Regulations Amending the Canada Labour Standards Regulations: SOR/2021-163

Canada Gazette, Part II, Volume 155, Number 14

Registration
SOR/2021-163 June 24, 2021

CANADA LABOUR CODE

P.C. 2021-634 June 24, 2021

His Excellency the Administrator of the Government of Canada in Council, on the recommendation of the Minister of Labour, pursuant to paragraph 239.01(19)(b) footnote a of the Canada Labour Code footnote b, makes the annexed Regulations Amending the Canada Labour Standards Regulations.

Regulations Amending the Canada Labour Standards Regulations

Amendment

1 Paragraph 33.1(b) of the Canada Labour Standards Regulations footnote 1 is replaced by the following:

Coming into Force

2 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the regulations.)

Issues

The path of the COVID-19 pandemic remains uncertain. While vaccination efforts are underway, more job losses and delays in re-employment are possible before the economic recovery gains a stronger hold.

Since September 27, 2020, Canadians that have been unable to work due to COVID-19 have been relying on the Canada Recovery Benefit (CRB) and the Canada Recovery Caregiving Benefit (CRCB) to provide income support.

It is expected that many workers currently receiving the CRB and CRCB will begin to exhaust their benefit entitlement on June 19, 2021. If the number of weeks available for the CRB and CRCB are not extended, Canadian workers will find themselves without the income supports needed to bridge them through the coming weeks, as they await the anticipated positive impacts of the COVID-19 vaccination efforts and economic recovery on the labour market and the availability of their regular caregiving arrangement.

A complementary increase to the number of weeks of job-protected leave under the Canada Labour Code (Code) would also facilitate access to the CRCB for employees in the federally regulated private sector (FRPS) who are unable to work for reasons related to caregiving due to COVID-19. If the length of the leave for employees in the sector is not extended, they could run out of job-protected leave for caregiving reasons as early as June 25, 2021.

The proposal directly supports the Government of Canada's response to the COVID-19 pandemic and the analytical requirements have been adjusted to permit a timely and effective response.

Background

The COVID-19 acute respiratory disease is a condition in which affected individuals develop fever, cough and/or difficulty breathing. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and death. Human-to-human transmission is the main driving force of the current COVID-19 pandemic and is exacerbated by a lack of immunity in the general population.

As a result of public health measures that have been put in place across Canada to mitigate the spread of COVID-19, many workplaces have closed temporarily or permanently. This has led to many Canadians being unable to work, losing their jobs or having their hours reduced.

As part of Canada's COVID-19 Economic Response Plan, the CRB and the CRCB were introduced through the Canada Recovery Benefits Act (CRB Act) to help workers unable to work due to COVID-19 during the period beginning on September 27, 2020, and ending on September 25, 2021. At the same time, job-protected leave was also introduced under the Code for FRPS employees who are unable to work due to COVID-19. The maximum entitlement for the CRB and CRCB and the leave was initially set at 26 weeks; however, it was extended to 38 weeks through the Canada Recovery Benefits Regulations and the Regulations Amending the Canada Labour Standards Regulations.

The CRB supports workers ineligible for Employment Insurance (EI) who, for reasons related to COVID-19, are not employed or self-employed, or had a reduction of at least 50% in their average weekly employment or self-employment income. It provides $500 a week, paid in two-week periods, for up to 38 weeks.

The CRCB provides income support to employed or self-employed individuals who are unable to work at least 50% of the week because they must care for a child under the age of 12, or a family member who requires supervised care because the school, program or other facility that the child or family member normally attended was unavailable or closed; the child or family member has contracted or might have contracted COVID-19, or is required to self-isolate, or is at risk of serious health complications because of COVID-19. It provides $500 a week, paid on a weekly basis, up to 38 weeks per household.

The leave related to COVID-19 under the Code complements the CRCB by providing employees in the FRPS with job-protected leave if they are unable to work due to COVID-19-related caregiving responsibilities. The leave related to COVID-19 under the Code is scheduled to be repealed on September 25, 2021.

The CRB Act allows the Governor in Council to make regulations increasing the maximum number of weeks of entitlement of the CRB and the CRCB. The Code allows the Governor in Council to make regulations amending the length of the leave related to COVID-19.

Objective

The objectives of these regulations are to ensure that

Description

The Canada Recovery Benefits Regulations are amended to increase the maximum number of weeks of CRB and CRCB entitlement by 4 weeks up to a maximum entitlement of 42 weeks of income support.

The Regulations Amending the Canada Labour Standards Regulations are amended to increase the maximum length of the leave related to COVID-19 under the Code to align with the proposed changes to the CRCB.

Regulatory development

Consultation

The amendments respond directly to the continuing and extraordinary economic circumstances posed by the COVID-19 pandemic. These measures need to be in place expeditiously to be effective. Consequently, consultations were not undertaken and the Regulations were granted an exemption from prepublication in the Canada Gazette, Part I.

Instrument choice

The CRB Act provides the authority to modify the number of weeks of benefits through regulations. The Code also provides the authority to modify the length of the leave related to COVID-19 through regulatory amendments. While legislation (through the Budget Implementation Act, 2021, No. 1) is currently being pursued, using existing regulatory authorities ensures continuity in income supports for Canadians who would otherwise begin to exhaust their entitlement to the recovery benefits on June 19, 2021.

Modern treaty obligations and Indigenous engagement and consultation

An assessment of modern treaty implications on the measures was conducted in support of the proposal. There are no implications for modern treaty obligations or Indigenous engagement in these regulations.

Regulatory analysis

Benefits and costs for the amendment were assessed for the 2021–2022 and 2022–2023 fiscal years. Estimates are presented in 2021 dollars and are discounted to present values using a 7% discount rate.

The additional weeks of CRB and CRCB benefits available through these Regulations provide critical income support to Canadians who are unable to work due to COVID-19, and also support Canadians who may need to take leave from their employment to care for a child or family member due to COVID-19. The monetized benefits for Canadians, which are also the direct costs of these amendments, are estimated to be $1,442.1M. The amendments are also expected to provide economic stimulus, accelerating the economic recovery coming out of the pandemic. However, these benefits are not quantified in this analysis. The Government of Canada will incur a total cost of $14.6M to administer the program.

The proposal directly supports the Government of Canada's response to COVID-19 and the analytical requirements for cost-benefit analysis have been adjusted to permit a timely and effective response.

Baseline scenario

Under the baseline scenario, the current maximum weeks of entitlement remain unchanged and many Canadians will find themselves without benefits as they begin to exhaust benefit entitlement. As of June 6, 2021, over 1.9 million workers have accessed the CRB and 419 000 have accessed the CRCB.

If current trends persist, around 450 000 workers could begin to exhaust the 38 weeks of benefit entitlements for the CRB as early as June 19, 2021, with a significant additional number exhausting shortly thereafter. Although provinces and territories have initiated reopening plans, some sectors have not reopened or are partially reopened and as such, some workers in these sectors are likely to exhaust their benefits in the coming weeks.

For the CRCB, the use of the benefit has ranged from 120 000 to 140 000 applications per week, and around 34 000 recipients could run out of benefits as early as June 19, 2021. Employees in the FRPS would begin exhausting their leave for COVID-19-related caregiving responsibilities on June 25, 2021. The CRCB allows individuals to care for children who need to self-isolate or are sick, also reducing the risk of exposure to others. In the absence of additional CRCB entitlement, parents may be more likely to send their children to childcare facilities when they should be self-isolating, risking exposure to others.

Regulatory scenario

Under the regulatory scenario, the maximum CRB and CRCB entitlement is extended to 42 weeks. As well, complementary changes are made to the leave related to COVID-19 for employees working in the FRPS. The regulatory scenario will result in additional program and operating costs for the Government of Canada. There may also be costs to businesses associated with lost productivity such as overtime. The benefits of the regulatory scenario go beyond the direct income support provided to Canadians and are expected to result in economic and societal benefits that can be indirectly attributed to the extended benefit entitlement.

Costs

The incremental costs of the regulations are estimated to be $1.5 billion. These costs include $1.44 billion for program costs to provide additional income supports to CRB and CRCB recipients, which will be sourced from the Consolidated Revenue Fund (CRF) consistent with the CRB Act, as well as $14.6 million (present value) in operating costs for the Canada Revenue Agency (CRA).

Program and operating costs

Additional program payments resulting from the regulations are expected to be $1.4 billion. Operating costs to the CRA to administer the additional weeks of benefits under the programs are expected to be an additional $14.6M. Incremental administration costs are to support a number of functions across the CRA, of which the majority of the effort is focused on the following functions: collections and verifications and taxpayer service and assistance. For this reason, some operating costs extend into the 2022–2023 fiscal year.

These costs are broken down as follows:
Program Program costs (present value) Operating costs (present value)
CRB $1,305.3M $11.0M
CRCB $136.8M $3.6M

All of the program costs will be funded from the CRF.

Productivity costs associated with benefits and leave related to COVID-19

COVID-19 and the subsequent public health measures have resulted in the temporary closures of many workplaces. The pandemic and the resulting restrictions on the labour market also resulted in a temporary decrease in economic output with many workers being required to stay home. During this period the Government has provided income supports to workers who have been unable to work due to COVID-19. While provinces and territories are still in the midst of the vaccination rollout and most have initiated reopening plans, the need for temporary income supports continues, in particular for those recipients who could begin to exhaust their benefits, to prevent a gap in income support. Since these regulations extend the entitlements to income supports, as well as to job-protected leave for employees in the FRPS if they are unable to work due to COVID-19, it is expected that a relatively small amount of lost productivity will occur as a result of this. It is assumed that this lost productivity will occur from situations such as workers who will stay home and care for their children while receiving additional weeks of CRCB when schools or childcare facilities are closed rather than having to leave their children home alone, or with grandparents who may be more susceptible to the severe symptoms of COVID-19, while they go to work because they need the income. It is also assumed that there would be a small loss in economic productivity due to some CRB recipients decreasing their work search intensities. However, this loss would only occur in instances where employers were unable to fill jobs that would have been filled had the additional weeks of benefits not been provided. This cost would be mitigated by the requirement that CRB recipients be available and looking for work, and that they may not turn down work offers unless it is reasonable to do so. It is assumed that the improved social outcomes from increases to the number of weeks available for income supports under these regulations significantly outweighs the loss in economic productivity.

Employment and Social Development Canada (ESDC) does not have data on the number of people that would attend work were it not for the income support provided through the benefits.

Additonal costs to employers in the federally regulated private sector

The regulations allow workers in the FRPS to take additional weeks of leave for caregiving responsibilities related to COVID-19 under the Code. The availability of these additional weeks of leave is expected to result in a small cost to businesses in the FRPS resulting from having other employees work additional hours to cover the work of employees using the additional weeks of leave. This cost would not occur in every instance of employees using this leave, only occurring in the situations when the overtime was used.

Benefits

Recovery benefits additional income support

The increase in the maximum number of weeks of the CRB and CRCB ensures that workers across Canada whose employment continues to be affected by the COVID-19 pandemic continue to have access to income support for up to 42 weeks, if needed.

Based on available CRB and CRCB claimant usage data, it is estimated that 763 000 recipients would directly benefit from the additional weeks of income support. Recipients are estimated to receive an additional $1.4 billion in income support, equivalent to the amount of program costs.

Indirect economic benefits

The additional income supports to individuals who, because of the pandemic, are not able to work and would otherwise have no income will provide indirect economic benefits that arise from the spending of these income supports in the economy. This spending will help keep some businesses open that would otherwise have closed, and help keep some individuals employed when they would have otherwise lost their jobs. This in turn helps reduce the demand for these income supports and will likely assist with accelerating the economic recovery coming out of the pandemic. In addition, access to the additional income supports could have indirect societal impacts by reducing the risks of homelessness or childhood poverty.

Cost-benefit statement

Cost/Benefit Amount ($ millions)
Costs
Implementation costs to Government 14.6
Program costs to Government 1,442.1
Total costs 1,456.7
Benefits
Additional income supports 1,442.1
Total benefits 1,442.1
Total benefits — Total costs –14.6

Quantified (non-$) and qualitative impacts

Positive impacts

Negative impacts

While only net costs were monetized, it is expected that if the qualitative benefits of this measure were monetized that the benefits would exceed the costs.

Small business lens

As of 2019, small businesses (those with fewer than 100 employees or less than $5 million in revenue) employed 8.4 million individuals in Canada, or 68.8% of the total private labour force. These businesses are generally less well equipped to absorb long-term absences of employees as compared to larger businesses and, as such, could be impacted by the loss of economic productivity due to the pandemic and the related public health measures and restrictions on the labour market.

These regulations do not provide specific flexibility for small businesses. The increase to the maximum number of weeks of entitlements under the recovery benefits will not result in additional administrative burden for small businesses. In addition, it could create a financial inequity for employees of small businesses, including those in the FRPS, if they were not able to avail themselves of additional weeks of income support should their employment be affected by COVID-19, which would undermine public health measures.

One-for-one rule

The one-for-one rule does not apply to these amendments, as there is no incremental administrative costs to businesses.

Regulatory cooperation and alignment

The regulatory amendments do not have any regulatory coordination and cooperation implications. It does not have implications for international agreements (trade, environmental, human rights, etc.), obligations, or voluntary standards. It is not aimed at minimizing or reducing regulatory differences, nor at increasing regulatory compatibility with another jurisdiction. It does not introduce specific Canadian requirements that differ from existing regulations in other jurisdictions for an international program. It does not seek to enable regulatory alignment with the United States as committed to under the Joint Action Plan for the Canada-United States Regulatory Cooperation Council.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

The regulations assist a broad range of workers who, for various reasons related to COVID-19, are unable to work or had a reduction of at least 50% in their average weekly employment or self-employment income. The regulations do not target persons of a particular gender or identified group; however, some proportional and differential impacts have been identified using preliminary program data, between September 27, 2020, and April 28, 2021.

The administrative data contains information, by benefit type, on the number recipients by week, total weeks of benefits received, 2019 income of recipients, gender, age group, and province of residence; however, the data did not allow for cross tabulations (e.g. gender breakdown by province). In addition, the data does not contain information on industry or type of work, or whether recipients were employed in a sector covered by the Code.

Canada Recovery Benefit (CRB)

Beneficiaries of the CRB are predominantly men, making up 54% of claimants, whereas males aged 25 to 64 make up 53% of the labour force. Among the beneficiaries of the CRB, age was relatively evenly distributed among those aged 25 to 64; however, there was an over-representation among low-wage workers, as 63% of all beneficiaries earned less than $20,000 or had no tax filing in 2019. The CRB is available to workers who are not eligible for EI. This includes workers who have not worked enough hours to qualify for EI and workers who do not pay EI premiums, such as self-employed individuals. The majority of CRB applicants are from Ontario (45%), while comprising about 39% of the total Canadian population, followed by Quebec (18%) which represents about 23% of the total population. Alberta and British Columbia each represent around 13% of all CRB applications, while the Atlantic Provinces represent 5%, Manitoba and Saskatchewan represent 6% and territories represent less than 1% of CRB applications. For these jurisdictions, the applicants represent a similar share of their respective shares of the Canadian population.

Canada Recovery Caregiving Benefit (CRCB)

The CRCB targets caregivers and families with children. CRCB beneficiaries are more likely to be women, with 62% of CRCB beneficiaries as of April 2021 being women. As a comparison, men comprise 53% of labour force participants aged 15 and over while women are 47%. The majority, some 68% of beneficiaries earned annual income of less than $20,000 or had no tax filing in 2019. Increasing entitlement to CRCB would benefit low-wage workers to a greater degree than the general population as it replaces a greater percentage of their income.

The majority of the CRCB applicants are from Ontario (40%), followed by Quebec (18%). Alberta represents 14% of applicants but makes up 11.7% of the Canadian population, while Manitoba and Saskatchewan combined represents 14% of applicants while comprising just 6% of the Canadian population. British Columbia is representing 8% respectively. The Atlantic Provinces are representing 5% of applications, while territories are representing 2% of applications. Only 17% of the CRCB applicants have claimed all available weeks to date.

No data for other identity groups is available at this time.

Leave related to COVID-19

The data required to perform GBA+ analysis on employees in the FRPS who have taken the leave related to COVID-19 is not available as such leaves are arranged between employers and employees directly, with no government involvement. Despite this lack of data, it is expected that the proposed extension of the leave related to COVID-19 would disproportionately benefit women working in the FRPS. This is because women continue to shoulder a disproportionate percentage of childcare and caregiving responsibilities as compared to men.

Implementation, compliance and enforcement, and service standards

Implementation and compliance and enforcement

The CRA administers the Recovery benefits programs on behalf of the Minister of Employment and Social Development. The CRA already has the infrastructure in place but changes to the recovery benefits processing system are needed to allow for additional weeks of CRB and CRCB to be paid.

Existing implementation and enforcement mechanisms contained in the CRA's adjudication and controls procedures will ensure that these regulatory amendments are implemented properly. These include for instance, functionality to perform client accounting, withholdings, issuance of tax slips to applicants, support for individual eligibility and entitlement tax assessment activities, and support for post-payment compliance and verification activities.

The Labour Program (ESDC) will prepare interpretation and guidance materials for employees and employers on their new rights and responsibilities related to the extension of the leave related to COVID-19, specifically to allow employers time to implement any necessary changes to their workplace policies and procedures. These materials will be available on the Canada.ca website.

The amended regulations come into force upon registration.

Service standards

CRA provides Canadians with a single point of access to a wide range of government services and benefits, including the processing and payment of the Canada Recovery benefits. Existing service standards will continue to apply to the Recovery benefits programs.

Contact

George Rae
Director
Employment Insurance Policy
Skills and Employment Branch
Employment and Social Development Canada
140 Promenade du Portage, 7th Floor
Gatineau, Quebec
K1A 0J9
Email: george.rae@hrsdc-rhdcc.gc.ca