Regulations Amending Certain Regulations Made Under the Canada Labour Code: SOR/2023-65

Canada Gazette, Part II, Volume 157, Number 8

Registration
SOR/2023-65 March 27, 2023

CANADA LABOUR CODE

P.C. 2023-267 March 27, 2023

Her Excellency the Governor General in Council, on the recommendation of the Minister of Labour, makes the annexed Regulations Amending Certain Regulations Made Under the Canada Labour Code under paragraph 157(1)(a.2)^{footnote a}, subsections 251.001(4)^{footnote b} and (5)^{footnote c}, 251.06(3)^{footnote d} and (4)^{footnote e}, 251.1(3)^{footnote f} and (4)^{footnote g}, 251.101(4)^{footnote h} and (5)^{footnote i} and 253(1)^{footnote j} and (2)^{footnote j}, paragraphs 264(1)(e)^{footnote k} and (k)^{footnote k} and subparagraph 270(1)(a)(i)^{footnote l} of the Canada Labour Code ^{footnote m}.

Regulations Amending Certain Regulations Made Under the Canada Labour Code

Canada Labour Standards Regulations

1 The Canada Labour Standards Regulations ^{footnote 1} are amended by adding the following after section 18:

Regular Rate of Wages for Purposes of Attending Appeal Proceedings

18.1 (1) The following definitions apply in this section.

Act: means the Canada Labour Code. (Loi)
week: means the period between midnight on Saturday and midnight on the immediately following Saturday. (semaine)

(2) Despite section 20, for the purposes of subsection 251.12(5) of the Act, the regular rate of wages of an employee who is paid on a basis other than an hourly rate is calculated or determined in accordance with this section.

(3) Subject to subsections (5) to (7), if the employee worked for at least one hour during the four-week period preceding a week in which the employee attends the appeal proceeding in response to a summons by the Board, the employee’s regular rate of wages for that week is calculated by dividing the wages that the employee earned in that period by the hours that they worked during the same period, excluding overtime hours.

(4) Subject to subsections (5) to (7), if the employee did not work for at least one hour in the period referred to in subsection (3) but did work for at least one hour in the preceding four-week period, their regular rate of wages is calculated using the formula set out in subsection (3) but in respect of the preceding four-week period.

(5) Subject to subsections (6) and (7), if the employee is paid, in whole or in part, on a commission basis and the employee has completed at least 12 weeks of continuous employment for their employer, the employee’s regular rate of wages for the week in which the employee attends the appeal proceeding in response to a summons by the Board is calculated by dividing the amount of wages that they earned in the 12-week period preceding that week by the number of hours that the employee worked during that period, excluding overtime hours.

(6) Subject to subsection (7), if a collective agreement that is binding on the employee and employer sets out a regular rate of wages that is applicable to the employee, or a method for calculating it, that rate, or the rate calculated following that method, is the employee’s regular rate of wages.

(7) In the following circumstances, an employee’s regular rate of wages is the minimum wage rate referred to in Part III of the Act:

(a) the employee’s regular rate of wages cannot be calculated or determined in accordance with any of subsections (3) to (6) because the employer is not required, under paragraph 24(2)(d), to keep records of hours worked by the employee each day and the employer cannot otherwise determine the number of hours that the employee worked during the applicable period; or
(b) the employee’s regular rate of wages, as calculated or determined in accordance with any of subsections (3) to (6), is less than that minimum wage rate.

(8) For the purposes of subsections (3) to (5), vacation pay, general holiday pay, personal leave pay, pay for leave for victims of family violence, bereavement leave pay, overtime pay and pay received under section 146.5, subsection 205(2) or 251.12(5) or section 288 of the Act are not taken into account in the calculation of wages earned.

2 The Regulations are amended by adding the following after section 34:

Service of Documents

35 (1) Subject to subsection (2), for the purposes of subsections 251.001(4), 251.06(3), 251.1(3), 251.101(4) and 253(1) of the Act, the following constitutes other means of serving a document:

(a) sending the document by courier;
(b) sending the document by fax or other electronic means; or
(c) if the person to be served is an individual, leaving the document with someone who appears to be an adult member of the same household at the individual’s last known address or usual place of residence.

(2) If a person cannot reasonably be served by any means listed in subsection (1) or by the means listed in subsection 251.001(4), 251.06(3), 251.1(3), 251.101(4) or 253(1) of the Act, as the case may be, the person may be served by leaving the document at the person’s last known address or place of business or, in the case of an individual, at the individual’s usual place of residence or workplace.

(3) For the purposes of subsections 251.001(5), 251.06(4), 251.1(4), 251.101(5) and 253(2) of the Act, the following constitutes other proof that the document has been sent or received:

(a) an acknowledgement of service signed by or on behalf of the person served, specifying the date and location of service;
(b) a certificate of service signed by the person who effected service of the document, stating that service was made on the person named in the certificate and indicating the means by which and day on which service was effected;
(c) a receipt issued by a courier setting out the date on which the document was sent; or
(d) a record of electronic transmission setting out the date and time of transmission.

(4) Service of the document is deemed to have been effected

(a) in the case of service by courier and in the absence of an acknowledgement of service or a certificate of service, on the seventh day after the day on which the document was sent, as indicated on the receipt issued by the courier; or
(b) in the case of service by fax or other electronic means, despite sections 2 and 3 of the Electronic Documents and Electronic Information Regulations, on the day on which the document is sent, as indicated on the record of electronic transmission.

Canada Occupational Health and Safety Regulations

3 The definition Act in section 1.2 of the Canada Occupational Health and Safety Regulations ^{footnote 2} is replaced by the following:

Act

means

(a) in Parts I to XIX, Part II of the Canada Labour Code, and
(b) in Part XX, the Canada Labour Code; (Loi)

4 Section 1.3 of the Regulations is replaced by the following:

1.3 These Regulations are prescribed for the purposes of sections 125, 125.1, 125.2, 126 and 146.5 of the Act.

5 The Regulations are amended by adding the following after section 19.8:

PART XX

Regular Rate of Wages

20.1 (1) For the purposes of section 146.5 of the Act, the regular rate of wages of an employee who is paid on a basis other than an hourly rate is calculated or determined in accordance with this section.

(2) Subject to subsections (4) to (6), if the employee worked for at least one hour during the four-week period preceding a week in which the employee attends the appeal proceeding as a party or in response to a summons by the Board, the employee’s regular rate of wages for that week is calculated by dividing the wages that the employee earned in that period by the hours that they worked during the same period, excluding overtime hours.

(3) Subject to subsections (4) to (6), if the employee did not work for at least one hour in the period referred to in subsection (2) but did work for at least one hour in the preceding four-week period, their regular rate of wages is calculated using the formula set out in subsection (2) but in respect of the preceding four-week period.

(4) Subject to subsections (5) and (6), if the employee is paid, in whole or in part, on a commission basis and the employee has completed at least 12 weeks of continuous employment for their employer, the employee’s regular rate of wages for the week in which the employee attends the appeal proceeding as a party or in response to a summons by the Board is calculated by dividing the amount of wages that they earned in the 12-week period preceding that week by the number of hours that the employee worked during that period, excluding overtime hours.

(5) Subject to subsection (6), if a collective agreement that is binding on the employee and employer sets out a regular rate of wages that is applicable to the employee, or a method for calculating it, that rate, or the rate calculated following that method, is the employee’s regular rate of wages.

(6) In the following circumstances, an employee’s regular rate of wages is the minimum wage rate referred to in Part III of the Act:

(a) the employee’s regular rate of wages cannot be calculated or determined in accordance with any of subsections (2) to (5) because the employer is not required, under paragraph 24(2)(d) of the Canada Labour Standards Regulations, to keep records of hours worked by the employee each day and the employer cannot otherwise determine the number of hours that the employee worked during the applicable period; or
(b) the employee’s regular rate of wages, as calculated or determined in accordance with any of subsections (2) to (5), is less than that minimum wage rate.

(7) For the purposes of subsections (2) to (4), vacation pay, general holiday pay, personal leave pay, pay for leave for victims of family violence, bereavement leave pay, overtime pay and pay received under section 146.5, subsection 205(2) or 251.12(5) or section 288 of the Act are not taken into account in the calculation of wages earned.

(8) For the purposes of this section, week means the period between midnight on Saturday and midnight on the immediately following Saturday.

Administrative Monetary Penalties (Canada Labour Code) Regulations

6 The portion of item 99 of Part 1 of Schedule 1 to the Administrative Monetary Penalties (Canada Labour Code) Regulations ^{footnote 3} in column 2 is replaced by the following:
Item	Column 2 Violation Type
99	B

7 The portion of item 105 of Part 1 of Schedule 1 to the Regulations in column 2 is replaced by the following:
Item	Column 2 Violation Type
105	B

8 The portion of item 125 of Part 1 of Schedule 1 to the Regulations in column 2 is replaced by the following:
Item	Column 2 Violation Type
125	B

Coming into Force

9 These Regulations come into force on the day on which they are published in the Canada Gazette, Part II.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Under Part III (Labour Standards) of the Canada Labour Code (the Code), current requirements can make it difficult to complete the service of legal documents in cases of hard-to-reach employers. If service cannot be completed, the Labour Program’s ability to enforce the Code may be undermined. New modern regulations under Part IV (Administrative Monetary Penalties) of the Code which came into force on January 1, 2021, allow for improved service of documents provisions including electronic and substitutional service. Regulations are needed to harmonize the service of documents rules under Part III with those under Part IV of the Code.

Further, there is a lack of clarity under Part II (Occupational Health and Safety) and Part III of the Code around how employees are to be reimbursed for attending Canada Industrial Relations Board (CIRB) hearings, particularly if they are normally compensated at something other than an hourly rate (e.g. commission). Regulatory provisions under Part IV of the Code prescribe the method by which reimbursement is to be calculated for employees who are normally compensated in a manner other than at an hourly rate (e.g. commission). Regulations are needed to harmonize regulations under Part II and Part III of the Code with the regulations respecting regulatory rate of wages under Part IV of the Code.

Background

The Code consolidates legislation regarding industrial relations (Part I), occupational health and safety (Part II), labour standards (Part III), and administrative monetary penalties (Part IV) for industries that fall within the federal jurisdiction. Part III of the Code establishes basic labour standards (e.g. payment of wages, protected leaves) for persons employed in federal Crown corporations (but not the public service) and federally regulated private sector industries, such as

international and interprovincial transportation by land and sea; including railways, shipping, trucking and bus operations;
airports and airlines;
port operations;
telecommunications and broadcasting;
banks;
industries declared by Parliament to be for the general advantage of Canada or of two or more provinces, such as grain handling and uranium mining; and
First Nations Band Councils.

Part II of the Code sets out occupational health and safety standards that apply to workplaces in the federal jurisdiction, including Indigenous governments on First Nations reserves and the federal public administration. The federal public service and employees of Parliament are covered by Parts II and IV of the Code only. All other workplaces, which make up over 90% of the Canadian workforce, are under provincial labour jurisdiction.

Administrative monetary penalties

On January 1, 2021, the new Part IV of the Code came into force to promote compliance with requirements under Part II and Part III. The Administrative Monetary Penalties (Canada Labour Code) Regulations (AMPs Regulations) designate and classify violations of obligations under Part II and Part III of the Code and related regulations for which an administrative monetary penalty (AMP) may be issued. Only designated violations can be subject to an AMP.

The AMPs Regulations specify the method used to determine the amount of the penalty included in a notice of violation. The baseline penalty amount applicable to a violation (i.e. contravention of a designated legislative or regulatory provision) varies depending on the category of person (i.e. individuals or small or large businesses) believed to have committed a violation and the classification of the violation. Each designated violation is classified as either Type A, B, C or D for obligations under Part III of the Code, and Type A, B, C, D or E for obligations under Part II of the Code, in order of increasing severity, according to the level of risk and/or the impact and significance of the violation as outlined in Table 1.

Table 1: Classification method for violations under the Code
TYPE	PART II	PART III
A	Related to administrative provisions.	Related to administrative provisions.
B	Related to low-risk hazards that may result in a minor injury or illness that requires medical treatment, but that do not result in disabling injuries.	Related to the calculation and payment of wages.
C	Related to medium-risk hazards that may result in a serious injury or illness that prevents an employee from effectively performing their regular work duties.	Related to leave or other requirements, which could have an impact on financial security, or health and safety, of an individual or group of individuals.
D	Related to high-risk hazards that may result in serious injury or fatality. Non-compliance with a direction. Non-compliance with an order from the Canada Industrial Relations Board.	Related to the employment and protection of employees who are minors.
E	Involves immediate life-threatening hazards or hazards known to cause latent occupational disease. These hazards give the employee little to no opportunity to avoid or minimize severe injury or death or occupational disease.	N/A

The AMPs Regulations include modernized rules for service of documents as well as a method for calculating the regular rate of wages for employees who are normally compensated at something other than an hourly rate for their attendance at hearings of the CIRB.

As of July 29, 2019, a number of adjudicative functions under the Code were transferred to the CIRB to simplify employment-related recourse by creating a single access point to adjudicate certain employment disputes. Under the Code, employees who are required to appear before the CIRB for Part II, Part III and Part IV matters are to be reimbursed for their appearances at their regular rate of wages.

Service of documents

A number of legal documents issued by the Labour Program in the course of their compliance and enforcement activities under Part III of the Code, including payment orders, compliance orders and orders to debtors, require perfected service — that is, proof of delivery to the named individual or to a person (i.e. a legal person, such as a business or organization). This required delivery by registered mail or personal service, and in most cases the signature of the person being served acknowledging receipt of the document.

As of January 2021, the AMPs Regulations set out modern rules for the service of notices of violation. They may be served in person, or through registered mail, courier, fax or other electronic means. The AMPs Regulations also set rules around acceptable proof of service. In addition, the AMPs Regulations provide for substitutional service, enabling Labour Program officials to perfect service by leaving the document at the last-known address or place of business or an individual’s usual place of residence or workplace. Substitutional service is a method of last resort in carrying out service that allows enforcement officers to perfect service in cases of hard-to-reach employers. This option is not available for labour standards violations under Part III, that is, to perfect service of documents such as payment orders, compliance orders, and orders to debtors.

The current service of documents provisions in Part III of the Code provide regulatory authority to prescribe the manner of service and proof of service for a number of different types of documents the Labour Program sends to employers in the course of its compliance activity. Table 2 describes the sections of the Code that correspond to various documents under Part III.

Table 2: Service of documents provisions under Part III of the Canada Labour Code
Section of the Code	Provision	Description
251.001	Internal audit order	Sets out the manner of service and provides regulatory authority to prescribe service for internal audit orders, as well as laying out proof of service provisions and providing regulatory authority to prescribe proof of service.
251.06	Compliance order	Sets out the manner of service and provides regulatory authority to prescribe service for compliance orders, as well as laying out proof of service provisions and providing regulatory authority to prescribe proof of service.
251.1	Payment order, notice of unfounded complaint or notice of voluntary compliance	Sets out the manner of service and provides regulatory authority to prescribe service for payment orders, notices of unfounded complaints and notices of voluntary compliance, as well as laying out proof of service provisions and providing regulatory authority to prescribe proof of service.
251.101	Review of payment order or notice	Sets out the manner of service and provides regulatory authority to prescribe service for reviews of payment orders and notices, as well as laying out proof of service provisions and providing regulatory authority to prescribe proof of service.
253	Notice to furnish information	Sets out the manner of service and provides regulatory authority to prescribe service for notices to furnish information, as well as laying out proof of service provisions and providing regulatory authority to prescribe proof of service.

The Regulations will harmonize service of documents provisions in the Canada Labour Standards Regulations under Part III of the Code with those modernized provisions under Part IV of the Code to ensure consistency and effectiveness of service rules.

Regular rate of wages

Pursuant to the current Code provisions in Parts II and III (Table 3), employees who are required to appear before the CIRB for Part II, Part III and Part IV matters are to be paid for the time spent at the proceeding that would otherwise have been time at work, at their regular rate of wages. The AMPs Regulations provide enhanced clarity around the calculation of the regular rate of wages for employees who are normally compensated at something other than an hourly rate while attending CIRB hearings on Part IV matters.

Provisions of the Code also provide regulatory authority to make regulations prescribing a method of calculating and determining a regular rate of wages. At present, there are no regulations that set out a method for calculating and determining what the regular rate of wages under Parts II and III should be for the purpose of compensating employees who must appear before the CIRB.

Table 3: Regular rate of wages provisions under Parts II and III of the Canada Labour Code
Section or subsection of the Code	Provision	Description
146.5 and 157(1)	CIRB proceedings — wages	Sets out that an employee who attends as a party to a proceeding under subsection 146.1(1) or who has been summoned by the CIRB to attend is entitled to be paid by their employer at the employee’s regular rate of wages. Subsection 157(1) provides regulatory authority to prescribe a method of calculating and determining the regular rate of wages.
251.12(5) and 264(1)	CIRB proceedings — wages	Sets out that an employee who attends as a party to a proceeding under this Part or who has been summoned by the CIRB to attend is entitled to be paid by their employer at the employee’s regular rate of wages. Subsection 264(1) provides regulatory authority to prescribe a method of calculating and determining the regular rate of wages.

The Regulations will harmonize the regular rate of wages provisions under Part II and Part III of the Code with those under Part IV.

Objective

The objective of the Regulations Amending Certain Regulations Made Under the Canada Labour Code (the Regulations) is to harmonize and modernize the service of documents and calculation of regular rate of wages provisions across the Code.

The Regulations will harmonize the service of documents rules under Part III of the Code with those introduced under Part IV. Part III legal documents, such as payment orders, compliance orders, and notices to furnish information, are important tools used by the Labour Program to direct employers to undertake activities that aid the Labour Program in conducting investigations and to direct employers to take action to bring themselves into compliance with the Code. A payment order, for example, is a document that sets out that an employer must compensate an employee a specified amount for a violation of the Code. They are issued after the Labour Program has investigated an employee’s complaint, gathered information, and determined that an amount of money is owed to the employee. To ensure that the order is received and acted on by the employer, it must be served. When service is difficult to perfect, this can affect the employee’s receipt of the amounts they are owed.

The Regulations will allow for electronic and substitutional service, which will ensure that difficult-to-contact employers are served with payment and other orders, better enabling employees to receive the benefits and rights under Part III of the Code to which they are entitled.

The Regulations will provide a formula for employers to follow in calculating employees’ compensation for time spent in CIRB hearings, which can be particularly complex for those employees who are paid on a commission or other non-hourly basis. These Regulations will apply to appearances required under both Parts II and III of the Code. This will ensure that all employees receive adequate and fair compensation, regardless of the manner in which they are normally paid and whether they are appearing before the CIRB under Part II, III or IV of the Code.

Additionally, the Regulations will amend Schedule 1 of the AMPs Regulations. These amendments will not create any new designations, but will adjust the designation of three provisions under Part II related to the calculation and payment of wages in order to align with equivalent provisions under Part III. The three provisions (subsections 135.1(11) and 136(9), and section 146.5) deal with employees’ compensation if they are required to perform duties for a policy committee or workplace committee or attend a proceeding. Specifically, the regulatory amendment will decrease the amount of the AMP associated with the potential violation related to the calculation and payment of wages from the current C level as it relates to Part II to a B level in order to remain consistent with the classification method and to align with the designation of provisions related to the calculation and payment of wages under Part III of the Code.

Description

Service of documents

New manner of service regulatory provisions in the Canada Labour Standards Regulations will include electronic delivery and leaving documents at the last-known address or usual place of residence of the individual being served. New provisions will allow for substitutional service, new forms of proof of service, and provisions clarifying when and how service is deemed to have been affected. These service rules will apply whether service is being carried out to an individual or a legal person, for example a company or organization.

Manner of service

New regulatory provisions will clarify that, in addition to existing manners of service (i.e. registered mail and personal service), service can be carried out by sending the document by courier, sending it by fax or other electronic means and, if the person to be served is an individual, by leaving the document with someone who appears to be an adult member of the same household at the individual’s last-known address or usual place of residence.

Substitutional service

New regulatory provisions will clarify the way in which service is to be affected if an individual or person (i.e. a legal person, such as a business or organization) cannot be reasonably served in any of the manners laid out above. Substitutional service will allow the Labour Program to effect service by leaving a copy of the notice or order at the person’s last-known address or place of business or, in the case of an individual, at their usual place of residence or workplace. Substitutional service provisions are somewhat novel; the AMPs regime was the first to establish this option for delivery of documents for the Labour Program and these Regulations will follow that model.

Proof of service

New regulatory provisions will clarify the manner in which proof of service could be proved, including (a) an acknowledgement of service signed by or on behalf of the person served, specifying the date and location of service; (b) a certificate of service signed by the person who effected the service, stating that service was made on the person named in the certificate and indicating the means by which and day on which service was affected; or (c) a record of electronic transmission setting out the date and time of transmission.

Date of service

The Regulations will also clarify the date on which service will be deemed to have been completed in the case of either registered mail, courier or electronic service. In cases where service was completed by registered mail or courier, without an acknowledgement or certificate of service, service will be deemed to have been effected on the seventh day after the day on which notice was sent (as indicated on the receipt from the post office or courier). In cases of service by fax or other electronic means, service will be deemed to have been effected on the day on which it was sent (as indicated on the record of electronic transmission — e.g. the date and time on an email).

Regular rate of wages

The Regulations will amend the Canada Occupational Health and Safety Regulations and the Canada Labour Standards Regulations to provide clarity around how employees are to be compensated for time spent appearing before the CIRB, particularly where their basis for compensation is a method other than an hourly rate (e.g. piece rates, haulage, commission). Additional provisions will clarify the role of collective agreements, a minimum wage, and exclusions.

General, alternative four-week period, employee paid on commission

The Regulations will clarify how an employee is to be compensated for the time spent at a CIRB hearing. Their rate of wages will be calculated by dividing the wages the employee earned in the preceding four-week period by the number of hours they worked, excluding overtime. Their compensation will be determined based on the time spent before the CIRB multiplied by this hourly rate of wages.

The Regulations set out that, if an employee did not work any hours during the four-week period preceding a CIRB appearance, but did work at least one hour during the four-week period prior to the one immediately preceding the CIRB appearance, their hourly rate of wages will be determined based on that earlier four-week period.

If an employee is paid on a commission basis, Regulations will provide for a different formula. In that case, a 12-week period would be used: if an employee has completed at least 12 weeks of continuous employment for their employer, their regular rate of wages for the week in which they attend a CIRB hearing will be calculated by dividing the amount of wages earned in the 12-week period preceding that week by the number of hours worked, excluding overtime.

Collective agreement and minimum wage

The regulatory provisions will clarify that if a collective agreement sets out a regular rate of wages or method for calculating it, the rate or method in the collective agreement will apply. In other situations, instead of calculating an employee’s regular rate of wages, the applicable minimum wage will apply as their rate of wages. Under the Regulations, the applicable minimum wage will apply if

the employee’s rate of wages could not be calculated because the employer is not required to keep records of hours worked and the employer cannot determine the number of hours worked; or
the employee’s calculated regular rate of wages is less than the applicable minimum wage.

Exclusions

Some elements of an employee’s pay will be excluded in any calculations for a four-week or twelve-week period used to determine the regular rate of wages set out above, including vacation pay, general holiday pay, personal leave pay, pay for leave for victims of family violence, bereavement leave pay, and overtime pay.

Administrative monetary penalties

The schedules to the AMPs Regulations list and classify contraventions under different parts of the Code which are subject to administrative monetary penalties. Contraventions under Part II of the Code are listed and classified in Schedule 1, whereas contraventions under Part III that are subject to an AMP are listed and classified under Schedule 2. When amendments are made to Part II or Part III of the Code and any associated regulations, the schedules of the AMPs Regulations must also be amended to reflect any associated updates.

This regulatory package includes consequential amendments to Schedule 1 of the AMPs Regulations (which lists provisions under Part II of the Code). These changes will ensure consistency in the classification level of provisions relating to the calculation and payment of wages that are listed in Schedule 1 and Schedule 2. The classification methodology that was used to classify contraventions that can be subject to an AMP stipulates that all violations listed in the AMPs schedules that deal with the calculation and payment of wages should be classified at the B level.

Currently, all provisions under Part III of the Code that deal with the calculation and payment of wages are classified at the B level in Schedule 2 of the AMPs Regulations. Three legislative provisions (subsections 135.1(11) and 136(9), and section 146.5) under Part II of the Code that deal with employee compensation if the employee is required to perform duties for a policy committee or workplace committee or to attend a proceeding of the CIRB were previously classified at the C level in Schedule 1. Therefore, this package reclassifies the three Part II legislative provisions from a C level to a B level in order to align them with the classification of pay-related violations under Part III. These changes will ensure that contraventions under Part II and Part III of the Code are classified at the appropriate level.

Regulatory development

Consultation

During the development of the AMPs Regulations concerning service of documents and regular rate of wages, extensive internal consultations were conducted with the Labour Program inspectorate. Further internal consultations with the Labour Program inspectorate were held in the winter of 2021 to inform the development of the Part III service of documents and Parts II and III regular rate of wages provisions. The Regulations reflect the input received over the course of these consultations.

During consultations on the AMPs service of documents and regular rate of wages provisions, which took place in multiple rounds in 2018 and 2019, external consultations were held with a wide range of stakeholders. These included representatives from labour and employer groups. Stakeholders generally welcomed the addition of electronic service provisions and did not provide any comments on the proposed regular rate of wages provisions.

External consultations were held online concerning the current provisions during the winter of 2021, during which a discussion paper was shared electronically with stakeholders, including representatives of employers, labour, and national Indigenous organizations.

A small number of comments were received. The Canadian Labour Congress and Halifax Employers Association were supportive of the service of documents provisions. The Halifax Employers Association and Canadian Bankers Association provided more critical feedback on regular rate of wages. In the case of the comments from the Halifax Employers Association, their concern was that an employee would be paid for appearances during the time when they were not scheduled to work. This is not the case, as the enabling legislation and its regulations apply only to employees’ time that would otherwise be spent at work. In the case of the Canadian Bankers Association, they recommended a per diem approach or deemed work approach that would result in compensation at a rate lower than an employee’s regular rate of pay. The intent of the enabling legislation and the Regulations is to provide compensation for employees at the same rate as their regular rate of pay for employees who must miss work to attend CIRB hearings.

Prepublication in the Canada Gazette, Part I

The Regulations were published in the Canada Gazette, Part I, on October 1, 2022, followed by a 30-day consultation period. The Labour Program did not receive any submissions from stakeholders on the proposed Regulations; as a result, no changes to the Regulations were made. A minor administrative change postponed the date on which the Regulations will come into force: in the Canada Gazette, Part I, they were planned to come into force upon registration, but they will come into force on the day on which they will be published in the Canada Gazette, Part II.

Modern treaty obligations and Indigenous engagement and consultation

There have been no impacts on modern treaties identified in relation to these Regulations. However, as on-reserve Indigenous employers and Indigenous employees are impacted by the Regulations, a discussion paper summarizing the amendments and soliciting comments was shared with national Indigenous organizations in the winter of 2021. No comments were received.

Instrument choice

Regulations are needed at this time to harmonize and modernize service of documents and regular rate of wages provisions across the Code. Regulations are an appropriate mechanism to introduce these new provisions, as they are within the scope of the regulatory authority provided in the Code and of a technical and minor nature.

Regulatory analysis

Baseline scenario

Service of documents

It can be difficult to serve legal documents to some hard-to-reach employers, for example when they do not pick up their registered mail or cannot be contacted or found by mail carriers. This situation limits the ability of Labour Program officers, who require proof that legal documents have been served, to enforce provisions of the Code and its regulations related to labour standards. In some cases of violations, officers might be forced to resort to administrative closures, pausing their investigations until new information can be obtained regarding employer whereabouts.

Regular rate of wages

Some employees are not paid based on an hourly wage, such as those who are paid by piece rate, haulage, or commission. When employers compensate these employees for time spent at CIRB hearings, they must somehow estimate an hourly wage rate to determine the value of this time. The Labour Program does not have information regarding how employers currently perform the hourly wage calculation in these cases, since they are not required to submit reports on this matter. Nevertheless, the baseline method must necessarily incorporate income and hours worked over some time period. Assuming that employers conduct this calculation in good faith, the baseline scenario is assumed to be based on annual income divided by annual hours worked, taking into account the previous 52-week period.

Regulatory scenario

Service of documents

The regulatory package will expand the possible methods by which enforcement officers can serve legal documents in the case of labour standards matters. In addition to the baseline method of in-person delivery, which will remain available, officers will also have the ability to serve documents via a courier service, electronically or by leaving the documents at the last-known place of address, under certain conditions.

Regular rate of wages

For the purpose of compensating employees who attend CIRB hearings, the formula to calculate the hourly wage for those who are not normally paid on an hourly basis is to be the same as the one currently in force under Part IV of the Code: total income over the previous four weeks, divided by the total hours worked over that same time period. Compared to the assumed method in the baseline scenario, the only difference in the regulatory scenario is that the hourly wage will have to be calculated based on the previous four weeks, rather than over the entire previous year.

Benefits and costs

Benefits

By expanding the methods that enforcement officers can use to serve legal documents, the Regulations will improve the ability of the Labour Program to enforce labour standards in cases where employers are hard to reach. To the extent that electronic or substitutional service could reduce the number of times that officers attempt to serve documents in person, the Regulations could also result in cost savings to the government.

By introducing an explicit formula for employers to use when calculating the compensation for employees who attend CIRB hearings, the Regulations will provide regulatory clarity and ensure consistency across stakeholders in the federal jurisdiction.

Costs

Service of documents

The Canadian government will incur minor costs due to the changes related to the service of documents. For example, enforcement officers who serve documents will require some additional training regarding how to perform electronic and substitutional service, and internal guidance materials may need to be updated. In a working model from 2019 in which the Labour Program analyzed similar government costs under AMPs, the estimated impact was approximately $1.5 million over a 10-year period (or an average of $150,000 per year, undiscounted). Furthermore, the use of substitutional service will entail additional costs related to courier service delivery.

Regular rate of wages

No additional time is expected to be spent by employers to perform the hourly wage calculation in the regulatory scenario since the method is not more onerous than the method that is assumed to be used in the baseline scenario. Furthermore, the formula is based on information about pay and hours of work that employers are already assumed to have in their records. Therefore, with respect to the value of employer time while performing the hourly wage calculations, the Regulations are not expected to generate any incremental impacts.

To assess the potential change in compensation owed to employees as a result of the Regulations, it is important to consider the following: (i) the annual frequency of CIRB cases; and (ii) the different outcomes from calculating the hourly wage rate based on income and hours worked over the previous four weeks versus the previous 52 weeks.

CIRB disposed of an average of 531 cases per year between the 2016–2017 and 2020–2021 reporting years.^{footnote 4} In 2019–2020, out of all matters received, 28.7% fell under Part II or Part III of the Code. The remaining 71.3% of matters were beyond the scope of the current Regulations. Out of all matters disposed, approximately 15% resulted in oral hearings. Note that if any of the following conditions apply to a particular hearing, then the Regulations will not have any incremental impact regarding the amount of compensation owed to the employee:

the hearing only involves the employer;
the employee who attends the hearing is already paid at an hourly rate; or
the employer already calculates the hourly rate in a method that is equivalent to that required by the Regulations.

Assuming that none of these conditions apply to any of the oral hearings, and further assuming that all oral hearings pertain to Part II or Part III, the upper-bound number of cases that could possibly be affected by the Regulations will grow from approximately 94 cases in 2023 to 108 cases in 2032.

Turning to the potential changes in the hourly wage estimate calculated using the previous four weeks versus the previous year, any difference will be due to monthly fluctuations in income and hours worked throughout the year. For example, if an employee earns more income and/or works more hours during certain months of the year, then the hourly wage estimate based on the previous four weeks will depend on which four-week period is captured. In the absence of information about how income and hours worked fluctuate throughout the year for employees who attend CIRB hearings, a simplifying assumption was applied whereby, on average, income and hours worked are spread uniformly throughout the year. With this assumption, it is inconsequential whether the hourly rate is calculated based on the previous 4 weeks or 52 weeks. While there could be case-by-case changes in compensation owed between the baseline and regulatory scenario, these changes are not expected to occur in any systematic way. In other words, employee compensation could increase in some cases, decrease in other cases, or remain unchanged, with the expected net result being no change in compensation.

A scenario analysis was conducted to assess a hypothetical situation in which all oral hearings before CIRB involve employees whose estimated hourly wage rates will increase by $10 per hour as a result of the Regulations, with an assumed two-hour duration for each hearing. Even in this extreme case, the 10-year total discounted costs to employers will be just $15,000. Conversely, if all hourly wage estimates decrease by $10 per hour as a result of the Regulations, then this will save employers $15,000 over 10 years. As mentioned above, the reality will fall somewhere in the middle, with some cases yielding a slight increase and others yielding a slight decrease in compensation owed compared to the baseline scenario.

The Labour Program does not expect to receive any additional complaints from employees related to the regular rate of wages provisions, as the amendments clarify the method by which compensation is calculated. There are therefore no additional costs associated with reviewing complaints, and no additional government resources will be required to conduct compliance or enforcement activities.

Administrative monetary penalties

No incremental costs are expected to be incurred as a result of the consequential changes to the AMPs Schedule.

Small business lens

Analysis under the small business lens concluded that the Regulations will not impact Canadian small businesses. The impacts due to the service of documents provisions will be limited to the Government of Canada. The formula for employers to use while calculating employee compensation for time spent at CIRB hearings is also not expected to result in any costs to businesses, since they are already assumed to have the required information in their records, and the compensation owed to employees is not expected to change in any systematic manner.

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in the administrative burden on business and no regulatory titles are repealed or introduced.

Regulatory cooperation and alignment

The Regulations are not related to a work plan or commitment under a formal regulatory cooperation forum. The changes are administrative in nature and will simply harmonize and modernize various provisions within the Code; therefore, the Regulations are not expected to generate issues with other regulatory jurisdictions or create regulatory differences with key trading partners.

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

A gender-based analysis plus (GBA+) concluded that no groups based on factors such as sex, age, language, education, geography, culture, ethnicity, income, ability, sexual orientation or gender identity are expected to be affected disproportionately by these Regulations. The service of documents package is not expected to affect the number of documents that will be served to employers of any particular demographic group, but will simply facilitate the Labour Program’s enforcement efforts. The changes to the method of compensation for employees who attend CIRB hearings will address the current lack of specification regarding this calculation, but it is not expected to substantially change the compensation owed, nor disproportionately affect any demographic group.

Implementation, compliance and enforcement, and service standards

The Regulations will provide clarification on the new service of documents regime and will improve labour standards compliance activities by providing new methods of serving notices of violations. Additionally, since the Regulations will provide clarification to employers regarding the calculation for rates of pay for attendance at hearings, there are likely to be fewer complaints in this regard. As a result, no additional compliance or enforcement activities are planned.

Currently, compliance with Part III of the Code is achieved using a variety of approaches, including education and outreach, and the investigation of complaints. In general, Labour Affairs officers detect non-compliance by conducting inspections, either proactively or in response to a complaint. Compliance will be achieved using a variety of approaches along a compliance continuum. This may include educating and counselling employers on their obligations, seeking an assurance of voluntary compliance from the employer, or issuing a compliance order to cease the contravention and take steps to prevent reoccurrence. To address more serious or repeated violations, an administrative monetary penalty under Part IV of the Code may be issued.

The Regulations will come into force on the day on which they are published in the Canada Gazette, Part II.