Canada Gazette, Part I, Volume 153, Number 23: Standards for Work-Integrated Learning Activities Regulations

June 8, 2019

Statutory authority
Canada Labour Code

Sponsoring department
Department of Employment and Social Development

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In December 2017, legislative amendments to Part III (labour standards) of the Canada Labour Code (the Code) were enacted to limit unpaid internships in the federally regulated private sector to only those that are part of an educational program. Supporting regulations are needed to clarify when an internship can be unpaid by establishing the process to be followed and to specify the applicable labour standards protections.

Background

Over the past few decades, there has been a rapid increase of internship arrangements in the job market, and interns are now found in all industries and occupations. Internships are workplace placements that offer opportunities to gain hands-on work experience. They differ from standard employment in that they are temporary in nature and include a learning component, ranging from observation to more formal learning-by-doing work.

In recent years, the Canada Labour Code was amended to clarify the status of interns in the workplace and to ensure that they receive appropriate protections.

In 2015, legislative changes to Part II of the Code extended to all interns the same occupational health and safety protections as to employees. All interns will also benefit from the improved framework for the prevention of harassment and violence, including sexual harassment and violence, when the legislation introduced under Bill C-65 [An Act to amend the Canada Labour Code (harassment and violence), the Parliamentary Employment and Staff Relations Act and the Budget Implementation Act, 2017, No. 1] comes into force (expected in 2020).

In December 2017, legislative changes to Part III of the Code were enacted to limit unpaid internships in the federally regulated private sector (Budget Implementation Act, 2017, No. 2 amended Economic Action Plan 2015, No. 1). The legislative changes to Part III will recognize interns in two ways:

These legislative changes to Part III require supporting regulations in order to come into force. The Standards for Work-Integrated Learning Activities Regulations (the proposed Regulations) will establish the following: (1) the process for determining that a student placement can be unpaid, (2) the labour standards protections for students in work-integrated learning, and (3) related administrative requirements.

Part III of the Code establishes employment conditions such as hours of work, payment of wages, overtime pay, general holidays, protected leaves and rights on termination of employment. Part III applies to the federally regulated private sector, including

The Labour Program is responsible for administering the Code and, through its inspectorate, ensuring compliance and enforcement of Part II and Part III.

Objectives

Description

Process for determining that a student placement can be unpaid

The proposed Regulations would prescribe that for a student placement to begin, the student would be required to provide the employer with documents issued by the educational institution that contain the following information:

Furthermore, the proposed Regulations would establish what educational institutions are covered by the legislative provisions. For post-secondary and vocational educational institutions, the proposed Regulations would incorporate by reference the Directory of Educational Institutions in Canada, which provides a list of recognized educational institutions in Canada. The Directory is maintained by the Canadian Information Centre for International Credentials, in close collaboration with competent authorities responsible for education in the provinces and territories.

Labour standards protections for students in work-integrated learning

The proposed Regulations list the labour standards protections under Part III that apply and specify how these provisions are to be adapted. The proposed labour standards protections include

The proposed Regulations would also include a few additional labour standards protections, which were recently introduced under the Budget Implementation Act, 2018, No. 2 (Bill C-86), including

The proposed Regulations also include protections against sexual harassment, until the related provisions under Part III are consolidated into a new framework for the prevention of harassment and violence under Part II [under Bill C-65, An Act to amend the Canada Labour Code (harassment and violence), the Parliamentary Employment and Staff Relations Act and the Budget Implementation Act, 2017, No. 1]. This will ensure that there is no gap in coverage for students in work-integrated learning.

Administrative requirements

The proposed Regulations would specify record-keeping requirements with respect to students in work-integrated learning. The employer would be required to keep, for at least three years after the placement, the documents issued by the educational institution as well as written records such as hours in the workplace, general holidays granted and days of any leave taken.

Regulatory development

Consultation

A series of consultation sessions was held in September 2018 with representatives from business and labour groups representing federally regulated employers and employees, student and intern associations, educational institutions and associations, and other organizations. The consultations were based on a policy intent paper circulated in August 2018. A total of 17 organizations participated and six written submissions were received. Labour Program officials responsible for the administration and enforcement of Part III of the Code (i.e. technical advisors and inspectors across the country) were also consulted.

The proposed Regulations were developed to balance the stakeholder views heard during consultations. The suggestions that fell outside the scope of the enabling legislation were not incorporated into the proposed Regulations. For instance, some participants stated that an employer should commit to specific learning objectives and student mentoring, and that a maximum duration for the placement should be prescribed in regulations. To address this feedback, the proposed Regulations were developed to provide that the educational institution must approve the activities to be performed by the student for a given employer.

Process for determining that a student placement can be unpaid

Participants had mixed reactions regarding the proposed process for determining that a student placement is a formal part of a program and that it can be unpaid. Labour organizations as well as student and intern associations proposed that the process should include a tripartite agreement between the educational institution, the employer and the student and that learning objectives should be set out in advance. However, educational institutions and associations warned against creating a process that would be overly prescriptive and could infringe into education jurisdiction. To balance these views, the proposed Regulations provide that the educational institution needs to approve that the activities to be performed by the student for a given employer will fulfill the requirements of the educational program.

Labour standards protections for students in work-integrated learning

The proposed set of labour standards protections included in the policy intent paper was generally well received.

Participants generally agreed that a firm limit of 40 hours per week should be set. A few participants suggested lowering that limit, while others called for flexibility to surpass the limit in certain circumstances. Participants generally supported that, if a student has an unpaid internship and paid employment with the same employer, that the combined hours of the internship and the work should not exceed 48 hours per week.

Given the expected short duration of student placements, the proposed Regulations would include only short-term protected leaves (for bereavement, medical leave, personal leave, leave for victims of family violence, and leave for traditional Aboriginal practices). Labour groups as well as student and intern associations proposed that other protected leaves (such as maternity/parental leave and compassionate care leave) should apply. These leaves are normally taken for a longer duration and it would not be practicable to require the employer to reinstate a student due to a protected leave. Moreover, educational institutions and associations also noted that extended absences from the work-integrated learning placement are managed on a case-by-case basis and that processes are in place to safeguard the interests of students.

Labour groups as well as student and intern associations expressed that early termination of a placement can cause hardship for a student in work-integrated learning (e.g. lost credits and tuition). However, it was not deemed feasible to protect students from early termination of their placements in any way similar to employees (e.g. mandatory notice period or pay in lieu of notice). Moreover, educational institutions and associations expressed that early terminations are dealt with on a case-by-case basis and that academic programs often use alternative assignments to make up for an incomplete placement.

It should be noted that new labour standards protections, introduced under the Budget Implementation Act, 2018, No. 2 (Bill C-86) in December 2018, were not part of the regulatory consultations held in September 2018. Prepublication of the draft Regulations in the Canada Gazette, Part I, will provide an opportunity for Canadians to provide feedback on the suitability of these new protections for students in work-integrated learning, which include unpaid breaks, a 96-hour schedule notice and rest period between shifts.

Administrative requirements

Several participants proposed tailoring record-keeping requirements for students in work-integrated learning. This suggestion was incorporated into the proposed Regulations.

Regarding the process for determining that a student placement can be unpaid, several participants proposed developing a template to facilitate the submission of the required information from the educational institution to the employer. This suggestion will be considered as part of the implementation process and the development of education and program guidance materials.

Additional feedback received

Labour groups as well as student and intern associations proposed developing information materials targeted to students and educational institutions, which in addition to labour standards protections could cover human rights and health and safety protections. Those participants also called for proactive compliance activities such as inspection blitzes. These suggestions will be considered as part of the development of operational policies and guidelines.

Lastly, in light of gender and equity considerations, labour organizations as well as student and intern associations stated that the federal government should exercise leadership and develop programs that offer financial support to facilitate access to paid student placements, in particular for disadvantaged students. In relation to this, the Budget 2019 announced the federal government’s commitment to invest $631.2 million over five years to support up to 20 000 new work-integrated learning placements per year for post-secondary students across Canada.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, a preliminary assessment concluded that the proposal has minimal implications on modern treaty holders.

Instrument choice

The statutory changes to Part III of the Code recently passed by Parliament are intended to provide parameters for the use of unpaid internships, as well as legally enforceable labour standards protections for student interns. As described above, these provisions require the adoption of regulations to become operational.

In several countries, labour standards legislation specifies if its application covers students in work-integrated learning. Across Canada, eight jurisdictions exempt students participating in an approved work placement from some or all labour standards protections. The proposed Regulations take a similar approach to limit the use of unpaid internships, but go one step further by establishing the process that needs to be followed and by tailoring the applicable labour standards protections. This approach is in line with the 2017 Report of the Expert Panel on Youth Employment in Canada, which recommended eliminating unpaid internships except for those that are part of an academic or community program.

Four countries (Argentina, Brazil, France and Romania) have adopted specific legislation to regulate internships, with clear rules regarding the duration, learning objectives and institutional arrangements that need to be in place between the parties involved. This approach establishes a comprehensive set of rules for internships, but it also creates regulatory and compliance burden.

Other countries, such as Japan, South Africa and the United Kingdom, rely on codes and voluntary charters. However, these soft tools are not enforceable by law. Recent research points to the fact that a more robust regulatory environment is needed to ensure the quality of student placements.

Regulatory analysis

According to the Federal Workplace Jurisdiction Survey, in 2015 there were 2 346 unpaid interns in the federally regulated private sector. This survey did not provide information about the number of unpaid students in work-integrated learning. The working hypothesis retained for the purpose of this impact assessment is that half of these unpaid interns are students. It is further assumed that the number of unpaid students in work-integrated learning with federally regulated employers will grow at the same pace as the anticipated Canadian labour force expansion for the 10-year period (2019–2028) considered in this analysis. Therefore, it is estimated that employers in the federally regulated private sector will host approximately 1 250 to 1 350 unpaid students in work-integrated learning annually for the next 10 years.

All employers in the federally regulated private sector, around 19 000, would be potentially affected by this regulatory proposal. However, the actual number of such employers hosting unpaid students in work-integrated learning is expected to remain under 200 for the 10-year period considered in this analysis.

Anticipated costs

The proposed Regulations are expected to entail limited compliance and administrative costs for employers in the federally regulated private sector. Small administrative costs would also be carried by educational institutions. A substantial portion of these costs would be related to the record-keeping requirement for determining that a student placement is a formal part of an educational program. All costs outlined in this impact assessment are rounded to the nearest thousand and expressed as a present value, in 2012 dollars, discounted at 7% over the 10-year period (2019–2028), unless otherwise specified. The total anticipated cost is $418,018 and can be broken down as follows:

Since employers in the federally regulated private sector are already required to keep records about their employees, the record-keeping requirements for students in work-integrated learning would not impose an additional administrative burden, with the exception of the filing of the documents issued by the educational institution.

Anticipated benefits

The proposed Regulations are expected to foster a work environment where employers, students and educational institutions can leverage work-integrated learning opportunities more confidently. The proposed Regulations are therefore anticipated to promote a culture of trust and accountability conducive to stable and productive workplaces. The proposed Regulations would

Cost-benefit statement
 

Base Year

Other Relevant Years

Final Year

Total
(Present Value)

Annualized Average

A. Quantified impacts in $

Benefits

All employers

2019

 

2028

N/A

N/A

Costs

Educational institutions

2019

 

2028

$37,882

$5,394

Large and medium businesses

2019

 

2028

$322,319

$45,891

Small businesses

2019

 

2028

$57,817

$8,232

Net benefits

$(418,018)

$(59,517)

B. Quantified impacts in non-$

Positive impacts

By stakeholder

     

N/A

N/A

Negative impacts

By stakeholder

     

N/A

N/A

Note: In 2012 thousands of constant dollars, discounted at 7%.

Small business lens

It is expected that small employers in the federally regulated private sector (employers with fewer than 100 employees) would not be disproportionately affected by the proposed regulatory changes and that they would not require special consideration in implementing this regulatory proposal.

All employers in the federally regulated private sector would carry a limited initial compliance cost and a sustained incremental administrative cost. The discounted incremental cost for all federally regulated small businesses anticipated from this regulatory proposal would be approximately $66,735, averaging $525 per small business.

Small Business Lens Summary

Number of small businesses impacted

127 (average for the period)

Number of years

10 (2019–2028)

Base year for costing

2012

Compliance costs

Annualized Value

Present Value

Human resources personnel training on the proposed Regulations and their incidence on students in
work-integrated learning

$4,039

$28,369

TOTAL

$4,039

$28,369

Administrative costs

Annualized Value

Present Value

Issuance, verification and filing of the documents on the
work-integrated learning requirements

$5,463

$38,366

TOTAL

$5,463

$38,366

TOTAL COST (all impacted small businesses)

$9,502

$66,735

Cost per impacted small business

$75

$525

One-for-one rule

The cost of the administrative burden associated with the proposed Regulations would be related to the issuance, verification and filing of the documents on the work-integrated learning requirements. The estimated administrative burden costs were derived based on the following assumptions: the issuance of the documents will typically require 10 minutes of administrative work, verification of this form will normally take 15 minutes and its filing will be completed in 5 minutes on average.

The annualized incremental costs of the regulatory burden that is anticipated from this regulatory initiative have been estimated through the Treasury Board Secretariat of Canada Regulatory Cost Calculator to be $15,440 in 2012 dollars. This incremental cost will be added to Element A of the one-for-one rule Labour Program regulatory administrative burden rolling summary (costs).

As this regulatory proposal entails a new standalone regulation pursuant to Part III of the Code, it would add a new title to the regulatory portfolio of Employment and Social Development Canada (ESDC). Consequently, Element B of the one-for-one rule ESDC administrative burden regulatory stock would increase by one unit.

Regulatory cooperation and alignment

The regulatory proposal is not developed as part of a formal regulatory cooperation forum.

The proposed Regulations are part of domestic and international efforts to promote decent work for young people. In particular, they are aligned with recommendations from recent research commissioned by the International Labour Office regarding the regulation of internships (A. Stewart et al., The Regulation of Internships: A Comparative Study, Employment Working Paper No. 240, 2018).

Strategic environmental assessment

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

Gender-based analysis plus

Positive gender-based analysis plus (GBA+) impacts are anticipated since the proposed Regulations would extend labour standards protections to students in work-integrated learning, where women, new immigrants, visible minorities and persons from an economically disadvantaged background are likely overrepresented.

There is some evidence that women tend to be involved more often than men in unpaid internships. According to a large American online survey completed in 2009 by 27 335 undergraduate students at 234 colleges and universities throughout the United States (Intern Bridge, 2009), women were significantly more likely to be engaged in an unpaid internship (77%). The survey also indicates that students from low-income families have a much higher level of participation in unpaid internships than students from high-income families. An exception exists, however, in the fields of finance as well as art and entertainment, where students from high-income families are willing to accept unpaid placements in so-called “coveted careers.”

In fact, recent research suggests that access to student placements replicates many of the social inequalities found in the broader labour market, where women and students from low-income families struggle to access paid and quality placements. By contrast, students from high-income families favour internships in for-profit sectors and enjoy connections and status that help them land paid internships.

The proposed Regulations would create an accountability framework in which the employer must ensure that a recognized educational institution approves that the activities to be performed by the student satisfy educational requirements. However, recent comparative research commissioned by the International Labour Office suggests that the involvement of an educational institution is not sufficient to guarantee the educational quality of a student placement (A. Stewart et al., 2018). Additionally, educational institutions alone cannot ensure that disadvantaged groups are given a fair share of paid and unpaid work-integrated learning opportunities.

Fostering work-integrated learning placements with a consistently high educational value, where disadvantaged populations are adequately represented, will require continued collaboration, communication and knowledge sharing among governments, employers, student and intern associations, as well as educational institutions and associations. The proposed Regulations are one step in that direction and will require that implementation be done in collaboration with the education world.

Implementation, compliance and enforcement, and service standards

Implementation of the proposed Regulations will require the development of new guidance materials to inform employers, students in work-integrated learning, and educational institutions and associations. The Labour Program is currently preparing policy guidelines for employers as well as various information materials for dissemination to educational institutions, employers and students in work-integrated learning.

Currently, compliance with Part III of the Code is achieved using a variety of approaches, including education and counselling, investigation of complaints and inspection of workplaces. In addition, Budget Implementation Act, 2017, No. 1 introduced a number of new provisions in order to modernize compliance and enforcement measures under the Code, and the Labour Program is currently working on developing supporting regulations. Once in force, all new compliance and enforcement measures under the Code would apply to the labour standards protections that interns would receive.

Powers of inspectors responsible for the administration of Part III of the Code would allow them to investigate labour standards complaints and engage in inspections to verify compliance with the proposed Regulations. Inspectors would be trained on how to apply and enforce labour standards protections in relation to students in work-integrated learning.

Contact

Danijela Hong
Acting Director
Labour Standards and Wage Earner Protection Program
Workplace Directorate
Labour Program
Employment and Social Development Canada
Email : NA-LABOUR-STANDARDS-NORMES-DU-TRAVAIL-CONSULTATIONS-INTERNS-GD@labour-travail.gc.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to paragraphs 264(1)(a.1), (a.3), (a.4) and (i.1) footnote a and subsection 264(2) footnote b of the Canada Labour Code footnote c, proposes to make the annexed Standards for Work-Integrated Learning Activities Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Judith Buchanan, Director, Labour Standards and Wage Earner Protection Program, Workplace Directorate, Labour Program (email: NA-LABOUR-STANDARDS-NORMES-DU-TRAVAIL-CONSULTATIONS-INTERNS-GD@labour-travail.gc.ca).

Ottawa, May 30, 2019

Julie Adair
Assistant Clerk of the Privy Council

Standards for Work-Integrated Learning Activities Regulations

General Provisions

Educational institutions

1 For the purpose of subsection 167(1.2) of the Canada Labour Code, the educational institutions are

Provision of documents to employer

2 Before performing activities referred to in subsection 167(1.2) of the Canada Labour Code, a person must provide the employer with documents issued by an educational institution or vocational school referred to in section 1 that contain the following information:

Record keeping

3 (1) An employer of a person who performs activities referred to in subsection 167(1.2) of the Canada Labour Code must keep the following records:

Period for keeping records

(2) An employer must keep the records referred to in subsection (1) for a period of 36 months after the day on which the activities end.

Application and Adaptations

Part III of Canada Labour Code

4 Subject to section 6, the following provisions of Part III of the Canada Labour Code apply to the persons referred to in subsection 167(1.2) of the Code:

Canada Labour Standards Regulations

5 Subject to section 6, the following provisions of the Canada Labour Standards Regulations apply to the persons referred to in subsection 167(1.2) of the Canada Labour Code:

Adaptations

6 (1) For the application of the provisions of Part III of the Canada Labour Code set out in section 4 and subsection (2) and the provisions of the Canada Labour Standards Regulations set out in section 5 and subsection (3)

Canada Labour Code

(2) The following provisions of the Canada Labour Code set out in section 4 are adapted as follows for the purpose of applying them to the persons referred to in subsection 167(1.2) of the Code:

Canada Labour Standards Regulations

(3) Subsection 34(1) of the Canada Labour Standards Regulations set out in section 5 is adapted as follows for the purpose of its application to the persons referred to in subsection 167(1.2) of the Canada Labour Code:

Coming into Force

Economic Action Plan 2015, No. 1, S.C. 2015, c. 36

7 These Regulations come into force on the day on which section 89 of the Economic Action Plan 2015 Act, No. 1 comes into force, but if these Regulations are registered after that day, they come into force on the day of their registration.