paid Personal Emergency Leave days under the ESA had come into effect. The employer argued that the requirements under the ESA did not apply, as the employer already provided a “greater benefit”.
In determining whether the existing benefits provided by the employer were truly greater than those required by the ESA, Arbitrator Mitchnick noted the importance of ensuring that that benefit being provided was directly related to the benefit required under the ESA. An employer can’t compare apples to oranges by saying, for example, “we provide more vacation time than is required by the ESA, so we will not pay time and a half for overtime”. In this case, the comparison required a determination of “the extent to which income protection is provided along with personal leave for illness”. When comparing the benefits provided side by side (i.e. two paid days as required under the ESA, versus 17 weeks of Sickness and Accident Insurance at 65% of earnings, followed by an unlimited period of Long-Term Disability Insurance), it was obvious to the Arbitrator that the union had negotiated an exponentially greater benefit in their collective agreement than that set out in the ESA. As a result, the entitlement to personal emergency leave under the ESA did not apply.
However, it is important to note that Arbitrator Mitchnick did find that probationary employees, who did not become entitled to the Sickness and Accident Insurance benefits until the completion of their probationary period, were entitled to personal emergency leave under the ESA. Unlike other employees, probationary employees did not have a “greater right” under the collective agreement than under the ESA.
This is an important reminder that where an employer offers a greater right or benefit to your employees, that greater right may effectively replace any entitlements the employee may have had under the ESA. A similar situation arose a few years ago, when Family Day was introduced in Ontario and some employers were not required to provide it if they already provided an equal or greater number of holidays than what the ESA required.
It is important to understand that employers are not always obligated to provide employees with both the benefits negotiated for in the employment / collective agreement and those required by the ESA. For example, if prior to January 1, 2018, you provided your employees with five paid sick days, then you are not now required to provide an additional two days of paid personal emergency leave days under the ESA – you are already providing your staff with a greater benefit to income protected time off for illness than they would otherwise be entitled to.