A

Agent

The definition provides that agent includes trade unions that represent employees in collective bargaining. Trade union is also defined in s. 1. Because the definition of agent is inclusive, rather than exhaustive, agent can include people or entities other than a trade union. For example, it can include lawyers or other representatives.

Alternative vacation entitlement year

This definition was introduced by the Government Efficiency Act, 2002, SO 2002, c 18, effective November 26, 2002.

The definition provides that alternative vacation entitlement year is a recurring 12-month period that begins on a date that is not the date of an employee’s first day of employment.

For further details see ESA Part XI - Vacation with Pay.

Arbitrator

This definition provides that arbitrator includes both a board of arbitration and the Ontario Labour Relations Board when it is acting under s. 133 of the Labour Relations Act, 1995, SO 1995, c 1, Sch A - that is, when it sits as a board of arbitration hearing construction industry grievances. See the definition of “board” in this section.

Assignment employee

An assignment employee is defined as an employee who is employed by a temporary help agency for the purpose of being assigned to perform work on a temporary basis for clients of the agency. Note that ESA Part I, s. 1 also provides a definition of employee that is discussed below. The Program’s position is that work on a temporary basis would obviously include a short term assignment but would also include long term or open ended placements with a client. The work is considered to be temporary because there is no permanent placement with the client; the assignment employee continues to be the employee of the agency and not the client throughout the period of the assignment.

Further, an assignment employee continues to be employed by the agency during both periods of assignment and non-assignment unless the relationship is ended by either party or by a lay-off that exceeds a certain number of weeks. See the related discussions in ESA Part XVIII.1, s. 74.3 and ESA Part XVIII.1, s. 74.4 regarding the employment relationship between assignment employees and temporary help agencies and work assignments as well as ESA Part XVIII.1, s. 74.11 regarding termination and severance of employment.

It should also be noted that pursuant to s. 74.8(4) and s. 74.9(4), references to assignment employee within ss. 74.8 and 74.9 are interpreted as including a prospective assignment employee. See the discussion at ESA Part XVIII.1, s. 74.8(4).

B

Benefit plan

This definition provides that benefit plan means a benefit plan that is provided for an employee by or through the employee’s employer. Thus, both employer-sponsored plans and plans that are provided through an employer by a third-party insurer fall within the definition of benefit plan.

Board

This defines the Ontario Labour Relations Board as the Board referred to in the Act. The definition was originally added to the former Employment Standards Act by the Economic Development and Workplace Democracy Act, 1998, SO 1998, c 8, effective June 29, 1998, at the same time the Board was given jurisdiction to deal with applications for review.

Building services

This definition identifies the kinds of services included in the term building services. The term building services appears in ESA Part IV Continuity of Employment and ESA Part XIX Building Services Providers.

The definition of building services in the ESA 2000 is exhaustive, which means that the defined term is limited to services related to food, security and cleaning and those services prescribed by O Reg 287/01. Building services cannot include other services even if they are analogous to the ones that are specifically mentioned, nor does it include construction, maintenance (other than maintenance activities related to cleaning the premises) and the production of goods (other than goods related to the provision of food services at the premises for consumption on the premises).

Food services

The definition of building services in ESA Part I, s. 1(1) includes food services. This is typically a food services operation that is intended to be exclusively for the use of the employees of a particular company located on the premises, and/or exclusively for the use of persons visiting the premises, but not for persons visiting the premises solely for the purpose of using the food services. It could be a cafeteria-style operation, vending machines or a full-service operation.

The operator of a food court in a shopping mall would not be considered to be providing service for a building with respect to food because, although many users of the food court services may be people who have business within the building (i.e., shoppers), it is likely that some people, such as those working in neighbouring office buildings, will come to the food court just for the food.

Likewise, operators of fast food restaurants in a food court in an office tower would not be considered to fall within the definition of building services. Such food courts are typically located in the public area of a large office building. The owner or manager of the building will typically lease space in the food court area to operators of fast food restaurants that do most of their business at lunchtime. Sometimes the owner will receive a percentage of sales in addition to the base rent. Like the food court in a shopping mall, the food court in an office tower can reasonably be expected to be used by persons who work in other buildings and only come to the food court to have a meal.

Generally, restaurants in food courts are intended for the use of persons other than just those who work or have business in the building in which the food court is located. The food court services the public at large, whether they work or have business in the building or not. Thus a food court cannot generally be said to be services for a building in accordance with the definition in ESA Part I, s. 1(1). This is in contrast to the typical 'company cafeteria' in an office tower, which is designed principally for the use of the persons who work in the building. However, see UFCW, Local 1000A v Cara Operations Ltd., 2001 CanLII 18382 (ON LRB) in which the food court in an airport was determined to fall within the definition of building services under the provisions of the former Employment Standards Act because the food court was considered to be for the exclusive use of persons having business at the airport. Similarly, where a restaurant or food court within an art gallery or museum is virtually exclusively used by patrons of the art gallery or museum patrons, the restaurant could be considered to be services for a building with respect to food within the meaning of the definition of building services in ESA Part I, s. 1(1).

Security services

The definition of building services in ESA Part I, s. 1(1) includes security services. These could be performed through patrols, either on foot or in a vehicle, through a guard sitting at a front desk, through video surveillance or any combination of the above.

Cleaning services

The definition of building services in ESA Part I, s. 1(1) includes cleaning services. This includes cleaning the inside of the building as well as cleaning the outside of the building, e.g., window cleaning services. Cleaning is usually for cosmetic, hygienic or safety reasons. Sometimes cleaning will be referred to as maintenance - see Federated Building Maintenance Co. Ltd. (September 23, 1988), ESC 2377 (Franks). For example, the employees who dust, vacuum and empty the garbage in office buildings are often referred to as providing maintenance services. Although they may be called maintenance, these cleaning activities are building cleaning services. However, maintenance that is of a non-cleaning nature, e.g., repair, preventative work, etc., will not be covered.

There may be some activities that fall into a grey area between cleaning and maintenance. For example, the removal of salty road slush from an indoor parking garage in the winter could be characterized as cleaning, or it could be characterized as preventative maintenance intended to avoid erosion of the concrete. It is Program policy that if the work can be characterized as cleaning, whether or not it can also be characterized in some regard as maintenance, it will fall under the definition of building services.

Other prescribed services

Under s. 1 of O Reg 287/01, the following are prescribed as building services:

  • Services that are intended to relate only to the building and its occupants and visitors with respect to a parking garage or parking lot and a concession stand; and
  • Property management services intended to relate only to the building.

These services may or may not be provided through a comprehensive operations and maintenance contract for such things as janitorial services, landscaping services, driveway, parking lot and sidewalk snow removal, fire alarm services, elevator services, parking lot supervision, heating and air conditioning and plumbing maintenance, and repair and pest control.

For a more detailed discussion of the definition of building services see O Reg 287/01, s. 1.

Building services provider or provider

This definition identifies who is a building services provider or provider. The terms building services provider or provider appears in ESA Part IV Continuity of Employment and ESA Part XIX Building Services Providers.

Building services providers include cleaning, security and food companies that provide building services for a premises - see the discussion of the definition of building services above and in O Reg 287/01, s. 1.

This definition is inclusive, applying to any person, which includes a natural person as well as a corporation, who provides building services for a premises, including the owner or manager of the premises. As a result, the definition will include managers and property management companies who enter into sub-contracts with cleaning, security and food service operations, or use their own in-house staff to provide such services. It will also include owners that contract with cleaning security and food service operations or use their own in-house staff to provide building services at the premises it owns.

There may also be situations in which a major tenant of an office building, for example, contracts with a company to provide for cleaning or security services which are included in the definition of building services in ESA Part I, s. 1. Under the former Employment Standards Act, the application of the building services provisions was limited to an owner of a building or a manager. However, Program policy was that the term owner included lessees or tenants, where the lessee or tenant had control over the premises and was in a position to enter into agreements with contractors or other parties for the provision of building services. This policy was also supported by the courts, which took a broad view of the term owner where it appeared in the former Employment Standards Act, holding that it could include lessees and tenants where the context was appropriate. In this regard, see Ritchie and Dobbie v. Stanstead and Sherbrooke Fire Insurance Company (1940), 1 DLR 241 (ON CA). As noted above, the ESA 2000 definition of building services provider is inclusive, referring to building services being provided by any person who provides building services for a premises, including an owner or manager. It is therefore Program policy that lessees or tenants who provide building services for a building fall within the definition of building services provider whether as any person or as an owner.

Business

This definition provides that a business will include an activity, trade or undertaking.

C

Client

Client is defined in relation to a temporary help agency and means a person or entity that enters into an arrangement with the agency under which the agency agrees to assign or attempt to assign one or more of its assignment employees to perform work on a temporary basis for the person or entity. A person or entity includes an individual person, a sole proprietor, corporation, or a partnership.

The arrangement with the agency may or may not be in writing.

Collector

This provision defines collector as a person, other than an employment standards officer, who is authorized by the Director of Employment Standards to collect amounts owing under the Act. The term collector appears in ESA Part XXIV, ss. 127-129. These sections permit the Director to appoint collectors to collect amounts owing under the Act, whether for employees, for the Minister of Finance for amounts owed with respect to monetary penalties associated with notices of contravention or amounts owed to the former Employee Wage Protection Program or for amounts owed to the Director in the form of administrative costs.

Continuous operation

The term continuous operation appears in the public holiday provisions in ESA Part X, s. 28. Section 28 allows an employer in such an operation to require an employee to work on a public holiday if the holiday is on a day that is ordinarily a working day for the employee and the employee is not on vacation.

A continuous operation is an operation (i.e., an activity or service) or that portion of the operation that normally operates 24 hours a day until completion of the regularly scheduled operations for that period.

This may involve, for example, certain portions of, or routes on, a municipal public transportation network, a 24-hour security service, or that portion of an employer’s operation requiring stationary engineers, maintenance mechanics, millwrights or production workers to run machinery, furnaces, or heat-treating baths, etc. on a continual basis until a process is completed.

The operation need not run continuously seven days per week to fall within the definition of continuous operation. However, if the operation were to stop and start more than once in a seven-day period, it would not be considered by the Program to be a continuous operation.

In this regard, the Program disagrees with the arbitrator’s decision in Collins & Aikman Plastics Ltd. v United Steelworkers, 9042. In that case, the employer’s operation ran 24 hours a day for five, six or seven days a week and there was never more than one shutdown within any week. However, the arbitrator concluded that it was not a continuous operation because in his view, a continuous operation included only those employers who cannot stop operations midstream in order to observe a public holiday or those employers who ran a 24/7 operation.

Only that part of an operation that operates on a 24-hour basis is a continuous operation. For example, in a casino that operates 24 hours a day, seven days a week, the games part of the casino will be a continuous operation, but the office part of the casino, if it operates only during regular business hours, will not be.

Businesses that are open seven days a week but not 24 hours a day are not continuous operations.

D

Difference in employment status

This term appears in section 42.1 of the ESA, under Part XII (Equal Pay for Equal Work). Under that section, subject to certain exceptions, employers are prohibited from paying an employee a rate of pay less than the rate paid to another employee of the employer because of a difference in employment status, when certain criteria are met.

A difference in employment status means:

  • A difference in the number of hours regularly worked by an employee and one or more other employees; or
  • A difference in the term of employment of an employee and one or more other employees.

Difference in number of hours regularly worked

A difference in the number of hours regularly worked by employees constitutes a difference in employment status. “Hours regularly worked” refers to the number of hours that the employees actually work (including hours that they are deemed to have worked pursuant to section 1.1 of O. Reg. 285/01). A contract of employment or job description may set out the number, or a range, of hours the employee is expected to work, and may be relevant when determining whether there is a difference in the number of hours regularly worked by employees. However, if there is a conflict between the contract / job description and the number of hours actually worked, the number actually worked will be used to determine if there is a difference in the number of hours worked.

Two or more employees may be considered to regularly work a different number of hours even if they sometimes work the same number. Conversely two employees may be considered to regularly work the same number of hours even if they sometimes work a different number.

It may not always be readily apparent how many hours employees regularly work. For example, their hours may vary from day to day, week to week or month to month, in a predictable or unpredictable pattern. In these situations, the period of time over which the number of hours worked that is to be reviewed to determine the number of hours an employee regularly works will depend on the circumstances. In general, as the aim is to determine the character of the employee’s employment status, a longer period is to be reviewed when determining the number of hours an employee regularly works (i.e. a review of the number of hours worked over a period of months, rather than days or weeks, is generally the preferred approach; one exception to that approach would be, of course, where it is not possible due to the length of the employment relationship).

There is no “minimum difference” or threshold that must be met in order for a difference in the number of hours regularly worked to constitute a difference in employment status. For example, a one-hour difference or a 20-hour difference in the number of hours regularly worked by employees would both constitute a difference in employment status.

Difference in the term of employment

A difference in the term of employees’ employment constitutes a difference in employment status.

A difference in the term of employees’ employment is defined to include a difference in:

  • “Permanent” status – This generally means that the employment relationship has no fixed end date.
  • “Temporary” status. This generally means that the employment relationship is not permanent but has a fixed end date or will end upon the completion of a project, task etc..
  • “Seasonal” status – This generally means that the employment relationship is seasonal in nature and will end when the season for which the employee was hired comes to an end.
  • “Casual” status – This generally refers to an arrangement where an employee is called to work on an as-needed basis.

The list of types of difference in the term of employees’ employment above is not exhaustive, and there could be other differences not listed.

Note that there could be overlap between the types of differences in the term of employee’s employment listed above. But, as long as there is a difference in the term of employment as between two or more employees, they will be considered to have a “difference in employment status” for the purposes of the “equal pay” provision in s. 42.1. For example, a permanent casual employee and a temporary casual employee are considered to have a difference in employment status even though both are casual.

Director

This defines the Director referred to in the Act as the Director of Employment Standards, who is appointed by the Minister of Labour for Ontario. The Director of Employment Standards may exercise powers and is required to perform duties imposed on them under the Act. Many of the powers of the Director have been delegated. For a complete listing of the powers of the Director, and to whom those powers have been delegated, please see Delegation of Powers.

Domestic or sexual violence leave pay

This definition was added by the Fair Workplaces, Better Jobs Act, 2017 SO 2017, c 22.

Domestic or sexual violence leave pay is defined as pay for any paid days of leave taken under ESA Part XIV, s. 49.7. ESA Part XIV, s. 49.7(5) requires that an eligible employee be paid for the first five days of domestic or sexual violence leave taken within a calendar year. The amount of domestic or sexual violence leave pay an employee may be entitled to is determined by ESA Part XIV, ss. 49.7(6), (7) and (8).

E

Employee

The definition of employee specifically includes those persons described in (a) to (d) above. Each description also either explicitly or implicitly refers to a relationship between the person described therein and an employer - see the definition discussed below. It is the existence of the relationship between the employer and the employee that defines an employee for the purposes of the Act. See 1022239 Ontario Inc. (Seventy-Five Hundred Taxi Inc.) v Director of Employment Standards, 2011 CanLII 44478 (ON LRB) and Professional Recovery Equipment Inc. v Mootoo, 2014 CanLII 69932 (ON LRB) in which the Board referred to the factors considered in determining whether an employment relationship exists. In the first case, the issue was whether taxi drivers were employees of the taxi company or independent contractors. In the second case, the issue was whether a tow truck driver was an employee or an independent contractor. Likewise, the definition of employer states that the employer has control or direction of, or is directly or indirectly responsible for, the employment of a person . . . Therefore, the Act only applies to the employer within the context of the employee-employer relationship.

There is an abundance of case law referring to this relationship, as the roots of the employee-employer relationship date back to the common law notion of master-servant. Because the Act also defines employee in reference to the employee-employer relationship, the common law definitions, with some modification and expansion in light of the intent of the Act, are used to determine whether a person is or is not an employee. See the discussion of the common law tests for employer-employee relationships below.

In addition, this relationship of employee and employer is the subject of other statutes and has been the subject of determinations by administrative tribunals and the courts under those other statutes. However, those determinations have limited application in the context of the ESA 2000 because the purposes of those other statutes are different than the purpose of the ESA 2000.

Therefore, for the purposes of the ESA 2000, the fact that a person is, or is not, considered an employee for the purposes of income tax, employment insurance, workers' compensation, the Labour Relations Act, 1995 or the Canada Pension Plan is not of great relevance. See Deluxe Taxi (Barrie) Ltd. v Employees (April 18, 1973), ESC 125 (McNish), decided under the former Employment Standards Act, and also see 1022239 Ontario Inc. (Seventy-Five Hundred Taxi Inc.) v Director of Employment Standards, a decision of the Board under the current Act.

In Homelife G.M. Ewins Limited v Chiu (September 22, 1987), ESC 2269 (Baum), the referee dealt with a claimant who was not an employee according to a by-law of the Toronto Real Estate Board (“TREB”). The by-law stated that a person who worked full-time elsewhere would not be considered to be employed as a real estate salesperson by an agency such as the applicant. The referee, in finding the claimant to be an employee under the former Employment Standards Act, noted that employment standards legislation takes its own measure and was not controlled by the private law of such domestic bodies as TREB.

Note that as of November 27, 2017, ESA Part III, s. 5.1 prohibits an employer from treating an employee as if they were not an employee under the Act.

Statutory provisions

Work or service for wages

These two sections include as employees those persons who perform work or supply services for wages. The Program position is that the Act does not apply to volunteers.

Employee vs. volunteer

Since volunteers are not considered to be employees under the Act, it is important to determine whether a person is a true volunteer or an employee. The fact that no wages were paid is not determinative of volunteer status - see Robinson o/a Station Street Café v Ramsay and Ramsay (December 30, 1988), ESC 2434 (Adamson), a decision under the former Employment Standards Act; nor is the fact that there was some form of payment made necessarily determinative of employee status (e.g., a payment may have been made in the form of an honorarium as opposed to wages).

Referee Davis in Consumer Liability Discharge Corporation v Molica (July 24, 1981), ESC 1032 (Davis), a case under the former Employment Standards Act, suggested that:

Applying the first factor in the context of family-run businesses, the question will often be whether the individual is providing their services in pursuit of a livelihood or in service of the family.

Officers of a corporation

Officers of a corporation who perform work or supply services for wages are specifically included in the definition of employee. It codifies previous Program policy that although a person may be a corporate officer, they will nonetheless be considered an employee insofar as they perform work or supplies service for wages.

A person receiving training

Clause (c) of the definition of employee defines persons receiving training from an employer as employees if the skill in which the person being trained is a skill used by the employer’s employees.

This provision was amended by the Fair Workplaces, Better Jobs Act, 2017 SO 2017, c 22. Prior to this amendment, the former s. 1(2) held that trainees who met certain conditions were not considered to be employees under the Act. However, this amendment now states that any person who receives training from a person who is an employer is an employee if the skill in which the person being trained is a skill used by the employer’s employees.

Trainees

The effect of clause (c) is to define some people who receive training from an employer as employees, thereby bringing them under the Act. Note that the fact that an individual did not negotiate for or expect to receive monetary compensation while they were being trained does not preclude a finding that they were an employee, nor will the fact that an individual has agreed to take training in an employer’s business on an unpaid basis in preparation for taking on a job with that employer preclude a finding that their employment began when the training commenced. See 1153800 Ontario Inc. o/a Baker’s Dozen Donuts v Sherren, 2000 CanLII 4482 (ON LRB), decided under the former Employment Standards Act.

In order for an individual who receives training from an employer to be an employee, the individual must be trained in a skill that is used by the employer’s employees. It is the Program position that if the person receiving training is being trained in a skill that could be used by other employees of the employer, even though the employer has no other employees, that person is considered an employee.

However, it should also be noted that ESA Part III, s. 3(5) excludes certain categories of trainees who might otherwise be considered employees:

This exclusion had been scheduled to be repealed as of January 1, 2019, pursuant to the Fair Workplaces Better Jobs Act, 2017. However, under the Making Ontario Open for Business Act, 2018 amendments, the repeal was delayed and it will now be repealed on a day to be named by proclamation of the Lieutenant Governor.” For further discussion of the exclusions in s. 3(5), see ESA Part III, s. 3.

Pre-employment selection

Activities engaged in as part of the pre-employment selection process must be distinguished from training. Persons who are engaged in some form of pre-employment activity are generally not considered employees under the Act, provided that the amount of time spent in the program is reasonably limited in duration and the activities involved do not displace the substantive training, instruction and orientation needed once an employee is hired.

Apprentices

Apprentices are generally considered to be employees for the purposes of the ESA 2000. Even though a worker may be defined as an apprentice under the Apprenticeship and Certification Act, 1998, SO 1998, c 22 or the Trades Qualifications and Apprenticeship Act, RSO 1990, c T.17 and may even have signed an agreement stating that they are to be considered a volunteer, they may still be an employee for the purposes of the ESA 2000.

In Northland White Truck Sales Limited v Laframboise (March 17, 1983), ESC 1380 (Barnett), a case under the former Employment Standards Act, the referee rejected the applicant’s argument that the claimant was not an employee since his employment was regulated by the apprenticeship legislation. The referee found that although the claimant was indeed an apprentice for the purposes of that legislation, he was also an employee for the purposes of the former Employment Standards Act by virtue of s. 1(c) in the definition of employee.

Note, however, that there may be cases where paragraph 2 or 2.1 of ESA Part III, s. 3(5) applies, thereby excluding an apprentice from the application of the Act.

Work performed under an apprenticeship program may be covered by one of these exclusions, since such programs can include classroom training and, as such, form part of a program approved by a college or university or private career college. See ESA Part III, s. 3 for more details on these exclusions.

Sheltered workshops

The Act does not apply with respect to participants in a simulated job environment such as a sheltered workshop although such individuals might otherwise be considered trainees, and consequently employees under the Act. This exclusion had been scheduled to be repealed on January 1, 2019, pursuant to the Fair Workplaces Better Jobs Act, 2017. However, under the Making Ontario Open for Business Act, 2018 amendments, the repeal was delayed and it will now be repealed on a day to be named by proclamation of the Lieutenant Governor.

Participants in a simulated job environment are specifically excluded from the application of the Act see paragraph 6 of ESA Part III, s. 3(5). For a more detailed discussion of this exemption in Part 3 Section 3(5).

Homeworkers

This paragraph clearly establishes that homeworkers are to be considered employees for the purposes of the Act, even though some of the circumstances under which homework is performed might suggest that a homeworker more closely resembles an independent contractor than an employee.

A more detailed discussion of the status of homeworkers as employees under the Act can be found in the s. 1 definition of homeworker.

Person who was an employee

Employee includes a person who was an employee

The definition of employee also includes a person who was an employee. This provision ensures that the recovery of entitlements that should have been given to an employee under the Act is not precluded merely because the individual concerned is no longer in the employee-employer relationship.

The employee-employer relationship: Common law tests

The Act only applies where there is an employment relationship. The central question is whether an employee-employer relationship exists between the two parties. The determination of whether someone is an employee or an independent contractor is complex and the courts have created a number of common law tests for determining whether an employee-employer relationship exists. As noted above in the discussion of employee, the Board, referees adjudicators and the courts have referred to other sources, notably the common law tests, to determine if an employee-employer relationship exists.

The definition of employee in s. 1 is not exhaustive and has traditionally been interpreted in an expansive fashion. However, it is not always clear whether a person performing work for an employer is an employee as defined in s. 1 of the ESA 2000 or an independent contractor. An independent contractor is in business on their own account and is therefore not entitled to the same protections as employees under the ESA . Although the ESA does not contain a test for determining whether a person is an employee or an independent contractor, it is Program policy that the determination of whether or not an individual is an employee or independent contractor should be considered broadly utilizing the various tests and any other relevant factors.

Note that as of November 27, 2017, ESA Part III, s. 5.1 prohibits employers from treating employees as if they are not employees under the Act. It is important to note that parties cannot decide employee status merely by mutual agreement or by the signing of a written document, such as an employment contract or independent contractor agreement. Nor does the method of remuneration and whether statutory deductions are made greatly impact the determination of whether there is an employment relationship. Rather, it is the overall relationship that determines whether an employer-employee relationship exists. See for example Econome Inc. v Champagne, 2017 CanLII 14543 (ON LRB), in which the employer tried to rely on an unsigned employment agreement to indicate that the employee was not an employee. The Board disagreed and noted that the existence or form of a written contract does not impact an employee’s status, particularly where the individual in question works full time and exclusively for the employer.

The Supreme Court of Canada in 671122 Ontario Ltd. v Sagaz Industries Canada Inc., [2001] 2 SCR 983, 2001 SCC 59 (CanLII) distinguished between the relationship of an employee and an employer and the relationship of an employer and an independent contractor, who is in business on their own account. Major J., writing for the majority, reviewed the various tests developed by the case law and held that there is no one conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor (at paragraph 46). In making the determination, what must always occur is a search for the total relationship of the parties (at paragraph 46). Major J. provided further guidance by stating in paragraphs 47-48:

The Supreme Court of Canada’s decision in 671122 Ontario Ltd. v Sagaz is essentially a restatement of the Federal Court of Canada’s decision in Wiebe Door Services Ltd. v M.N.R., [1986] 3 FC 533 (CA). The non-exhaustive list of factors above does not replace the factors in the traditional common law tests, since no single test can answer the question of whether a person is an employee or an independent contractor in all situations. As Major J. noted, the key question is whether the person who has been engaged to perform the services is performing them as a person in business on their own account.

The classic common law tests, and the analysis given them by the Supreme Court of Canada in 671122 Ontario Ltd. v Sagaz are discussed below.

Control test

The Supreme Court in 671122 Ontario Ltd. v Sagaz first reviewed the control test. Under this test, an individual is characterized as an employee if there is an employer who can control, or has the right to control the employee: the essential criterion of employer-employee relations is the right to give orders and instructions to the employee regarding the manner in which to carry out his work - see Hôpital Notre-Dame de l'Espérance and Théoret v Laurent, [1978] 1 SCR 605, 1977 CanLII 8 (SCC) at 613. Major J., writing for the Court, notes that the control test is problematic and has been criticized as having an air of deceptive simplicity. The indicia of control is thus no longer a sole determining factor of whether there is an employment relationship.

Although the control test has been rejected as the sole determining factor of whether there is an employment relationship, the element of control is one of the factors in other common law tests, notably the four-fold test, discussed below. Major J. in 671122 Ontario Ltd. v Sagazindicated that the level of control the employer has over the worker’s activities will always be a factor in determining whether there is an employment relationship.

What is meant by the term control has expanded from the initial focus on the manner in which work was done. As workers became more specialized and skilled relative to their employers, there was less need for the workers to be told how each facet of their work was to be done. Other aspects in which employers have control of the activities of their workers fall within the element of control:

  1. The right to control the method of doing the work;
  2. The power to hire and to control the method of hiring;
  3. The right to suspend or dismiss the alleged employee:
    • An employer has a greater degree of control over their employees than they would over an independent contractor. The employer’s rights over the independent contractor are limited to terminating the contract for services where the work is not performed satisfactorily, whereas the employer has the right to suspend, dismiss or otherwise discipline employees.
  4. The payment of wages or other remuneration;
    • The manner of payment may indicate whether a sufficient degree of control is present in order for there to be an employment relationship. If a person is paid proportionate to the amount of work done rather than the time occupied or for a lump sum, this may indicate that such a person is being employed as an independent contractor. - See Becker Milk Co. Ltd. v Hajjar et al(January 31, 1973), ESC (Carter).
  5. The right of the employer to demand exclusive service from its worker;
  6. The right of the employer to determine the place of work;
  7. Freedom of action in performing the task, including the degree of supervision and the ability to designate;
  8. Retention of the right to prescribe the exact work to be done; and
  9. The degree of accountability on the part of the person performing the work.
Four-fold test

Major J. in 671122 Ontario Ltd. v Sagaz also reviewed the classic four-fold test of Montreal (City) v Montreal Locomotive Works Ltd. [1944] UKPC 44, which was an attempt to deal with the problems of the control test. The four-fold test retains the element of control as a key indicator of the employment relationship, but examines additional factors to provide a means of distinguishing between an employee and an independent contractor. The test involved four elements, as follows:

  • Control: This may be defined as the power to control the method of doing the work. In other words, does the employer have the right to tell the employee not only what to do, but how to do it? Direct or immediate supervision is not essential. It is the power of control, rather than the day-to-day exercise of supervisory control that is significant.
  • Ownership of tools: Tools does not refer only to such items as hammers, lathes and cleaning mops, but can include any item used at the workplace, such as forms, manuals, promotional literature and a telephone. A person who owns all the equipment necessary for the work they do is more likely to be an independent contractor than an employee. Likewise, if the tools are supplied by the purported employer, it is more likely indicative of an employee-employer relationship.
  • Chance of profit.
  • Risk of loss: Elements three and four are usually linked together. Typically, an independent contractor is in business for himself or herself. This suggests that there is a financial investment in their undertaking, so that there are variables (other than their own labour) subject to their influence that provide a chance of profit and risk of loss.
Organization test

The Supreme Court of Canada in 671122 Ontario Ltd. v Sagaz also considered the organization test or integration test, which was approved by that Court in Co-operators Insurance Association v. Kearney, [1965] SCR 106, 1964 CanLII 21 (SCC) and followed in Mayer v J. Conrad Lavigne Ltd., 1979 CanLII 2088 (ON CA). This test examines whether the alleged employee is an integral part of the employer’s organization, in which case the individual is an employee, or a mere accessory to it, in which case they are an independent contractor. The test was initially proposed by Lord Denning in Stevenson, Jordan & Harrison Ltd v MacDonald & Evans [1952] 1 TLR 101 as follows:

Major J. in 671122 Ontario Ltd. v Sagaz stressed the difficulties with the organization test: it can be a difficult test to apply, because if the question is whether the activity or worker is integral to the employer’s business, the question can usually be answered in the affirmative. If the test is applied to demonstrate that, without the work of the alleged employees the employer would be out of business, a factual relationship of mutual dependency would always meet the test. Nonetheless, Major J. acknowledged that the organization test can be useful if properly applied, looking at the question of integration from the perspective of the employee and not that of the employer. If the test is applied from the employer’s perspective, it is too easy to assume that every contributing cause is arranged purely for the convenience of the larger enterprise.

In Pinnacle Roofing Systems Inc. v Thompson, 2009 CanLII 9251, the Board summarized the organizational test as two main questions: (1) is the alleged employee an integral part of the business or ancillary [to it]?; and (2) is the employee’s work subject to coordinated control as to where and when rather than the how? In applying the test, the OLRB found that a sheet metal worker was an employee because his work was an integral part of the employer’s business within the meaning of the organizational test.

Statutory purpose test and economic dependence

The definition of employee in ESA PI, s. 1 is inclusive, which means that it is not a closed set of characteristics. The statutory purpose test, like the definition of employee, is meant to be expansive and inclusive. The test was first formulated inMajestic Maintenance Services Limited (February 8, 1977), ESC 479A (Burkett), in which Referee Burkett held that the traditional common law tests were not appropriate for interpreting the scope of the Act when the Act was clearly designed to expand upon or enhance the protections of the common law. Referee Burkett concluded that the existence of an employment relationship should be assessed by reference to the purpose of the statute, which he characterized as intended to provide certain benefits to persons who by reason of their economic dependence or lack of bargaining power in the market place, might otherwise have to work on terms below the basic minima established in the Act. Referee Burkett further observed that “Whereas the Act is not designed to protect or underwrite the independent businessman… it must be said (and indeed it follows from the Becker decision) that it is designed to protect those who are dependent in their employment.”

The statutory interpretation test was further parsed out by the OLRB in Andrew Beyers Carpentry Inc. v Mohammed, 2010 CanLII 23842 (ON LRB). The Board noted that the purpose of the ESA 2000 is to address the potential negative effects of unequal bargaining power between employees and employers. The Board stated that although the statutory purpose of the Act is easy to state, its application to a variety of “ever-changing” contractual agreements designed to obtain skills and services in a cost-effective way is challenging, and requires nuanced analyses to determine if there is economic dependence even where those agreements were specifically designed to include features that are commonly associated with independent contractors.

In applying the statutory interpretation test, the Board considered the claimant’s work in the context of the construction industry. The Board noted that in the context of the construction industry, workers had more economic power in providing skills and services than in industrial settings, but there was no fundamental change to the underlying inequality between worker and employer. Furthermore, the Board stated that the fact that construction work is often done in multiple relationships of short duration and little day-to-day supervision was merely a function of the industry itself (e.g., duration of projects and the highly skilled nature of the worker), and not necessarily evidence of an independent contractor arrangement. The Board found that a relationship of economic dependence characteristic of the construction industry existed between the employer and the claimant. It was clear that the claimant agreed to provide her work regularly without any specified hour limit and with the expectation that she would be paid on a weekly basis. The Board found that the fact that the claimant agreed to use her cell phone and car was more indicative of her weak negotiating position than of her being an independent contractor. The fact that the employer did not take statutory deductions off of her pay and that the claimant was happy with that arrangement was not determinative, because the ESA 2000 is not applied in accordance with the preferences persons may have with respect to other statutes.

Application of the common law tests

Following the Supreme Court of Canada’s decision in 671122 Ontario Ltd. v Sagaz, the Board has generally not applied one singular test for determining whether an employee-employer relationship exists. Rather, the Board has broadly utilized the various tests and any other relevant factors. Similarly, it is Program policy that the various common law tests and any other relevant factors should be applied and considered when determining when an individual is an employee or an independent contractor. The following Board decisions are some good examples of how the common law tests and other factors have been utilized.

In Warren v 2006515 Ontario Inc., 2005 CanLII 1757 (ON LRB), the OLRB looked at several factors in determining that the claimant, a manager of a health food store, was in fact an employee and not an independent contractor. There were several facts that suggested the claimant was an independent contractor: she invested in one product for sale to her own profit; for a period, she financed the balance of the inventory; she used the terms “Nutritional Services” and “Managerial Services” on documents to describe the work she did for the employer; and no statutory deductions were made from gross amounts owing to her for work performed. However, the OLRB found that there was substantial evidence to determine that the claimant was in fact an employee: the employer had control over her activities; the employer provided the premises and the equipment used; the employer had ultimate control to determine what product would be stocked; and the claimant had essentially no opportunity for profit or risk of loss. The Board has followed the approach articulated in Warren v 2006515 Ontario Inc. in other decisions, for example: Big Picture Home Entertainment Limited v MacDonald, 2016 CanLII 82670 (ON LRB); Iris Blu Staffing Limited v Irwin, 2016 CanLII 56987 (ON LRB); and Bining v 1391165 Ontario Inc. (Wallace Transport), 2009 CanLII 33872 (ON LRB).

In Teneva v 946900 Ontario Limited o/a Idlewood Inn/Cloverleaf Motel, 2016 CanLII 2422 (ON LRB), the OLRB considered whether a housekeeper for a motel was an employee or an independent contractor. The employer relied on a document signed by the claimant that stated she agreed to be an independent contractor. The employer also argued that the claimant could set her own schedule, refuse work and increase her profits by cleaning more rooms.

The OLRB found that the “independent contractor agreement” was not determinative. The OLRB stated that whether or not an individual is an employee is a question of fact and law to be determined after consideration of all of the relevant factors. The OLRB noted that the intention of the parties is relevant only to the extent that it is reflected in the actual structure and circumstances of their relationship, that is, parties cannot by their “agreement” make their relationship as one of independent contractor if the facts show that there is an employee-employer relationship.

The OLRB found that the claimant was an employee based on the following facts: the employer exercised substantial control over the claimant’s schedule; the claimant was expected to answer the employer’s call to work, regardless of the time of day, which meant that the claimant was unable to work for any other employer or attend job interviews to find alternate employment; the employer provided the claimant with all the cleaning products and equipment she required; and the claimant had limited ability to profit from cleaning rooms, as the employer decided the number and type of rooms she was to clean.

In Ilaris Corporation v Gadzevych, 2007 CanLII 19192 (ON LRB), the OLRB considered whether a claimant who performed repair and renovation services for a fixed amount on a per project basis was an employee or an independent contractor. The OLRB concluded that he was in fact an employee because he was an integral part of the employer’s business. Although he was hired for a fixed amount per project, he was not free to substitute someone else to perform the work and there was no sense in which he could be described as being in business for himself.

In Appleseed Snow Blowing Service Inc. v Bourguignon, 2005 CanLII 38056 (ON LRB), the OLRB found that the claimant, a snow shoveler, was an independent contractor whose snow shoveling activities were more akin to being engaged in business on his own account. There was no ongoing working relationship between the snow shovelers and the employer, and snow shovelers were free to engage in other activities or employment in between snowfalls. The employer exercised little control over the activities of the snow shovelers as it did not require them to work following every snowfall and did not dictate hours of work, how or in what order the work was to be done. The snow shovelers also arranged their own transportation between work sites and provided their own equipment.

Miscellaneous

There are other persons who may or may not be considered employees for the purposes of theESA 2000, some of whom are discussed in greater detail below. For information regarding the exclusions in s. 3(5), see ESA Part III, s. 3.

Directors

Paragraph 11 of s. 3(5) and s. 3(6) of the Act read:

These sections provide that the Act does not apply with respect to directors of a corporation, in their role as directors, except as provided in ESA Parts XX-XXVIII. However, the Act does apply to an individual who is a director but who also performs work or occupies a position as an employee. In order to determine whether ESA Part III, s. 3(6) applies, however, it is Program policy that directors, who constitute the controlling mind of a corporation, are not, in the absence of clear evidence of an employment contract, to be considered employees for the purposes of the Act. See Re D.J.'s Family Centre Ltd., 1977 CanLII 1331 (ON SC) and Satellite Computer and Communication Systems Ltd. v Dryla (May 8, 1980), ESC 784 (Adamson), decisions under the former Employment Standards Act.

For cases under the former Employment Standards Act where a director of a corporation was also found to be an employee, see Algoma Rubber Services Ltd v Johnston (April 19, 1982), ESC 1205 (Eaton), where the Referee held that although the claimant was a director of the company, a minority shareholder and held the position of Vice-President and General Manager, his directorship did not preclude a finding that he was an employee for the purposes of the former Employment Standards Act. The referee found that there was a contract of employment and that the claimant was receiving wages within the meaning of the Act, and not being paid a consulting fee for his services. In addition, he was a Director in name only and his minority shareholder position was such that he had no effective say in the control of the company. See also Munro v Cord King International (August 24, 1998), 2086-97-ES (ON LRB), where the adjudicator found on an application for review of an employment standards officer’s decision that the applicant, who was both a president and director of a company, was an employee under the former Employment Standards Act and therefore entitled to receive unpaid wages. While the applicant did have the title of president, he had no control over the decisions of the company, no control over its finances, and no substantial ability to hire, terminate, discipline or set salaries for the employees. As for his directorship, the employer had designated him as a director without the applicant’s knowledge or consent.

Partners

A partnership is the relationship that exists between parties carrying on business in common with a view to profit. In the same way that a person cannot be their own employee, a partner cannot be employed by the partnership. See Berini o/a Noront Printing v Purificati (September 9, 1975), ESC 286 (Soubliere), a case decided under the former Employment Standards Act. The fact that a claimant is registered as a partner is not conclusive of partnership status, as there may be factors that will lead to a conclusion that the so-called partner is actually an employee for the purposes of the Act. To be partners, parties must have an agreement to carry on business in common and share profits. Some of the other indicia of partnership status include the contribution by the parties of money, property, effort, knowledge, skill or other assets to the common business, a joint ownership interest in the business, a mutual right of control or management of the enterprise, and authority to contract liabilities in respect of the business that is being carried on. Therefore, it is essential to look closely at the relationship between the parties to determine if the facts are more indicative of a partnership or an employer-employee relationship.

Corporate shareholders

Corporate shareholders may be employed by the company in which they own shares. Even a major shareholder with a controlling interest in the company may be an employee, though they would have to occupy an employee position - shareholder status obviously does not make an individual an employee.

Agent

An agent is someone who can make a contract or dispose of property on their principal’s behalf. This authority may be held by an independent contractor or by an employee. Therefore, the fact that a claimant is an agent is not determinative. The common law tests must be applied when examining the relationship to determine whether the claimant is an independent contractor/agent or an employee/agent.

Franchisees

Bona fide franchisees are generally not considered to be employees. In Groulx v Loeb Inc. (November 26, 1992), ES 203/92 (Novick), a case under the former Employment Standards Act, the claimant argued that he was a glorified store manager, not a franchisee, due to the high degree of control exercised by the franchisor: the franchisor held the head lease for the store premises, Loeb management was generally involved in the demotion and termination of employees in the franchisee’s store, the franchisor suggested retail prices for the store’s products, and the franchisee store was generally required to order its stock from Loeb. The adjudicator found, however, that the franchisee was not an employee because of the following: the claimant was the sole shareholder of the franchisee operation; he invested a substantial amount of money into the store at various stages, running the risk of significant financial loss or gain; and the claimant’s company owned all of the equipment and inventory in the store. The claimant also made all key decisions with respect to the purchasing of products and the prices at which they were sold, albeit in accordance with dictated norms or industry practice; decided hours the store would be open; and had authority to hire and fire employees.

Lessees

Where a claimant is party to a lease agreement, leasing the business premises from a third party, they will not generally be considered an employee.

However, there are exceptions to this. For example, in Anderson et al v Neil operating as Gerry Neil Texaco Service (September 13, 1973), ESC 181 (McNish), the claimant was found to be an employee under the former Employment Standards Act even though he had a lease agreement with the Texaco Oil Company. The referee found Mr. Neil (the claimant) to be in the same position as a foreperson in a normal employee-employer arrangement. Most significant was the fact that Texaco maintained financial control on a daily basis and that Mr. Neil was paid a flat salary, not a share in the profits of the business.

Strikers

Persons on strike are employees under common law and are also considered to be employees under the inclusive definition in the ESA 2000. For example, see Re Domtar Chemicals Limited (August 17, 1973), ESC 139 (Fram), a decision under the former Employment Standards Act.

Personal service corporations

When a person has incorporated and provides services through the corporation, the assumption is often made that the person is, therefore, an independent contractor as opposed to an employee. However, where the person themselves is providing services through the corporation, the fact of the incorporation does not preclude a finding that they are an employee for the purposes of the ESA 2000. The common law tests should be applied to determine if the relationship is in fact one of employee-employer.

For example, in Queensbury Enterprises Inc. v J.R. Corporate Planning Associates Inc., the Ontario High Court held that there was an employee-employer relationship where a personal services corporation was retained to provide the defendant with financial consulting services. The sole and principal shareholder of the corporation was found to be an employee of the defendant, and therefore entitled to reasonable notice of termination.

Temporary help agencies

Temporary help agencies provide personnel to clients who require temporary or short-term help. A common example is the agency that supplies its clients with secretaries, data entry clerks, etc. during peak periods or when a replacement is required due to illness or pregnancy or parental leave. Although the personnel are subject to the host business' control with regard to the work they do for the client, they are not employed by the client. Generally speaking they are regarded as employees of the temporary help agency, for the purposes of the ESA 2000. See Occasional Office Help c.o.b. Data Capture v Tinney et al (July 28, 1977), ESC 444 (Picher) and Taylored Drivers Inc. v Beck et al (March 3, 1980), ESC 720 (Adamson), decisions under the former Employment Standards Act which discussed the issue of Elect to Work status of temporary help agency employees.

It should be noted, however, that just as one must always look to substance and not be misled by form when determining whether an employment relationship exists, one must also look to substance and not be misled by form when considering whether the host business is in fact the employer, or at least an employer (along with the agency, under the joint unrelated employers rule) for purposes of the Act. This is particularly likely to be the case where an individual spends many years working in the same job for the same host business without interruption while having ostensibly been employed by a succession of unrelated temporary help agencies, each of whom supposedly provided the individual’s services to the host and where the individual’s situation throughout was not distinguishable, as a practical matter, from that of an employee of the host. However, one should not be quick to draw the conclusion that an individual supposedly employed by a temporary help agency is in fact an employee of a host business; temporary help agencies fulfill an important and legitimate function, and where someone’s services are apparently being provided to a host through the medium of an agency it should not lightly be assumed that form does not in fact reflect substance.

Employer

The definition of “employer” includes the persons described in (a) and (b) above. It is the existence of a relationship between the employer and the employee (in the form of employment) that imposes the statutory obligations upon the person(s) defined as employer for the purposes of the Act.

An inquiry as to whether an employment relationship exists is resolved by applying the common law tests described in the preceding discussion on the employee definition. Essentially, the common law tests may be applied to determine whether a claimant is an employee, thereby imputing the position of employer to the other party to the employment relationship.

It should be noted, however, that the term employer as defined in the Act is given a broader meaning than its ordinary common law meaning. The term employer in the Act includes persons who may not be considered employers at common law. The Act also allows for the possibility of more than one person having employer status in relation to the same employee, either as persons having control or direction of an employee or having responsibility, directly or indirectly for the employment of a person, or entities carrying on associated or related activities or businesses with such persons. Therefore, it is necessary to determine which of these possible employers owes the statutory obligations set out in the ESA 2000 to the employee.

Statutory provisions

Owner, proprietor, etc.

This part of the definition states that any owner, proprietor, manager, superintendent, overseer, receiver or trustee who has control or direction of, or is directly or indirectly responsible for, the employment of a person is an employer.

In Re National Bank of Canada et al. and McArthur et al., 1986 CanLII 2837 (ON SC), a receiver-manager had refused service of an order to pay under the former Employment Standards Act in respect of employee vacation pay entitlements, arguing that it was not an employer under the Act. On judicial review of the case, the Divisional Court ruled that the Ministry had acted properly in serving the receiver-manager with the order, as a means of ensuring that the employee entitlements were dealt with properly from the proceeds of realization. In affirming the referee’s decision, the Court stated:

Amendments to the former Employment Standards Act in 1987 specifically included receivers and trustees within the definition of employer to codify the principle that the definition was intended to include such persons who have control of, or direct or indirect responsibility for, the employment of a person.

It should be noted that it has not been and is not the policy of the Program to consider the receiver or trustee personally liable for ESA 2000 obligations incurred by an insolvent employer where the receiver or trustee continues to operate the employer’s business for some period of time following insolvency, for the purpose of carrying out his/her obligations respecting distribution among creditors. However, if the receiver or trustee was carrying on business for a lengthy period of time with no apparent view to distribution, the Program might consider imputing personal liability on the trustee or receiver.

Joint unrelated employers

In Baldeo et al v Regent Park Community Improvement Association (May 26, 1980), ESC 790 (Ellis) the Referee held that the former Employment Standards Act's definition contemplated the possibility of each employee having a number of different employers at any one time. Although he acknowledged that this concept might not accord with other substantive aspects of the Act, he felt that the definition was workable if it was interpreted as referring to a particular person as an employer as determined by the aspect of the employment for which that person is or was in fact responsible directly or indirectly, or over which he did indeed have control or direction.

In that case, the issue was which of two entities, the Association or the Ontario Housing Commission (“OHC”), was the employer of the claimant laundry attendants with regard to their claims for unpaid wages and vacation pay. The laundry attendants had been hired by the Association and were paid by the Association, pursuant to a contract between the Association and the OHC. Under the contract, the OHC provided funds, including those paid out to the laundry attendants by the Association as wages, for the building management services supplied by the Association.

The Association took the position that the OHC was the true employer and that the Association’s status as employer was nominal only.

The Referee examined the contract and the relationship between the Association and the OHC and noted (among other things) that the Association was in a legal position, pursuant to its contract with the OHC, to control the way the agreed-upon arrangements concerning the employment of the claimants were administered. The Association thereby assumed a responsibility to the persons employed, pursuant to that arrangement, to see that their rights with respect to wages and like matters would not be jeopardized by the nature of that arrangement, or the way in which it was administered.

As a consequence, the Referee held that the Association was a person who, as a manager, superintendent or overseer, was directly or indirectly responsible for the compensation aspects of the complainants' employment. Therefore, the Association was an employer for the purposes of the complaints in question.

However, he also noted that the laundry rooms were the property of the OHC and, in fact, were facilities that the OHC was obligated to provide to its tenants. The supervision of the staff of those facilities (the laundry attendants) was, as a practical matter, largely assumed by the OHC senior project manager. In addition, the laundry attendants were required to attend training sessions run by OHC staff. Finally, the OHC strictly controlled the Association’s funding, thereby indirectly controlling the payment of wages to the laundry attendants. The Referee therefore held:

Although the Referee was unable to attach any liability for the unpaid wages and vacation pay to OHC by reason of its status as a Crown agency, he did make it clear that both the OHC and the Association fell within the definition of employer under the former Employment Standards Act as regards the laundry attendants' claims. See ESA Part III, s. 3.1 for more information on Crown agencies and employees.

It should be noted that the referee did not suggest that every person who could be seen as falling within the broad definition of employer under the former Employment Standards Act would necessarily incur every liability that could possibly befall an employer under that Act. He recognized, for example, that in light of the definition a foreperson might be considered an employer for some purposes, but that a foreperson should not be considered to be personally liable for unpaid wages. In the referee’s view, the key to applying the definition in s. 1 where more than one person fell within the definition was that a person or persons could be held responsible only for those aspects of the employment relationship in respect of which it could be said that they had control or direction of, or were directly or indirectly responsible for the person’s employment. This principle enunciated in Baldeo et al v Regent Park Community Improvement Association continues to be the Program’s policy under the ESA 2000.

It is also important to note that the joint liability of OHC and the Association in the above case was not based on the provision in the Act that provides for one or more entities to be treated as one employer, often called the related employers' provision. That provision is referred to in clause (b) of the definition of employer of the ESA 2000 and defined in ESA Part IV, s. 4 - see the discussion below under Related Employers.

Related employers

Section 4 of the Act is reproduced below:

This section expands the definition of employer to include persons who carry on or have carried on associated or related activities or businesses with the principal employer,  and aims to hold them accountable as one employer. Such persons are commonly referred to as related employers.

While each joint unrelated employer must have direct or indirect control or responsibility for the employee in order to be found to be a joint unrelated employer, related employers do not have to have such control or responsibility, though obviously the principal employer must in order for there to be a related employer finding. It is the relationship of the related employer to the principal employer, rather than its relationship, if any, to the employee, that is the source of the liability under the Act.

For further discussion, refer to ESA Part III, s. 4.

Employment contract

This defines employment contract as including a collective agreement. The term collective agreement is not itself defined in the ESA 2000, but would presumably include any agreement between an employer and a trade union, as defined in ESA Part I, s. 1, that contains the terms and conditions of employment for employees in a bargaining unit represented by that trade union.

The definition of employment contract in ESA Part I, s. 1 is inclusive, not exhaustive. This means that, under the definition, a collective agreement is just one particular example of what constitutes an employment contract. Other examples that are not specifically mentioned in the definition but that fall under the definition include a written employment contract between an employer and a non-unionized employee, an oral contract between an employer and a non-unionized employee, and an implied contract between an employer and a non-unionized employee.

Employment standard

This defines an “employment standard” as being an employer’s obligation for the benefit of an employee under the Act.

As reflected by the name of this Act, the concept of employment standards is the core of this legislation. The Act both establishes and provides for the enforcement of minimum rights, both monetary and non-monetary, with respect to the terms and conditions of employment.

Establishment

An establishment is defined as a location where the employer carries on business. Separate locations will be considered one establishment if they are in the same municipality. Locations in separate municipalities will also be considered one establishment if an employee in one location has contractual bumping rights that extend to the other location. Bumping rights are typically found in collective agreements, but they can also sometimes be found in employment contracts that are not collective agreements.

It is the policy of the Program that it is the largest area of municipal organization that will constitute the municipality for purposes of the definition of establishment in the Act.

In some cases, the largest area of municipal organization will be an upper tier municipality, e.g., the Regional Municipality of Peel; in such a case, the area of a lower tier municipality within the upper tier municipality (e.g., the City of Brampton) would not be treated as the municipality for the purposes of the establishment definition.

In other cases, there may not be any upper tier or lower tier municipality, but simply a single tier municipality, e.g., the City of Toronto.

To determine whether a particular location is within an upper tier municipality, reference might be made to the Ontario Municipal Directory, which is published by the Association of Municipal Managers, Clerks and Treasurers of Ontario, or to the list of All Ontario Municipalities link on the website of the Association of Municipalities of Ontario.

F – H

Homeworker

A homeworker is a person who performs work for compensation in a place that is primarily used as the person’s home. The definition of homeworker does not include persons employed to perform work in premises that are not their residence, such as domestic workers, housekeepers, and homecare workers of social service agencies.

If an individual performs any type of work in premises that are occupied by them primarily as residential quarters for compensation, that individual will fall within the definition of homeworker. The definition in the ESA 2000 is expansive in that it includes all types of work, including sewing operations, assembly and packaging operations (e.g., of small parts, toys or games), addressing envelopes (e.g., for direct mail advertisers), typing (e.g., of insurance policies), design of computer programs, and editing on a word processor, and other types of work that do not involve the manufacture, preparation, improvement, etc., of goods such as telemarketing.

Special rules regarding homeworkers apply in the case of recordkeeping, minimum wage and the provisions regarding advising homeworkers of the calculation of homeworkers' wages and the deadlines for completing their work. See ESA Part VI, s. 15(2), O Reg 285/01, s. 5(1) para. 4, ss. 5(2) and 5(3) and O Reg 285/01, s. 12, respectively.

Employment relationship

A homeworker is an employee by virtue of paragraph (d) of the definition of employee in ESA Part I, s. 1(1):

The specific exclusion of independent contractors in the homeworker definition was added in the ESA , 2000 to clarify that just because homeworkers are listed under the definition of employee does not mean that all homeworkers are employees.

Whether a particular homeworker is an employee, or an independent contractor not subject to the Act, may sometimes be difficult to decide.

In one decision under the former Employment Standards Act, Sparta Mercantile Ltd. v Hulst (June 21, 1984), ESC 1657 (Brown), the referee applied the standard common law tests (the four-fold test and the organization test - see the definition of employee in ESA Part I, s. 1) and and concluded that the of home-sewers was more clearly equivalent to that of an independent contractor, and that accordingly they were not employees. This decision was contrary to the Program’s policy under the former Employment Standards Act. Consequently, Sparta Mercantile Ltd. v Hulst should not be relied upon for assistance in determining whether an individual who performs work for compensation out of premises that is primarily their residential quarters is an employee.

In C.N. Shoes Ltd. v Vanin (Feburary 4, 1985), ESC 1780 (Davis), another decision under the former Employment Standards Act, the claimant made leather uppers for shoes and owned most of the hand tools, while the company supplied the jack, leather, thread and beeswax. Every Friday, the claimant took to the company factory the work completed during the preceding week, and received a further supply of work for the next week. At that time he signed a standard work order for the completed items, which described the claimant as a sub-contractor, and the claimant was paid accordingly.

The employer in C.N. Shoes Ltd. v Vanindid not exercise the kind of control over the home-cobbler that was common to employer-employee relationships. However, the referee held that homeworkers are not required by the Act to conform to the typical employer-employee relationship and questioned the usefulness of the common law tests applied in Sparta Mercantile Ltd. v Hulst. After all, one of the inherent characteristics of homework is that the employee works at home with little supervision, deciding when and how to work. If a common law test is required, the referee considered the organization test to be the appropriate one in the circumstances. The claimant was a necessary and integral part of the company’s business: without his work on the uppers, no shoe could be completed.

Hospital

This definition provides that the term hospital under the ESA 2000 has the same meaning as under the Hospital Labour Disputes Arbitration Act, RSO 1990, c H-14 (HLDAA).

The HLDAA defines hospital as:

This definition in HLDAA was amended in 2010, by replacing the terms nursing home and home for the aged with the term long-term care home. This amendment did not alter the substance of the definition, as long-term care home includes what was previously referred to as nursing homes and homes for the aged.

The term hospital appears in ESA Part X Public Holidays.

I – N

Labour relations officer

This defines labour relations officers referred to in the Act as officers appointed under the Labour Relations Act, 1995.

Minister

This definition provides that references in the Act to Minister are references to the Minister of Labour.

Ministry

This definition provides that references to Ministry in the Act are references to the Ministry of Labour.

O – P

Overtime hour

This provision defines overtime hour as:

The term overtime hour appears in the definitions of regular rate and regular work week, and in ESA Part VIII Overtime Pay and ESA Part X Public Holidays.

Person

The purpose of this provision is to avoid having to add a reference to union where the Act was making a reference to person. In law, a trade union is not normally considered to be a person. The definition is inclusive, and so should not be taken to exclude other persons, such as individuals and corporations. In law, a corporation is a person.

Personal emergency leave pay

This definition was added by the Fair Workplaces, Better Jobs Act, 2017 SO 2017, c 22.

Personal emergency leave pay is defined as pay for any paid days of leave taken under ESA Part XIV, s. 50. Section 50(5) provides an entitlement to two paid days of personal emergency leave per year if an employee has been employed for at least a week. The amount of personal emergency leave pay that an employee is entitled to is determined by ESA Part XIV, ss. 50(9), (10) and (11).

Premium pay

Under ESA Part X Public Holidays, employees may have the right to receive, among other entitlements, premium pay if they work on a public holiday. Section 24(2) states that the amount of premium pay must be at least one and one half times the employee’s regular rate.

For further discussion, please refer to ESA Part X Public Holidays.

Prescribed

This definition provides that the word prescribed means as set out in the regulations under the ESA 2000.

Public holiday

This provision defines public holidays for the purposes of the Act. Note that where a substitution is made, as provided for in ESA Part X, that substitute day is to be treated as if it were the named public holiday. This means that the substitute holiday takes the place of the public holiday. Therefore, the formula to be used for calculating public holiday pay for the substitute holiday would be the formula that is in effect on the date of the substitute holiday.

In each year:

  • New Year’s Day is January 1;
  • Family Day is the third Monday in February (the first Family Day fell on February 18, 2008);
  • Good Friday is the Friday before Easter Sunday. Easter Sunday (which is not named as one of the days that are public holidays for the purposes of the Act) varies from year to year, but is always between March 22 and April 25. It falls on the first Sunday following the paschal full moon, which is determined from algorithmic tables and can differ from the date of the actual full moon by up to two days;
  • Victoria Day is the Monday preceding May 25;
  • Canada Day is July 1, unless July 1 falls on a Sunday, in which case the public holiday is July 2 by virtue of the federal Holidays Act, RSC 1985, c H-5 (see subsection 88(4) of the Legislation Act, 2006, SO 2006, c 21, Sch F);
  • Labour Day is the first Monday in September;
  • Thanksgiving Day is the second Monday in October;
  • Christmas Day is December 25; and
  • December 26 (also known as Boxing Day) is December 26.

For the purposes of the public holiday provisions, the Program considers a day to be a calendar day running from 0001 hours to 2400 hours. It is Program policy that where a shift spans two calendar days, the entire shift is, unless the employer has adopted a different policy that is reasonable and that it consistently applies, considered to have been worked on the calendar day on which the shift began. For example, where an eight-hour shift commenced at 11 p.m. on the Thursday evening before Good Friday, the seven hours actually falling on Good Friday will not be considered to have been hours worked on a public holiday. Similarly, where an eight-hour shift commenced at 11 p.m. on the evening of Good Friday, all eight hours are considered to have been worked on the public holiday, notwithstanding that seven of them actually fell on the next calendar day.

Public holiday pay

Under the circumstances set out in ESA Part X Public Holidays, employers must pay employees public holiday pay for a public holiday. Section 24(1) states that the amount of public holiday pay must be equal to:

  1. The total amount of regular wages earned in the pay period immediately preceding the public holiday, divided by the number of days the employee worked in that pay period; or
  2. If some other manner of calculation is prescribed, the amount determined using that manner of calculation.

For further discussion, please refer to ESA Part X.

Q – R

Regular rate

This definition establishes that the regular rate, which serves as the basis for many calculations (e.g., overtime pay and public holiday entitlements, and what constitutes a week of lay-off for termination and severance purposes) under the Act, is the rate of pay for each non-overtime hour of work. In a decision under the former Employment Standards Act, the referee held that an agreement that incorporates a component for overtime premiums into the regular rate of pay is of no effect since it is inconsistent with the provisions of the Act and does not excuse an employer from calculating and paying overtime in accordance with the number of hours worked in excess of the statutory overtime threshold of 44 hours - see Wen-Hal Limited v Hansen (August 22, 1979), ESC 660 (MacDowell).

Under this definition, an employee’s regular rate will be:

  1. Where an hourly wage rate is set, it is the regular rate.
  2. Where wages are not based on an hourly rate, regular rate will be the average hourly rate calculated by dividing the total wages earned in the week by the number of non-overtime hours worked. Overtime hour is defined in ESA Part I s. 1. This method of calculation applies to a person who, for example, is paid a fixed salary, or commission or on a piecework basis. For further information on the calculation of regular rate in the context of determining overtime pay, see ESA Part VIII, s. 22(1)
  3. If a regulation made under paragraph 10 of ESA Part XXVII, s. 141(1) applies to an employee, the calculation contained in the regulation will prevail over 1) and 2) above. Paragraph 10 allows the Lieutenant Governor in Council to make a regulation setting out a formula for the determination of an employee’s regular rate that would apply instead of the formula that applies under the definition of regular rate in ESA Part I, s. 1.

Regular wages

This definition was amended by the Fair Workplaces, Better Jobs Act, 2017 SO 2017, c 22, when “domestic or sexual violence leave pay”, “personal emergency leave pay” and “termination of assignment pay” were introduced into the Act.

This definition establishes that regular wages, which serves as the basis for the calculations of public holiday pay in ESA Part X, s. 24(1) and termination pay and severance pay entitlements in ESA Part XV, ss. 60(1), (2) and ss. 65(1),(5), (6), includes all wages except:

  • Overtime pay;
  • Public holiday pay;
  • Premium pay;
  • Vacation pay;
  • Domestic or sexual violence leave pay
  • Personal emergency leave pay;
  • Termination pay;
  • Severance pay;
  • Termination of assignment pay; and
  • Entitlements under an employment contract (which includes a collective agreement) that provide a greater right or benefit with respect to the standards of overtime pay, public holidays, vacation with pay, domestic or sexual violence leave, personal emergency leave, termination and severance of employment and termination of an assignment.

Note that premium pay is defined in ESA Part I, s. 1 to mean an employee’s entitlement for working on a public holiday as described in ESA Part X, s. 24(2). It does not mean, for example, a premium rate of pay of an extra 50 cents an hour that an employee earns under an employment contract for working the weekend shift. Such monies owing would be included in the definition of regular wages.

Regular work day

This  provision provides that where an employee usually works the same numbers of hours each day, that number of hours is the employee’s regular work day. An employee does not have to work the same number of hours every work day for there to be a regular work day, just so long as they regularly and ordinarily work that number of hours.

The term regular work day appears in ESA Part VI, s. 15(3) with respect to an exception to the requirement for employers to record the number of hours worked by each employee in each day and week, and in ESA Part VII, s. 17(1) with respect to the daily limits on hours of work. If an employee does not usually work the same number of hours each day, they will not have a regular work day for the purposes of s. 15(3) or s. 17(1).

Regular work week

For further information see the overtime hour definition in ESA Part I, s. 1.

The term regular work week appears in ESA Part VI, s. 15(3) with respect to an exception to the requirement for employers to record the number of hours worked by each employee in each day and each week, in ESA Part XI, s. 33(3) with respect to the calculation of the number of single vacation days to which an employee is entitled, and in ESA Part XI, s. 34(2) with respect to the calculation of the number of vacation days earned during a stub period. In addition, it appears in the provisions that specify what constitutes a week of lay-off for termination and severance purposes in ESA Part XV, ss. 56(3)-(3.6) and ss. 63(2)-(2.4), as well as the provisions for the calculation of termination pay and severance pay entitlements in ESA Part XV, ss. 60(1), (2) and ss. 65(1), (5), (6). In this regard, also see the discussion of the work week in this section.

In Stewart Warner Corporation of Canada Limited v Employees (April 25, 1983), ESC 1406 (Egan), Referee Egan distinguished work week from a regular work week as referred to in s. 57(13)(b)(i) (then s. 40(6)(b)(i) of the former Employment Standards Act, which is substantially the same as s. 60(1)(b) of the ESA 2000). In that case, the employer had temporarily cut the shifts from five per week to three per week just prior to terminating the employees.

In calculating termination pay owing to the employees, the employer had claimed that the regular work week consisted of three shifts. The referee disagreed, stating that the reduction in shifts was anticipated to be a temporary measure only and that the regular work week still consisted of five shifts in each work week. As a consequence, termination pay in lieu of notice had to be the pay the employee would have received had he been working five shifts per week.

Regulations

This definition states that regulations as referred to in the Act refers to regulations made under the ESA 2000.

The authority to make regulations generally originates from the Legislation Act, 2006, SO 2006, c 21, Sch F. Section 17 of the Legislation Act, 2006 states:

The authority to make regulations under the ESA 2000is found in ESA Part XXVII, s. 141.

In accordance with s. 22(2) of the Legislation Act, 2006, regulations come into force on the day on which the regulation is filed unless otherwise stated in the regulation or in the Act under which the regulation is made.

Section 25(1) of the Legislation Act, 2006 further provides that regulations must be published on the e-Laws website promptly after their filing and in The Ontario Gazette within one month of filing or in accordance with another timeline that may be specified a regulation made by the Attorney General. A regulation that is not published is not effective against a person who has not had actual notice of it.

Reservist

This definition was introduced by the Fairness for Military Families Act (Employment Standards and Health Insurance), 2007, SO 2007, c 16, in the creation of Reservist Leave.

A reservist is defined to mean a member of the reserve force of the Canadian Forces referred to in s. 15(3) of the federal National Defence Act, RSC 1985, c N-5, which states:

For further details, refer to ESA Part XIV, s. 50.2.

S

Standard vacation entitlement year

This definition was introduced by the Government Efficiency Act, 2002, effective November 26, 2002. The definition provides that standard vacation entitlement year is a recurring 12-month period that begins on a date that is the date of an employee’s first day of employment.

For further details, refer to ESA Part XI.

Statutory notice period

Statutory notice period is the period equal to the length of notice to which the employee is entitled under the Act. Where more notice is given than is required by the Act, the statutory notice period is the last part of the longer notice that is given. For example, if an employee was entitled under the Act to eight weeks' notice but was given 12 weeks' notice, it is the last eight weeks of the 12-week period, not the first eight weeks, that constitute the statutory notice period.

The definition becomes relevant for determining the timing of employees' statutory entitlements in situations where an employer has given a longer period of notice than it is required to give under the Act. For example, employees are to receive their full pay during the statutory notice period, even if no work is available. If an employee entitled to eight weeks' notice of termination was given 10 weeks' notice and was sent home in the ninth week due to lack of work, the employee would entitled to be paid during the ninth and tenth week, notwithstanding that they did not work, because the statutory notice period was the last eight weeks of the 10 weeks' notice.

Another example comes from ESA Part XV, s. 63(1)(e) and s. 63(3). Under those sections, an employee who receives notice of termination and then subsequently resigns is entitled to severance pay if they gives their employer at least two weeks' notice of the resignation and the notice of resignation takes effect during the statutory notice period, assuming that the other qualifying criteria for severance pay are met. If an employee was entitled under the Act to eight weeks' notice but was given 12 weeks' notice by the employer, the employee’s resignation must take effect some time during the last eight weeks of the 12-week notice period in order for the employee to be entitled to severance pay. If the employee’s resignation takes effect some time during the first four weeks of the 12-week notice period, the employee will not be entitled to severance pay.

Stub period

This definition was introduced by the Government Efficiency Act, 2002, effective November 26, 2002.

The definition sets out what a stub period, as referred to in ESA Part XI Vacation with Pay, means.

For details, refer to ESA Part XI.

T

Temporary help agency

A temporary help agency is defined as an employer (also see the definition of employer in s. 1 of the Act) that employs persons for the purposes of assigning them to perform work on a temporary basis for clients of the employer. In other words, a temporary help agency is defined by the fact that it employs assignment employees for the purposes of assigning them to perform work for its clients.

One question that has arisen is whether employers such as management consulting firms or security companies whose employees perform work for clients of the employer are operating a temporary help agency.

The definition of temporary help agency provides that the agency must employ persons for the purpose of assigning them to perform work on a temporary basis for clients. The client is defined in relation to a temporary help agency as an entity that enters into an arrangement with the agency under which the agency agrees to assign or attempt to assign one or more of its employees to perform work on a temporary basis for that entity.

Determinations as to whether a particular employer is a temporary help agency or not would of course depend on all the facts in any given situation.

As an example, although a security company’s employees may work on a client’s premises, it is possible that company is not operating as a temporary help agency as that term is defined in s. 1.

One consideration would be whether the company can be said to be hiring employees to provide the company’s services to clients rather than for the purposes of performing work for a client. A related consideration would be whether the contract or agreement with the client is to provide certain services for the client rather than an agreement to assign one or more of its assignment employees to perform work for the client. Such an arrangement may be indicated where the work done by the employees is under the control and direction of the company rather than the client. Again, a determination as to whether an employer is, or is not, a temporary help agency would depend on all of the facts.

Termination of assignment pay

This section, subject to certain exceptions, requires temporary help agencies to provide an assignment employee with one week’s notice or pay in lieu if an assignment that was estimated to last for three months or more is terminated before the end of its estimated term unless another assignment lasting at least one week is offered to the employee.

For further discussion, please refer to ESA Part XVIII.1, s. 74.10.1.

Tip or other gratuity

Voluntary payments made to employees

Payments voluntarily made to or left for an employee by a customer include but are not limited to: money left on a table or bar for a server; money given to a receptionist as a tip for a hair stylist; money left in a hotel room for cleaning staff, etc.

The test for determining whether a payment made voluntarily is a tip or other gratuity is: would a reasonable person be likely to infer that the customer intended or assumed that the payment would be kept by the employee or shared by the employee with other employees (i.e., as part of a tip pool)?

It is generally understood that the reasonable person standard is to be determined on an objective, rational and informed basis. Whether the circumstances are such that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be kept or shared by the employee(s) will depend on the facts of a matter.

The questions to be asked are: How would a reasonable person interpret the situation when the customer made or left the voluntary payment? Are the circumstances such that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be kept or shared by the employee(s)?

Voluntary payments made to employers

Payments voluntarily made to an employer by a customer include but are not limited to: a tip added by a customer on to a debit or credit card payment; cash given to an employer that the customer says is for the employee; money left in a tip jar, etc.

The test for determining whether a payment made voluntarily to an employer by a customer is a tip or other gratuity is: would a reasonable person be likely to infer that the customer intended or assumed that the payment would redistributed to an employee or employees (i.e., as part of a tip pool)?  Whether the circumstances are such that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee(s) will depend on the facts of a matter.

The questions to be asked are: How would a reasonable person interpret the situation when the customer made or left the voluntary payment? Are the circumstances such that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employee(s)?

Service charges, etc., imposed by employers

Service charges or similar charges imposed by an employer on a customer include but are not limited to: gratuity or service fees charged by caterers, banquet halls, reception halls and convention halls; automatic service charges imposed upon groups of certain sizes in restaurants, etc.

The test for determining whether a service charge or similar charge imposed by an employer on a customer is a tip or other gratuity is: would a reasonable person be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employees (i.e., as part of a tip pool)?  Whether the circumstances are such that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employee(s) will depend on the facts of a matter.

The questions to be asked are: How would a reasonable person interpret the situation when the customer made the payment? Are the circumstances such that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employee(s)?

For example, if a banquet hall service contract or catering bill explicitly specifies a certain amount as a gratuity and another amount as an administrative fee, a reasonable person would likely infer that the customer intended or assumed that only the amount specified as a gratuity would be redistributed to the employee(s). Conversely, a reasonable person would likely infer that the customer did not intend or assume that the administrative fee would be redistributed by the banquet hall or catering company to the employee(s).

The Ontario High Court in Shabinsky v Horwitz et al, 1971 CanLII 729 (ON SC) held that where an employer charged the hotel customer an additional 15 per cent for gratuities, it was understood by the customer, employee and employer that this charge amounted to a tip for the employees because the customers were deliberately given the impression they were paying into a fund for gratuities in lieu of individual tips and paid for them by that purpose.

Other payments as prescribed

This provides for the power to make regulations to include other payments in the definition of tip or other gratuity. At the time of publication, no such payments are prescribed.

What is not a tip or other gratuity

This provides for the power to make regulations to exclude certain payments from the definition of tip or other gratuity. At the time of publication, no such payments are prescribed.

This provides for the power to make regulations to exclude all or part of charges relating to the method of payment used from the definition of tip or other gratuity.

O Reg 125/16 prescribes that a portion of credit card processing fees are excluded from the definition of tip or other gratuity under ESA Part I, s. 1. A tip or other gratuity does not include the portion of a service charge or similar charge imposed by a credit card company on an employer for processing a credit card payment made to the employer by a customer. The portion of the charge that is excluded from the definition is determined by multiplying the total amount of the tip or other gratuity by the greater of:

  • The per cent charged by the credit card company for processing the payment; and
  • 1.5 per cent.

Trade union

This definition sets out the broad scope of the phrase trade union. The definition covers organizations representing employee interests, whether or not they are called a trade union, under one of the above statutes.

This definition is necessary because the ESA 2000 recognizes the agency status of trade unions in certain circumstances. For example, under ESA Part III, ss. 6 and 7, settlements and agreements or authorizations made by a trade union on an employee’s behalf are binding.

Labour Relations Act, 1995

Section 1(1) of the LRA 1995 provides:

Crown Employees Collective Bargaining Act, 1993

Although the Crown Employees Collective Bargaining Act, 1993, SO 1993, c 38 (CECBA) does not contain a definition of trade union, that term has the same meaning in CECBA as it does in the Labour Relations Act, 1995 as a result of the referential incorporation of the Labour Relations Act, 1995 (with some modifications) and its definitions.

Education Act

The Education Act, RSO 1990, c E.2 provides as follows:

Fire Protection and Prevention Act, 1997

Bargaining agent is not defined in the Fire Protection and Prevention Act, 1997, SO 1997, c 4 (FPPA), although ss. 46(1) and (2) of the FPPA provide as follows:

As per s. 41(1) of the FPPA, a firefighter, for the purposes of defining a bargaining unit under the FPPA, means a person regularly employed on a salaried basis in a fire department and assigned to fire protection services and includes technicians but does not include a volunteer firefighter. In addition, s. 41(2) of the FPPA states that managers are deemed not to be firefighters for the purposes of defining a bargaining unit.

Colleges Collective Bargaining Act, 2008

The Colleges Collective Bargaining Act, 2008, SO 2008, c 15 provides as follows:

Any prescribed acts

As of the time of writing, no other Acts have been prescribed.

U – Z

Vacation entitlement year

This definition was introduced by the Government Efficiency Act, 2002, effective November 26, 2002.

The definition provides that vacation entitlement year means an alternative vacation entitlement year or a standard vacation entitlement year. Both of these terms are defined in ESA Part I, s. 1.

For further details, refer to ESA Part XI.

Wages

This provision defines what are and what are not wages for the purposes of the ESA 2000. According to this definition:

Wages include:

Any monetary remuneration owed to an employee under a contract of employment

This would include regular wages, whether the employee is paid on an hourly or salaried basis, or through commissions or piece work payments. It would also include any other monetary compensation to which the employee is entitled under their contract.

Any monetary payment owed to an employee under the Act

This includes payments where work is not performed, such as vacation pay, public holiday pay, personal emergency leave pay, domestic or sexual violence leave pay, termination pay and severance pay.

Any allowances for room or board granted under the employment contract or prescribed in the Regulations

O Reg 285/01 prescribes maximum amounts at which room and board can be valued for purposes of determining whether an employer has paid at least the minimum wage to an employee; such amounts are considered to be wages under the definition. Note, however, that where the employee is, say, entitled to receive an allowance for room or board that exceeds the amount prescribed in the regulation, that higher amount is considered to be wages for purposes other than determining compliance with the minimum wage requirements. For example, if the employee is provided with an allowance of $75 a week for meals, only $53.55 could be counted towards the employer’s minimum wage obligation, but all $75 is considered to be wages, and could be taken into account, for example, in determining the employee’s termination pay entitlement in the event of termination without notice.

Note also that since s. 5(4) of O Reg 285/01, which sets out the maximum allowances for room and board, does so for the sole purpose of determining if the minimum wage requirements in the Act have been met, the maximum allowances do not apply to employees who are exempt from the minimum wage provisions in ESA Part IX. One example of such employees is superintendents, janitors and caretakers of a residential building who reside in the building. Therefore, where, pursuant to a contract of employment, an apartment superintendent occupies without charge an apartment at an agreed value of, for example, $400/month, an amount that, incidentally, exceeds the maximum allowances under O Reg 285/01, that amount will be considered to be part of their wages. Note that if the value had not been agreed upon, the true value, i.e., the rent the employer would have otherwise received for the premises, would be included in the calculation of the wages paid to the employee.

Any other money paid to employee on a non-discretionary basis
Bonuses:
Commissions:

Such as sales commissions based on the employee’s productivity - see Tim Wilkins Pontiac Buick Ltd. d.b.a. Lorne Brett Motors Ltd. v Ojamae et al (October 2, 1980), ESC 878 (Davis), a decision under the former Employment Standards Act. Note, however, that in Winfield Reas Estate Limited v Rajani (May 7, 1978), ESC 610 (Brent) where the employee, a real estate agent, received 100 per cent commission for the sale of her own house, this representing an additional 30 per cent compared to what she normally earned, the referee held that the making of this arrangement was discretionary on the part of the employer and was not related to hours, production or efficiency. He concluded that this arrangement, therefore, satisfies the double test in paragraph (b) of the definition under the former Employment Standards Act excluding the sum from wages. This part of the definition of wages under the former Employment Standards Act is substantially the same as paragraph (e) of the definition in the ESA 2000.

Profit-sharing:

Where profit-sharing is included in the contract of employment and does not depend on the discretion of the employer, any monetary remuneration earned under the profit-sharing plan will be considered to be wages. For example, see the profit-sharing bonus agreements in Tim Wilkins Pontiac Buick Ltd. d.b.a. Lorne Brett Motors Ltd. v Ojamae et al and Bayside Kenworth Limited v Havelin (April 11, 1983), ESC 1409 (Aggarwal), both decisions under the former Employment Standards Act.

Prizes for Contests in Workplace:

Such as a sales contest that is intended to serve as an incentive to employees to stimulate sales, productivity, etc.  The contest becomes part of the contract of employment and consequently any monetary remuneration earned pursuant to the contest is part of wages - see Square Court Investments Limited o/a Bay & Lada v Poplawski (April 5, 1983), ESC 1390 (Davis), a decision under the former Employment Standards Act.

Wages do not include:

Any non-monetary remuneration received by the employee

For example, neither stocks nor stock options (whether the stocks are subsequently sold or the stock options exercised) are considered to be wages because they are not monetary remuneration at the time they are given to the employee. It should be noted that dividends are also not considered to be wages. An employee, as part of their employment contract may be offered shares in the company and as a result of ownership of these shares, the employee may receive dividends but would do so in their capacity as a shareholder and not in their capacity as an employee.

Tips or other gratuities

Tips or other gratuities, whether they are: received by employees directly or indirectly from a customer of the employees' employer; service charges or similar charges imposed by an employer upon the employer’s customer; or a portion of a redistribution of tips, commonly known as a tip pool. For more information on tips or other gratuities, see ESA Part 1, s. 1.

Gifts and bonuses that are paid on a discretionary basis on the part of the employer and that are unrelated to hours of work, production and efficiency

For example, this would include Christmas bonuses, suggestion or patent awards, and profit-sharing plans where the amount to be paid is determined independent of hours, production or efficiency of employees.

Travelling allowances for travel time

This does not include remuneration for hours spent travelling where that is part of work time - see O Reg 285/01, s. 1.1 for examples of travel time that does and does not count as hours of work.

Expense allowances
Living allowances

For example, when the employer provides the employee with money to pay for, or reimburses the employee for, the expenses that they incurred for such things as food, gas, hotel room, laundry, etc.

Employer contributions to a benefit plan, and payments from a benefit plan to which an employee is entitled

This includes plans like Blue Cross, dental plans, sick pay plans, etc., whether they are provided by a third-party insurer or are part of an employer-funded plan.

Note that the termination and severance provisions in ESA Part XV, ss. 60(3) and 62(2) deem employer contributions to benefit plans to be wages in the circumstances described in those sections.

Other benefits paid by the employer, such as supplementary unemployment benefits, pension plans and union welfare fund
Strike pay
Workplace Safety and Insurance Board payments
Financial assistance and discounts given to employees
Payment of tuition fees

Work week

This definition clarifies the meaning of the term work week, which appears in various sections throughout the Act.

A work week is the period of seven consecutive days within which the employer, through custom or practice, normally schedules work. If the employer has not established such a period, work week will be from Sunday to Saturday.

Section 1(2)

Assignment to perform work includes training – s. 1(2)

Subsection 1(2) clarifies that “assigned to perform work” includes an assignment to receive training from a client of the agency for the purposes of performing work for the client.

For more detail, see the “assignment employee” section in the definition of “employee” in Part I, s. 1.

Section 1(3)

Agreements in writing - s. 1(3) and (3.1)

In the case of many employment standards established by the Act, the standard consists of an entitlement on the part of an employee or a prohibition applicable to an employer (the default standard), together with a provision that permits the employer and the employee to agree (in writing or in electronic form) that some other entitlement or protection will apply instead. For example, agreements can be made:

  • To pay an employee’s wages by cash or cheque at a place other than the workplace - s. 11(3);
  • To pay an employee’s wages by direct deposit into an institution that does not have an office or facility within a reasonable distance from where the employee usually works - s. 11(4);
  • To exceed the daily hours of work limits - s. 17(2);
  • To exceed the weekly hours of work limits - s. 17(3);
  • To forego the requirement for a period of at least eight hours free from work between shifts when the total time worked on successive shifts exceeds 13 hours - s. 18(3);
  • To break the required 30-minute meal break into two shorter periods that total 30 minutes - s. 20(2);
  •  To average hours of work for the purpose of determining overtime entitlements - s. 22(2);
  • To compensate an employee for overtime hours with paid time off rather than with pay - s. 22(7);
  • To delay the taking of paid time off in lieu of overtime pay up to 12 months after the work week in which it was earned - s. 22(7)(b);
  • By employees who are not required to work on a public holiday to work on a public holiday - ss. 27, 30;
  • To pay an employee premium pay plus public holiday pay for working on a public holiday rather than giving a substitute holiday - ss. 27(2)(b), 29(3), 30(2)(b);
  • To delay the taking of a substitute holiday until up to 12 months after the public holiday on which it was earned - ss. 27(3)(b), 28(3)(b), 29(2)(b), 30(3)(b);
  • To take vacation days earned in vacation entitlement year in periods of less than one week (s. 35) and to take the vacation days earned in a stub period in periods shorter than those set out in paragraphs 1, 2 and 3 of s. 35.1(2) - para. 4 of s. 35.1(2);
  • To pay an employee’s vacation pay as it accrues or at any other time agreed upon - ss. 36(3), 36(4);
  • That allow an employee, with the Director’s approval, to forego their vacation time - s. 41;
  • In certain circumstances, by employees on a leave to defer taking their vacation to later than when the leave expires - s. 51.1;
  • To allow an employee who stops providing care or support to a relative before the end of a week in which they took a family medical leave to return to work before the end of the week - s. 52.1
  • To allow a temporary lay-off that would otherwise be deemed a termination once it exceeds 13 weeks in a 20 consecutive week period, if the employer and an employee not represented by a union agree to a recall date within a specified time that will not result in the lay-off lasting 35 weeks or more in a 52 consecutive week period - s. 56(2)(b)(vi);
  • To agree to receive severance pay in instalments over up a period of up to three years - s. 66;
  • By retail employees to work on a Sunday or a public holiday, subject to their right to change their mind with proper notice - s. 73(3);
  • By retail employees who were hired on or after September 4, 2001, to agree at the time of hire that they will not, with some exceptions, be able to refuse to work on Sundays - O Reg 285/01, s. 10.

Section 1(3) provides that these agreements must be in writing. The written requirement is satisfied if the agreement is in electronic form, as per s. 1(3.1), unless otherwise stipulated. One example of a provision where it is otherwise stipulated is ESA Part VII, s. 20(2), which allows employers and employees to agree, whether or not in writing, that the required 30-minute meal break be broken into two shorter periods that total 30 minutes. See also ESA Part XIV, s. 52.1(1)(b) and ESA Part XVIII.1, s. 74.3) for further examples of where agreements are not required to be in writing.

It is the Program’s position that where the Act allows the parties to do something other than what the Act would otherwise require if they agree in writing, and the parties make the agreement but fail to put it in writing, then the agreement is ineffective and the Act’s usual rule would apply. In other words, where the Act requires agreements in writing, there is no mechanism for opting for the alternate standard in the absence of a written agreement and the default standard will therefore apply. For example, a verbal agreement to average overtime will not allow for averaging - even in the face of the parties' acknowledgement that there was a verbal agreement to average overtime.

Having agreements in writing serves several valuable purposes:

  • It provides tangible evidence of the intent of employers and employees to bind themselves to an agreement;
  • It details the precise nature of the agreement;
  • It helps the employer and employee be aware of the consequences of their entering into an agreement; and
  • It provides a permanent and unaltered record of the agreement.

Several issues can arise regarding the validity of agreements that can be made under the Act. These include:

  1. The timing of the agreement in relation to the event being agreed to;
  2. Whether signatures are required;
  3. The level of specificity of information that needs to be in the agreement;
  4. Informed consent;
  5. Coerced consent; or
  6. Electronic agreements.

These issues are dealt with generally below. Also see the discussion under each provision that provides for agreements for more specific information.

Timing of the agreement

Agreements are generally effective only with respect to events that take place after the agreement is made. To the extent that an agreement purports to have a retroactive effect, it will not be valid, even if the employee has agreed to make it retroactive.

For example, an employee has been working 50 hours a week since their date of hire on October 1, 2001, but there is no written agreement allowing these excess hours to be worked. On December 1, 2001, the employer and employee agree in writing that the employee will work 50 hours a week. They further agree in writing that the agreement to work excess hours applies retroactively to October 1, either by explicitly stating so in the agreement or by backdating the agreement to October 1. It is Program policy that the agreement applies only from the date it was actually entered into - in this case, December 1 - onward. The agreement will not have the effect of undoing the hours of work violations that occurred between October 1 and December 1, even though the employee has agreed that it would have this retroactive effect.

To allow agreements to have retroactive effect would compromise the intent of the Act. The basic premise of the Act is that the default standards exist unless and until employees and employers agree to suspend them. The provisions of the Act do not contemplate parties being able to retroactively nullify, through their agreements, violations of the Act that have already occurred; they merely allow employers and employees to agree upon a future state of affairs.

This policy against retroactivity is consistent with the approach taken by the Director of Employment Standards when giving averaging approvals or approving permits to work excess hours under the former Employment Standards Act. Not recognizing a retroactive application was upheld under the former Employment Standards Act where the referee in 750338 Ontario Inc. o/a Hillside Foods v Handley (March 20, 1990), ESC 2645 (Haefling) held:

[T]o put the matter another way, apart from the facts just outlined, the finding and conclusion I reach in this case is that no legal or binding effect can be given to a written authorization signed after the event, as occurred here, since the result would plainly serve to defeat the clear purpose and intention of the legislation.

In very limited circumstances, however, an agreement may be permitted to have a retroactive effect. For example, an employee is off sick. The employee is subsequently advised that the sick day will be unpaid. They want to take that day off as a paid vacation day, so, pursuant to ESA Part XI, s. 35, they make a written request to do so, and the employer agrees to allow this in writing. The Program’s view is that in this situation, the agreement may be permitted because the employee does not lose any entitlements as a result of recognizing a retroactive application of the agreement. The employee was entitled to a vacation day and received the vacation day.

This can be contrasted to a situation where the employee enters into an agreement to retroactively allow for overtime averaging. In this case, the employee has earned overtime prior to entering into the agreement. In giving the agreement retroactive effect, the employee loses an entitlement already earned under the Act.

Signatures

Signatures are usually the best evidence to establish that both parties intended to enter into the agreement. In the absence of signatures, the party seeking to enforce the agreement must provide other evidence of the parties' intent to enter into the agreement.

Where the employer has not signed the agreement, the employer’s intent to enter into it may be established by the fact it drafted the agreement, or by the fact that the agreement is drafted on company letterhead. Where the employee has not signed the agreement, their intent to enter into the agreement may be established through evidence such as oral confirmation to the Officer, or through other documents the employee signed in hardcopy or electronically or sent electronically. More detail on the enforceability of electronic signatures is below in the section on electronic agreements..

Specificity

The terms of any agreement must be sufficiently certain in order to be enforceable; agreements must clearly and explicitly set out what is being agreed upon. For example, parties drawing up overtime averaging agreements under ESA Part VIII, s. 22(2) should specify that the purpose of the averaging is to calculate the employee’s entitlement, if any, to overtime pay. See ESA Part VIII, s. 22  for more detailed information on the requirements for averaging agreements. If one of the parties drafted the agreement, and a particular term is ambiguous and the parties disagree about what the term means, the term will be construed against the parties who drafted the agreement - this is called the contra proferentem rule.

Similarly, parties entering into agreements to work hours in excess of those limits contained in ESA Part VII, s. 17 should state that the employee is agreeing to work in excess of eight hours a day or a longer established regular day and/or 48 hours a week, and it should state the specific number of hours up to which the employee is agreeing to work, up to a maximum of 60. This type of agreement should avoid using the word overtime, because overtime is not the same as excess hours. And because the general overtime threshold of 44 hours is different than the general hours of work limits of eight hours a day or a longer regular day established by the employer and 48 hours in a week, an employee could agree to work overtime, i.e., hours in excess of 44 in a week, without necessarily having agreed to work more than 48 hours in a week or more than eight hours in a day or a longer established regular day. See ESA Part VII, s. 17(3) for more detailed information on the requirements for agreements to work excess hours.

An agreement will not be invalid only because it used the wrong term to describe the employment standard, as long it is clear from the context of the agreement that both parties knew exactly what was being agreed to. For example, an agreement to delay the scheduling of a substitute holiday beyond the default three-month deadline might state that the employee agrees to delay for six months the taking of their extra vacation day they earned for working on Canada Day. While the incorrect term was used - vacation day rather than substitute day - it is clear what the parties intended and the agreement would meet the specificity requirement.

This approach to the issue of specificity is consistent with several court and arbitration cases decided under the former Employment Standards Act. For example, see:

  • McLeod v Egan, [1975] 1 SCR 517, 1974 CanLII 12 (SCC), where the Supreme Court of Canada held that a general management rights clause could not be relied upon as consent to override an employee’s statutory right to refuse to work beyond eight hours in a day or 48 hours in a week.
  • Re Walker Exhausts and United Steelworkers of America Local 2894, 1981 CanLII 1837 (ON SC), where the court ruled that in order for an employee’s consent to work excess hours to be enforceable, there must be a specific reference to the limits on working hours set out in the Employment Standards Act. The court held that a consent was sufficient if such consent or agreement relates specifically to the performance of work by employees beyond the normal statutory legal limits.
  • DDM Plastics Inc. v I.A.M. & A.W., Local 2792, 2000 CanLII 29501 (ON LA), where Arbitrator Bendel commented: It is my view that the public interest element in [the former] section 20(3) requires a clear and explicit waiver by employees of their right to be free from a work week of more than 48 hours. Accordingly, where an alleged waiver is ambiguous or equivocal, it seems to me that it does not meet the test required by the legislation, even if extrinsic evidence might justify the conclusion that the union had agreed that a 48-hour work week could be exceeded.
  • Ontario Hydro v Power Workers' Union, [1998] LVI 2958-1, 74 LAC (4th) 425, where Arbitrator Burkett determined: On our reading of McLeod v Egan and Re Walker Exhausts, the courts have ruled that the language relied upon as constituting consent or agreement must evidence a clear intent to relinquish the statutory right of affected employees to refuse work beyond the statutory maximum. This intent may be evidenced by reference to the statute or to the permit or to the specific hours beyond the statutory maximum that are compulsory. Language that simply makes overtime compulsory, where either the daily or weekly hours of work are less than the statutory maximum, is not sufficiently specific and, therefore, is equivocal with respect to whether the intent was to give up the statutory right to refuse work beyond the statutory maximum.

In essence, an agreement should be specific and clear enough for an independent, objective third party to know what was being agreed to simply by reading it.

Informed consent

In the absence of informed consent by one of the parties to the agreement, an agreement is invalid. Informed consent will not be established unless each party knows precisely the ramifications of entering into the agreement.

The best evidence that an employee provided their informed consent is where the agreement itself accurately sets out the consequences of the agreement. If the agreement does not provide that information, informed consent can be demonstrated through other means (e.g., the employee was provided with or obtained an ESA 2000 fact sheet or contacted the Ministry of Labour).

Some examples of where there may be an absence of informed consent include:

  • The employee cannot read, and the contents of the document were not read to the employee before they agreed to it;
  • The employee does not understand the language the agreement was drafted in, and the contents of the document were not read to the employee in a language they understood before they agreed to it;
  • Where the employer simply referenced that an employee was bound by an accompanying Employee Handbook without ensuring that the employee had read and understood the provisions contained in the Handbook - see for example Lukowski v Hatch Associates Ltd. (1996), 25 CCEL (2d) 17 (Ont Gen Div);
  • Where an employee did not read the agreement and was told they must sign the document as a requirement of the job - see for example O'Shaughnessy v Drake International Inc. (1986), 14 CCEL 192 (ON SC); and
  • Where the employer hides a stringent provision in the fine print of a standard form - see for example Tilden Rent-A-Car Co. v Clendenning, 1978 CanLII 1446 (ON CA).

Officers are not required in every case to undertake a review of whether informed consent was provided by each party to a purported agreement. Officers may assume that there is informed consent, but if something comes to their attention that would contradict this assumption then a review of the conduct of the parties may be undertaken.

Coerced consent

Agreements may be invalid if a party to the agreement has not voluntarily and freely consented to being bound by its provisions.

In Cardinal Transportation B.C. Inc. v Canadian Union of Public Employees, Local 561 (1996), 34 CLRBR (2d) 1 (BC LRB), the British Columbia Labour Relations Board defined coercion as follows:

In the labour relations context, coercion connotes any effort by an employer to invoke some form of force, threat, undue pressure or compulsion for the purpose of controlling or influencing an employee’s [decision].

The Ontario Labour Relations Board has also considered the meaning to be attributed to the term coercion in a case where the applicant sought to set aside a settlement made pursuant to ESA Part XXIII, s. 112. The Board cited with approval a decision of the Board in the labour relations context, noting with approval the discussion therein regarding duress, coercion and the requirement that agreements be entered into freely. See Watkins v The Public Services Health and Safety Association, 2015 CanLII 69408 (ON LRB). The discussion in this decision would also be applicable to s. 120 settlements.

There will always be some reason for a party to enter into an agreement. The issue is which reasons are unacceptable, such that they will render the agreement invalid.

Unacceptable reasons include where an employer:

  • Intimidates an employee;
  • Threatens to dismiss an employee; or
  • Imposes or threatens to impose any other penalty on an employee.

Note that these actions may also amount to a violation of ESA Part XVIII, s. 74 which prohibits reprisals.

For example, an agreement would not be effective if the reason the employee entered it is because the employer:

  • Threatened to fire them;
  • Threatened to reduce their hours or pay; or
  • Penalized the employee’s co-workers because they had refused to enter into the agreement, and the employee entered into the agreement to avoid being similarly penalized.

On the other hand, it is unlikely that the reason will be considered to be unacceptable where an employee agrees to an arrangement merely to please their employer, to avoid displeasing them, or because they wanted to earn extra money.

Electronic agreements

Section 1(3.1) sets out that electronic agreements can constitute an agreement in writing under the ESA 2000.

The Courts have recognized that electronic contracts may be binding on the parties that entered into them. See for example Rudder v Microsoft Corp., 1999 CanLII 14923 (ON SC) where the court ruled that an individual was bound to an Internet service providing contract by clicking the I agree button that appeared on the user’s computer monitor. However, the courts have also ruled that it is essential that electronic contracts retain their original form and that there are mechanisms provided to ensure their integrity (i.e., safeguards to ensure that the parties have actually entered into the agreement, such as passwords).

Consequently, electronic agreements can be valid agreements under the Act, assuming all of the conditions of a valid agreement are met, e.g., specificity, informed consent, etc. However, precautions must be taken to ensure the integrity of electronic agreements. In particular, officers must be able to verify that the employee whom the employer claims to have electronically agreed to the agreement did in fact agree.

There must be a positive act by the employee to demonstrate their agreement; simply not responding to an e-mail that says, for example, if you don’t respond, you will be considered to have agreed to . . . does not constitute an agreement.

Officers are not required in every case involving an electronic agreement to verify the integrity of the agreement. Officers may assume that the agreement is as it appears to be, but if something comes to their attention that would contradict this assumption then the officer has to decide whether what has been placed before them does in fact accurately represent what the parties agreed to, on the basis of the evidence.

The enforceability of a party’s electronic signature requires proof that the party actually affixed its electronic signature to the agreement, and also intended to be bound by the terms and conditions of the agreement. There are many ways to sign a document electronically.

  1. Typing the sender’s name at the end of an email message;
  2. Providing a scanned image of a handwritten signature that is attached to an electronic document;
  3. Providing a secret code, password, or PIN to identify the sender to the recipient;
  4. Providing a unique biometrics-based identifier, such as a fingerprint, voice print, or a retinal scan;
  5. Using a computer mouse to click on an “I agree” button;
  6. Creating a sound, such as the sound by pressing “9” on a telephone, to indicate acceptance; and
  7. Creating a “digital signature” through the use of public key cryptography.

In accordance with the general principles discussed earlier regarding the validity of agreements, items that parties may wish to consider including in their electronic agreements include:

  • The names of the parties;
  • The date the agreement was entered into;
  • The date the agreement will come into effect;
  • The date the agreement will end;
  • The default employment standard that the parties are agreeing to replace with another entitlement or protection, and what that other entitlement or protection is; and
  • Electronic signatures of each party to the agreement.

In addition:

  • Employees must have had a sufficient amount of time to consider the agreement before agreeing to enter into it. What is sufficient will vary depending on the circumstances and the type of agreement.
  • Both parties to the agreement must understand it to mean the same thing. Ideally, the agreement would be sufficiently specific so that an independent, objective third party would be able to determine what was being agreed to simply by reading the agreement.
  • Both parties must have given informed consent.
  • The agreement must have been freely and voluntarily entered into.
  • The agreement will generally only be effective from the date of the agreement onward; it will generally not have retroactive effect.

Different types of agreements may have specific requirements. Please refer to the appropriate section of the ESA 2000 for more information.

Revocability of agreements

Some of the provisions for agreements within the Act and regulations set out specific restrictions or limitations on the ability of the parties to revoke the agreement. For example, agreements to average hours of work for the purpose of determining overtime entitlements may not be revoked before the agreement expires unless both the employee and employer agree to revoke it as per ESA Part VIII, s. 22(6). Likewise, in general, where there is an agreement for an employee to work up to a specified number of hours in excess of the weekly 48 hour maximum, an employee is only able to revoke such an agreement after giving the employer two weeks' written notice and an employer is only able to revoke after giving the employee reasonable notice.

Where the Act does not impose any restrictions on revocability, employees are entitled to revoke their agreement to the alternate standard and revert back to the default standard, and doing so is a protected activity under ESA Part XVIII, s. 74. If an employer penalizes an employee because the employee withdrew their agreement, that will be a violation of s. 74. See Part XVIII for additional discussion on this point.

Section 1(4)

Exception - s. 1(4)

It provides that s. 1(3), which requires that agreements that employees and employers enter into under the Act be in writing, does not mean that employment contracts that are not collective agreements have to be in writing.