Regulations Amending Certain Regulations Made Under the Canada Labour Code (Medical Leave with Pay): SOR/2022-228

Canada Gazette, Part II, Volume 156, Number 24

Registration
SOR/2022-228 November 4, 2022

CANADA LABOUR CODE

P.C. 2022-1193 November 4, 2022

Whereas the Governor in Council is of the opinion that employees or classes of employees will, despite the modification, earn periods of medical leave of absence with pay that are substantially equivalent to the period provided for in subsection 239(1.21)footnote a of the Canada Labour Code footnote b;

Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Labour, makes the annexed Regulations Amending Certain Regulations Made Under the Canada Labour Code (Medical Leave with Pay) under paragraphs 203(2)(b)footnote c, 239(13)(a)footnote d and (b)footnote d and 264(1)(a)footnote e and (i.1)footnote e and subparagraph 270(1)(a)(i)footnote f of the Canada Labour Code footnote b.

Regulations Amending Certain Regulations Made Under the Canada Labour Code (Medical Leave with Pay)

Canada Labour Standards Regulations

1 (1) Subsection 6(7) of the Canada Labour Standards Regulations footnote 1 is amended by striking out “or” at the end of paragraph (f) and by adding the following after paragraph (f):

(2) Subsection 6(8) of the Regulations is amended by striking out “or” at the end of paragraph (c), by adding “or” at the end of paragraph (d) and by adding the following after paragraph (d):

2 The heading before section 17 of the Regulations is replaced by the following:

Regular Rate of Wages for Purposes of General Holidays, Personal Leave, Leave for Victims of Family Violence, Bereavement Leave and Medical Leave

3 The portion of section 17 of the Regulations before paragraph (a) is replaced by the following:

17 For the purposes of subsections 206.6(2), 206.7(2.1), 210(2) and 239(1.3) of the Act, the regular rate of wages of an employee whose hours of work differ from day to day or who is paid on a basis other than time shall be

4 Subsection 19(6) of the Regulations is replaced by the following:

(6) For the purposes of subsections 177.1(1), 206.6(2), 206.7(2.1), 206.8(1), 210(2), 230(1), 235(1) and 239(1.2), paragraph 240(1)(a) and subsection 247.5(1) of the Act, if an employee is engaged in multi-employer employment, that employee is deemed to be continuously employed.

5 (1) Paragraph 24(2)(e) of the Regulations is replaced by the following:

(2) Paragraph 24(2)(l) of the Regulations is replaced by the following:

(3) Subsection 24(2) of the Regulations is amended by adding the following after paragraph (n.6):

6 The Regulations are amended by adding the following after section 33:

Medical Leave with Pay

Modification — subsection 239(1.21) of the Act

33.1 (1) With respect to employers that base the calculation of the annual vacation of their employees on a year other than a calendar year, subsection 239(1.21) of the Act is modified as follows:

Maximum of 10 days

(1.21) Subject to the regulations, an employee is entitled to earn up to 10 days of medical leave of absence with pay in a calendar year or in a year used by the employer to calculate the annual vacation of their employees.

Modification — subsection 239(1.4) of the Act

(2) With respect to employers that base the calculation of the annual vacation of their employees on a year other than a calendar year and that use a year other than a calendar year to calculate the days of medical leave of absence with pay of their employees, subsection 239(1.4) of the Act is modified as follows:

Annual carry forward

(1.4) Subject to the regulations, each day of medical leave of absence with pay that an employee does not take in the year used by the employer to calculate the annual vacation of their employees is to be carried forward to the first day of the following year and decreases, by one, the maximum number of days that can be earned in that year under subsection (1.21), as modified by subsection 33.1(1) of the Canada Labour Standards Regulations.

Standards for Work-Integrated Learning Activities Regulations

7 Paragraph 5(g) of the Standards for Work-Integrated Learning Activities Regulations footnote 2 is replaced by the following:

Administrative Monetary Penalties (Canada Labour Code) Regulations

8 Part 1 of Schedule 2 to the Administrative Monetary Penalties (Canada Labour Code) Regulations footnote 3 is amended by adding the following after item 97:
Item

Column 1

Provision

Column 2

Violation Type
97.1 239(1.2)(a) C
97.2 239(1.2)(b) C
97.3 239(1.21) C
97.4 239(1.3) B
97.5 239(1.4) C
9 Division 1 of Part 2 of Schedule 2 to the Regulations is amended by adding the following after item 56:
Item

Column 1

Provision

Column 2

Violation Type
56.1 24(2)(n.7)(i) A
56.2 24(2)(n.7)(ii) A
56.3 24(2)(n.7)(iii) A
56.4 24(2)(n.7)(iv) A
56.5 24(2)(n.7)(v) A
56.6 24(2)(n.8)(i) A
56.7 24(2)(n.8)(ii) A

Coming into Force

10 These Regulations come into force on the day on which section 7 of the Act to Amend the Criminal Code and the Canada Labour Code, chapter 27 of the Statutes of Canada 2021, comes into force, but if these Regulations are registered after that day, they come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Once the provisions of Bill C-3, An Act to amend the Criminal Code and the Canada Labour Code (the Act), respecting paid medical leave are in force, the Canada Labour Code (the Code) will be amended to provide 10 days of medical leave with pay for all federally regulated employees who are subject to Part III (Standard Hours, Wages, Vacations and Holidays) of the Code. Consequential regulatory amendments are required to support the implementation of the paid medical leave provisions and to ensure that they can be enforced.

Background

Application of the provisions

Part III of the Code establishes basic labour standards (e.g. payment of wages, protected leaves) for persons employed in federal Crown corporations and federally regulated private-sector industries, such as

Part III of the Code does not apply to the federal public service. All other workplaces, which make up over 90% of the Canadian workforce, are under provincial or territorial labour jurisdiction.

Protected leaves under the Code

Part III of the Code establishes paid leaves for employees, including annual vacation, general holiday, bereavement, and personal leave. The Code also provides for certain unpaid leaves, including unpaid medical leave in the event an employee must take time off work to deal with an injury or illness, for organ or tissue donation, or to attend a medical appointment.

The Canada Labour Standards Regulations (CLSR) clarify the calculation of wages owed for a paid leave to employees who work irregular hours or who are paid on a basis other than time and the determination of eligibility for employees engaged in multi-employer employment. Under section 24 of the CLSR, employers must keep records related to leaves, which allow inspectors to verify compliance with requirements under the Code. These record-keeping requirements vary depending on the type of leave, but typically require employers, at a minimum, to record the periods of each leave taken.

For unpaid medical leave, employers are also required to keep records of any request for a medical certificate, and any medical certificate provided by an employee in response to a request. All records required under the CLSR must be kept by employers for at least three years following the period of leave. Under the Code, an employer may request a medical certificate for periods of unpaid medical leave of three days or longer.

The Standards for Work-Integrated Learning Activities Regulations (SWILAR) govern the application of labour standards to persons who perform activities to fulfill the requirements of a secondary, post-secondary or vocational school program offered by an educational institution (student interns). The SWILAR set out the labour standards that apply to student interns.

Section 189 of the Code provides protections for employees whose employment is transferred as the result of the lease or transfer of their employer’s business or due to a contract being awarded through a retendering process. Under this section, employment with the former employer is considered continuous with employment with the subsequent employer.

New amendments to the Code

The Act received royal assent on December 17, 2021, and was amended through the Budget Implementation Act, 2022, No. 1. Once sections 6 and 7 of the Act are in force, the Act will amend Division XIII (Medical Leave) of Part III of the Code by adding the right to paid medical leave and apply section 189 to the Division, so that leave entitlements are protected during a contract retendering or a lease or transfer of a business. Sections 6 and 7 of the Act will come into force on December 1, 2022.

The new paid medical leave provisions will provide employees with 3 days of medical leave with pay after 30 days of continuous employment. Following this period of 30 days, employees will earn one further day at the start of each month after completing one month of continuous employment, up to a maximum of 10 days per calendar year. Any days of medical leave with pay that an employee does not take in a calendar year will carry forward to the next calendar year and each day carried over reduces the number of days that can be earned in that next year by one.

Because the legislative provisions will come into force on December 1, 2022, this means that employees entitled to paid medical leave will earn their first three days of leave as of December 31, 2022. Those three days (if unused) will carry over into 2023, and each employee will earn a further day of paid medical leave on February 1, 2023, and on the first day of each subsequent month, up to a maximum of 10 days of paid medical leave per year.

It will be possible for an employer to require that an employee take paid medical leave in periods of not less than one day. An employer may also require, through a written request made within 15 days after the employee’s return to work, that the employee provide a medical certificate with respect to any period of paid or unpaid medical leave of at least 5 consecutive days.

Administrative Monetary Penalties

On January 1, 2021, the new Part IV (Administrative Monetary Penalties) of the Code was brought into force to promote compliance with requirements under Part II (Occupational Health and Safety) and Part III of the Code. The Administrative Monetary Penalties (Canada Labour Code) Regulations (the AMPs Regulations) designate and classify violations of provisions under the Code and its regulations, making them subject to an administrative monetary penalty (AMP) in cases of non-compliance. Only designated violations can be subject to an AMP.

Designated labour standards violations are listed and classified under Schedule 2 of the AMPs Regulations. When amendments are made to Part III of the Code and its associated regulations, Schedule 2 of the AMPs Regulations must also be amended.

The AMPs Regulations specify the method used to determine the amount of an AMP in each situation when issuing the notice of violation. The baseline penalty amount applicable to a violation varies depending on the type of person believed to have committed a violation and the classification of the violation. For violations under Part III of the Code, each designated violation is classified as either type A, B, C, or D, in order of increasing severity, according to the level of risk and/or the impact and significance of the violation as outlined in Table 1.

For more information on AMPs, please consult the Labour Program’s Interpretations, Policies and Guidelines (IPG) document on AMPs.

Table 1: Classification method for violations under Part III of the Code
Type Part III
A Related to administrative provisions.
B Related to the calculation and payment of wages.
C Related to leave or other requirements, which could have an impact on financial security, or health and safety, of an individual or group of individuals.
D Related to the employment and protection of employees who are minors.

Objective

The objective of the Regulations Amending Certain Regulations Made Under the Canada Labour Code (Medical Leave with Pay) [the Regulations] is to support the implementation of the paid medical leave legislative provisions by clarifying the application of the provisions to certain classes of employees, making technical amendments that align sections of existing regulations with the new provisions, and ensuring that the AMPs regime can be used to promote compliance and be used in the enforcement of the provisions.

Description

The Regulations will ensure that employees in the longshoring sector who are engaged in multi-employer employment are considered to be continuously employed for the purposes of determining eligibility for paid medical leave. The Regulations also define the regular rate of wages to be used in calculating paid medical leave for certain employees, introduce record-keeping requirements, provide that employers who use a year other than a calendar year to calculate annual vacations may use that same year to calculate paid medical leave entitlements, and make other minor changes of a technical nature to ensure alignment with existing provisions in the Code and in regulations made under the Code.

The Regulations include amendments to the CLSR, the SWILAR, and the AMPs Regulations. The Regulations reflect changes as a result of comments received during prepublication and now provide a choice for some employers regarding how to calculate the paid medical leave provisions. The costing section has also been updated to take feedback from the longshoring sector into account regarding the number of employees who will receive access to paid medical leave as a result of the Regulations.

Ensure that employees in the longshoring sector who are engaged in multi-employer employment are eligible for paid medical leave

The Regulations will clarify that employees in the longshoring sector who are engaged in multi-employer employment (e.g. casual daily dispatch workers on the West Coast, casual workers on the East Coast) are considered to be engaged in continuous work for the purposes of eligibility for paid medical leave. Longshoring employees working for single employers are covered by the Code and are not impacted by the regulatory provisions that extend eligibility to employees engaged in multi-employer employment.

Definition of regular rate of wages

The Regulations will apply the definition in section 17 of the CLSR for the “regular rate of wages” to paid medical leave. This definition currently applies to calculations for other types of paid leave under the Code, such as personal leave. Under the Regulations, the regular rate of wages for an employee whose hours of work differ from day to day or who is paid on a basis other than time (e.g. commission) will be

New record-keeping provisions

The Regulations will require all employers to keep the following records related to each period of medical leave with pay:

Employers who use a year other than a calendar year

The Regulations will modify the paid medical leave provisions in the Code to allow an employer who uses a year other than a calendar year to calculate the entitlement to annual vacation of their employees to use the year used to calculate annual vacation for the purposes of the paid medical leave provisions.

Minor technical changes

The Regulations will also

Designation of violations

The Regulations will classify violations of the paid medical leave provisions for the purposes of the AMPs regime. New Code provisions that will come into force on December 1, 2022, will be designated and classified, as will the new regulatory record-keeping provisions introduced in the Regulations.

Designation and classification of new Code provisions

The following new Code provisions will be designated in Schedule 2 of the AMPs Regulations. Failures to comply with these provisions will be classified as type C violations, given that they address employee leave entitlements:

The following new Code provision set out below will be designated in the AMPs Regulations. Failures to comply with this provision will be classified as type B violations, given that it addresses the calculation and payment of wages:

Designation and classification of new regulatory provisions

Failures to comply with the new record-keeping regulatory provisions will be classified as type A violations, given that these provisions are administrative in nature:

Regulatory development

Consultation

Consultation — March to April 2022

In developing the proposed Regulations, the Labour Program of the Department of Employment and Social Development consulted with employer and employee representatives, union representatives, national Indigenous organizations, and industry experts. These stakeholders were invited to participate in two general consultation sessions and four additional industry- or employer-specific meetings — two with the longshoring sector, one with the Canadian Trucking Alliance, and one with the Canadian Federation for Independent Business — between March and April 2022. A discussion paper that outlined the regulatory proposals also circulated on March 2, 2022, for a four-week comment period. The consultation sessions were held with a total of 36 employer groups and 13 labour and community organizations in attendance. Written submissions were received from 13 stakeholder groups.

Consultations were also conducted with the Labour Program’s inspectorate to understand how the proposed Regulations may be enforced and to identify any potential issues with compliance before the proposed Regulations were prepublished. No concerns were raised about the proposed Regulations.

Feedback from the consultations was positive overall. Employer and employee representatives were generally supportive of the regulatory proposals presented as part of the consultations and indicated during the sessions and through written submissions that the regulatory proposals would add clarity to how paid medical leave would be applied given the unique circumstances of their industries and the working conditions of their employees.

Employers raised concerns regarding the potential for leave stacking. For example, an employee being entitled to both paid medical leave under the Code and an existing medical leave plan or benefit offered by their employer through a collective agreement or employment contract. Other feedback included comments on the difficulties of implementing paid medical leave without finalized regulations, and the time needed to make system changes to accommodate the new leaves and record-keeping requirements. Some employers raised concerns regarding how the regulatory proposals would apply to hours of work averaging and asked if employers could continue to use a year other than a calendar year, as used to calculate annual vacation, for the purposes of paid medical leave. Some employers were also concerned that employees who worked on a casual or “elect-to-work” basis would also be entitled to the same amount of paid medical leave, given the limited scope of their employment or their control over their hours worked.

Employee representatives were concerned about the time frame for implementing the provisions, with emphasis on implementing paid medical leave as quickly as possible before the next wave of COVID-19 or appearance of a new variant. They also indicated the need for the provisions to apply universally to all employees in federally regulated industries. The Labour Program may develop IPG documents to provide additional guidance on the application of the legislative provisions to employees who work irregular hours or work under an “elect-to-work” model. The Regulations were developed based on stakeholder feedback from the consultations (both prior to and as a result of prepublication). Hours of work averaging and a modification to allow an employer to use a year other than a calendar year were both addressed and the latter has been changed in response to further stakeholder feedback as described below. The coming into force of the Regulations was also set to coincide with the coming into force of the legislation, or as shortly after as possible, in order to ensure that stakeholders had a consistent statutory regime as soon as the legislation came into force.

This initiative reflects a timely response to the urgency that was highlighted by stakeholders. The Regulations will help to ensure that all employees in the federal jurisdiction are entitled to paid medical leave by ensuring that employees in the longshoring sector who are engaged in multi-employer employment can meet continuous length-of-service requirements. Employer concerns regarding coexisting of benefits, and the entitlement to leave for casual employees or employees who worked few hours were not addressed in the Regulations, as these areas fell outside the intended scope. These issues have been further analyzed and additional rationale is provided below in response to the prepublication comment period submissions received.

Prepublication in Part I of the Canada Gazette (CGI) — July 2022

On July 16, 2022, the proposed Regulations were prepublished in CGI followed by a 30-day comment period to allow interested persons and stakeholders to submit comments. The Labour Program received a total of 30 submissions during the comment period, including 11 submissions from employers and employer representative groups, 7 submissions from unions and employee representative groups, and 12 submissions from individuals. Key comments are discussed below: the Regulations have been amended to give employers the flexibility to use a calendar year or the year they use to calculate annual vacation entitlements, rather than requiring them to use the same year as used for annual vacation.

Coming into force

Employers and their representatives expressed concern that the December 1, 2022, coming-into-force date did not provide enough time for employers to properly implement the new paid medical leave provisions. A number of employer groups requested that the government delay the coming into force of the legislative and regulatory provisions, citing the ongoing impacts of the COVID-19 pandemic. One employer requested that the implementation be delayed by one year, to December 2023, and to also implement a phased approach that would provide 5 days in the first year and the full 10 days could be implemented in the second year.

Employees and their representatives opposed any further delays to the implementation of the legislation and the Regulations and some requested that an order in council be used to bring the provisions into force sooner than December 1, 2022. Given the context of the COVID-19 pandemic, they argued it was imperative that employees receive adequate paid medical leave.

The coming into force of the Regulations is set as the day on which the legislative provisions come into force, or the day that the Regulations are registered if the Regulations are registered after the legislation comes into force. At this time, there is no intent to use an order in council to bring the legislation into force early, as this would give employers less time to adjust their information technology systems to the new paid medical leave. The Regulations provide clarity to the legislative provisions such that if the legislation came into force without the Regulations, it could lead to confusion for employers regarding their obligations and may harm compliance and enforcement efforts by the Labour Program as the Regulations require employers to keep records relevant for the investigation of complaints and inspections.

Interaction with existing benefits

Employers and their representatives reiterated their concerns that the new paid medical leave could apply in addition to sick leave benefits provided to employees under collective agreements, workplace policies and/or employment contracts. A significant number of employers regulated under Part III of the Code provide some form of sick or medical leave, most commonly in the form of a health and wellness benefit plan or a short-term disability plan. These plans typically pay employees at a rate less than their regular rate of wages for periods of sick leave, and may be of limited application, such as only applying to the treatment of an illness or injury.

Employers requested that a legislative or regulatory amendment be introduced in order to ensure that existing sick leave benefits are considered equivalent to the paid medical leave provisions being introduced in the Code. This amendment would include text providing that a benefit that is at least as favourable to employees would apply instead of the new entitlement in the Code. A similar provision was considered as part of the parliamentary process for Bill C-3 but was rejected at the committee stage in the House of Commons.

The Labour Program has carefully considered this feedback, but has not made amendments to the Regulations to clarify the interaction of paid medical leave with existing benefits. Subsection 168(1) of the Code provides that the provisions of Part III apply notwithstanding any other custom, contract or arrangement, but nothing in Part III affects any right or benefit provided to an employee that is more favourable than what is required under Part III. Subsection 168(1) will apply to paid medical leave and will ensure that existing benefits are maintained where they are more favourable to employees than the new paid medical leave provisions. No regulatory amendments are being considered for benefits that are at least as favourable, but not greater than, the requirements under the Code since the paid medical leave provisions of the Code are intended to be a minimum standard for employees.

The Labour Program has committed to developing an IPG document on the application of the paid medical leave provisions. This document will outline the relevant legislative and regulatory provisions, as well as provide information on how arbitrators have interpreted the interaction between benefits in previous cases. The document may also outline the Labour Program’s interpretation of how benefits may interact under a variety of example circumstances. Stakeholders have expressed concern that collective agreement arbitrators are not bound by IPG documents. However, the intent behind the IPG documents is not to create a binding policy that will apply to all interactions between paid medical leave and existing benefits, but rather to provide guidance to employers and unions on the current state of the law and jurisprudence. Arbitrators will continue to apply their own judgment in applying the provisions of the Code that relate to the interaction between benefits.

Accrual of leave

Employers and their representatives also expressed concerns relating to the accrual of leave for casual employees and employees who work very few shifts in a month or year, arguing that employees should only earn days of paid medical leave if they work a minimum number of shifts per month. Many employers, particularly in the longshoring sector, rely on casual employees who work occasional shifts and may not work during a given period during the year. Other employees operate on an “elect-to-work” model whereby they choose when they make themselves available for work. As presented through the submissions, employers are concerned that employees who work very few shifts will be entitled to the same number of days of paid medical leave as regular, full-time employees.

Employees and their representatives opposed any amendments that might reduce an employee’s access to paid medical leave. They argued that employees engaged in precarious employment or atypical working arrangements should not receive fewer days, as these workers may be more vulnerable than full-time employees and thus more in need of the protections offered to employees under Part III of the Code. Some employee representatives also argued that the accrual method, which sees employees earn 3 days of paid leave after 30 days of continuous employment and one day per month following, should be replaced with an entitlement to 10 days of paid medical leave at the start of each year.

The Labour Program has considered this feedback, but has not adjusted the Regulations to modify the accrual model found in subsection 239(1.2) of the Code. In terms of casual employees and employees who work very few shifts in a month or year, the current model is consistent with how other paid leaves under Part III are applied: employees become entitled to the leave due to their continuous employment and are entitled to take periods of paid leave subject to the conditions of the legislation regardless of the number of shifts worked. The fact that paid medical leave periods are earned over time does not change the overall entitlement, which will be set through subsection 239(1.21) of the Code at 10 days per year. Adjustments have also not been made to the accrual model to provide the 10 days of leave at the start of each year, as there is no current consensus among stakeholders to do so.

Year other than calendar year

Some employer representatives noted that the modification provision in the proposed Regulations was too strict, requiring an employer to use the same year that is used for annual vacation for the purposes of paid medical leave. These employers noted that they may use different years for different benefits provided to their employees and requested flexibility in terms of using a different year for paid medical leave than for annual vacation. Employee representatives did not provide comments on this issue.

In response to this feedback, the Regulations were amended to allow employers who base the calculation of annual vacation on a year other than a calendar year to choose to use that year instead of a calendar year for the purposes of paid medical leave. This change will not affect the entitlement of employees to 10 days of paid medical leave per year.

Record-keeping requirements

One employer representative noted that, for employers who intend to offer 10 days of paid medical leave per year at the start of each year, the requirement to record the number of days carried over per year would not be necessary for them to administer paid medical leave and would be difficult to reflect in their information technology systems. The employer representative requested that the record-keeping requirement relating to the carry-over of leave be replaced with a requirement to record the number of days of leave taken in the previous year if an employer intends to offer all 10 days at the beginning of the year.

Employees and their representative groups agreed overall with the record-keeping requirements to ensure compliance. One union argued, however, that the Labour Program should be more proactive in ensuring compliance with record-keeping requirements. They argued that if employers do not keep adequate records, it could compromise an employee’s ability to receive the medical days they accrued and delay investigations by the Labour Program.

No changes have been made to the Regulations regarding record-keeping requirements. Replacing the requirement to record the number of leave days carried over, as proposed by the employer representative, would result in a more difficult calculation for employees who earn less than 10 days per year, such as those who are hired halfway through a year. In addition, it would increase the administrative complexity of the record-keeping requirements if there were different requirements for different employers. The Labour Program will continue to pursue compliance activities to ensure the effective implementation of paid medical leave, and will provide guidance to employers on the types of records that they must keep related to paid medical leave.

Costs

Employers and their representatives expressed concerns about the cost of implementation on employers, especially small and medium businesses. Many employer stakeholders stated that they were in the midst of economic recovery and had only recently restarted operations. They argued that the implementation of paid medical leave would further burden businesses and potentially exacerbate labour shortages, productivity, and supply chain issues.

Employer representatives from the longshoring industry stated that the introduction of paid medical leave will create financial burdens on employers, which will exacerbate inflation as employers need to raise prices to provide the new entitlements. The introduction of paid medical leave, and the addition of paid personal leave that was introduced in 2019, have and will continue to increase payroll costs according to employer representatives.

Many employers and employer representatives also expressed concerns regarding the costing associated with the Regulations. They argued that the costing did not properly capture the costs to employers associated with the introduction of paid medical leave. Comments were also provided that casual bullpen workers on the East Coast will not be entitled to paid medical leave as they are not continuously employed for at least 30 days, despite being engaged in multi-employer employment.

While it is beyond the scope of the Regulations to address the costs of the legislation, adjustments have been made to the cost-benefit analysis for regulatory specific items based on employer feedback. These changes impacted only the employees who will be entitled to leave as a result of the Regulations in the longshoring sector, based on feedback from longshoring employers that suggested that bullpen workers would not be entitled to paid medical leave as they are not employed for 30 days continuously. These adjustments have resulted in a reduced estimation of both costs and benefits to employers, as the number of employees granted access to paid medical leave by consequence of the Regulations has been reduced in number with the removal of casual bullpen workers from the prospective pool.

Regular rate of wages

Some employers and their representatives expressed concern with the method for calculating the regular rate of wages for employees who are paid other than hourly. Some expressed confusion over the need to review the previous 20 days worked, requesting clarification on how far back employers must go to reach 20 days when a worker works very few shifts every month. No changes were made in the Regulations, as the proposed method of calculation is identical to that used for other leaves under the Code and creating an inconsistency would likely cause additional work for both employers and inspectors.

Medical certificate

Stakeholders also raised concerns about employers’ ability to request a medical certificate after five consecutive medical days are used. Employers and employers’ groups stated that the five-day metric was too limiting and would prevent employers from being able to ascertain if an employee was abusing medical leave. One employer representative requested that employers be permitted to request a certificate whenever they believed that abuse was taking place. Unions and employee groups were generally opposed to the medical certificate requirement, although one union expressed approval. Unions who opposed the requirement stated that it will harm employees who could not easily access a health care practitioner, including employees who did not have a primary care physician. They further stated that requiring a medical certificate would place an undue burden on an already strained health care system. It would also discourage employees from accessing needed paid medical days, and therefore undermine the intent of the legislation. The provisions relating to medical certifications are located in the legislation, and as such, are out of scope for the Regulations.

Application of the legislative provisions to small businesses

Many stakeholders requested clarifications on a number of legislative and regulatory provisions, including provisions that would stagger the implementation of the legislation for employers with under 100 employees, and the application of the provisions to employees who work very few shifts. The Labour Program may develop IPG documents to further clarify these provisions. There is currently no intention to bring the provisions that would restrict access to paid medical leave to employees of employers who employ 100 or more employees into force, meaning that all employees in workplaces regulated under Part III will begin to earn periods of paid medical leave as of December 1, 2022, regardless of the size of their employer.

Other concerns raised by stakeholders

Some stakeholders also expressed concern that their feedback during the March-April consultations was not adequately addressed during the prepublication process.

Modern treaty obligations and Indigenous engagement and consultation

In accordance with the Cabinet Directive on the Federal Approach to Modern Treaty Implementation, a modern treaty implications assessment was conducted. There have been no impacts on modern treaties identified in relation to these Regulations.

Eight national Indigenous organizations were invited to participate in the consultation sessions, and only one (Women of the Métis Nation) attended the English consultation session. The Labour Program has not received any written submissions from Indigenous stakeholders.

Instrument choice

The Regulations are required to support the implementation of the paid medical leave provisions and their application in workplaces that are subject to Part III of the Code. The objective of the Regulations cannot be accomplished through other instruments, as the specific text used in the Regulations is necessary for the purposes of enforcement activities and to clarify the application of the provisions to certain classes of employees.

Regulatory analysis

Benefits and costs

Analytical framework

The incremental impacts (benefits and costs) attributable to the regulatory amendments are determined by comparing a baseline scenario, in which the Regulations are not in force, to a scenario with the Regulations. Costs between December 1, 2022, and December 31, 2032, the period of 10 years and one month following implementation of the Regulations, are discounted to the year 2022 at a discount rate of 7% and expressed in 2020 Canadian dollars.

In the baseline scenario, the Act would come into force on December 1, 2022, entitling all employees in the federal jurisdiction to 10 days of paid medical leave. The legislation would be unaccompanied by the Regulations, which provide further details about the newly introduced paid medical leave provisions for employees in the federal jurisdiction. In addition, record-keeping requirements under the CLSR would not specify requirements related to paid medical leave, other than the requirement to keep records related to the medical certificate. Though the longshoring sector is within the federal jurisdiction, in the baseline scenario, the paid medical leave provisions of the Code would not apply to multi-employer employment [defined in subsection 19(1) of the CLSR as “longshoring employment in any port in Canada where by custom the employee engaged in such employment would in the usual course of a working month be ordinarily employed by more than one employer”], assuming that these employees would not be considered continuously employed for the purposes of paid medical leave eligibility. Note that multi-employer employment only applies to a subset of the longshoring sector. Other employees in the longshoring sector, who are in a clear employer-employee relationship, will be covered by paid medical leave under the legislation. Bullpen workers who are not employed for 30 days despite being engaged in multi-employer employment will not earn periods of paid medical leave.

In the regulatory scenario, multi-employer employment, as defined in the CLSR, would be considered continuous for paid medical leave eligibility; therefore, 10 days of paid medical leave would be introduced for employees in the longshoring sector who are engaged in multi-employer employment. All of the costs and benefits of the legislation would therefore apply to employees in the longshoring sector engaged in multi-employer employment who are continuously employed for at least 30 days and to their employers. In addition, the CLSR would be amended to include record-keeping requirements for employers related to paid medical leave, which would have associated costs and benefits for all employers and employees subject to Part III of the Code. Other regulatory amendments, while not providing large, monetized benefits, will clarify the application of paid medical leave for stakeholders and make consequential amendments to the CLSR, the SWILAR and the AMPs Regulations to take into account the new legislative provisions.

Updates following prepublication

The cost and benefit estimates have been updated following feedback received from stakeholders during the prepublication comment period, who noted that bullpen casual employees on the East Coast will not be entitled to paid medical leave. While these employees may be engaged in multi-employer employment, they are not employed for at least 30 days of continuous service, and thus will not earn periods of paid medical leave. Following this feedback, the number of employees estimated to be impacted by these Regulations has been reduced from 430 to 283 per year in East Coast longshoring. As a result, the total present value of costs changed from $166,824,101 to $163,131,592 while the total present value of benefits changed from $80,613,302 to $78,016,456. Overall, the net costs changed from $86,210,799 to $85,115,136.

Costs
Costs to employers in the longshoring sector for paid medical leave for employees in the longshoring sector who are engaged in multi-employer employment (monetized)

As a result of the Regulations, employers are expected to carry costs associated with paying 10 days of paid medical leave to their employees engaged in multi-employer employment. The present value of the total costs of paid medical leave for employers of employees engaged in multi-employer employment in the longshoring sector is estimated to be $129.2 million in present value (PV) for the period from December 1, 2022, to December 31, 2032, or $18.4 million as an annualized average.

Amend record-keeping provisions (monetized)

The Regulations are expected to result in record-keeping costs, as employers will need to track the earned days of paid medical leave for employees. In the baseline scenario, employers are required under the CLSR to retain records for three years related to requests for medical certificates, when provided, as this requirement currently exists for medical leave in the CLSR.

The Regulations will increase record-keeping costs marginally, since employers will need to record periods of paid medical leave in greater detail than it is currently required for unpaid medical leave, with one incremental record for each day of paid medical leave used by an employee.

The anticipated incremental costs to federal jurisdiction employers for human resource administrative staff were estimated based on the total volume of employees in the federal jurisdiction multiplied by an incremental time requirement of one minute per record, for each day of paid medical leave. The present value of the costs associated with the additional time of human resource personnel is estimated to be $33.9 million (PV) for the period from December 1, 2022, to December 31, 2032, or $4.8 million as an annualized average.

Cost associated with the standard definition for regular rate of wages to medical leave (qualitative)

No costs are anticipated to result for either employers or employees as a result of adopting the standard definition for the regular rate of wages used to calculate the pay of employees compensated on a non-hourly basis. The same definition is presently used for application of other elements of the CLSR, including leave for bereavement. This measure will provide a transparent means to consistently determine the rate of wages in a manner that favours neither employers nor employees, to be used in calculations of medical leave entitlements, rather than alter the wage these processes will determine. The definition for the regular rate of wages will provide clarity for the purposes of enforcement under the Code and will not impact the entitlement to employees or the costs to employers for the implementation of the paid medical leave provisions.

Cost associated with clarifying the entitlement to paid medical leave for student interns (qualitative)

The Regulations will update the subsections listed in paragraph 5(g) of the SWILAR to take into account the amendments that will be made to the Code by the Act. They will ensure that student interns are not entitled to paid medical leave once the Code is amended by the Act. Student interns perform activities for an employer as part of a secondary, post-secondary, vocational, or other equivalent educational program. Amending paragraph 5(g) of the SWILAR is not anticipated to have any costs for employers or employees, since student interns are not entitled to receive pay for their work. As in the baseline scenario, student interns would remain eligible for unpaid medical leave under the regulatory scenario.

The total discounted costs of the regulatory proposal are estimated to be $163.1 million for the period from December 1, 2022, to December 31, 2032, or $23.2 million as an annualized average.

Benefits
Benefit for employers in the longshoring sector: productivity

Paid medical leave enables employers to gain access to longshoring workers who are more productive while in the workplace. Without paid medical leave and the supporting regulations, an employee engaged in multi-employer longshoring employment who is sick faces the option to either forego wages for the period of illness or injury to stay home and recuperate or go to work sick. Paid medical leave will reduce the financial repercussions in terms of foregone wages during periods of illness. Correspondingly, paid medical leave would reduce the number of days workers would show up to work sick. When workers continue to work during periods of illness, they will be less productive than when they are healthy. Providing paid medical leave to employees engaged in multi-employer employment ensures they are more productive when they are at work since they can care for themselves on days they are sick, thus ensuring they are continuously productive whenever they are at work.

The Regulations will also provide multi-employer employees in the longshoring sector the paid medical leave they need to get timely medical care and recover faster at home than they would if they attended their workplace while being sick. With sick and injured workers recovering at home rather than working, paid medical leave ensures employees can be continuously productive when they are at work, resulting in productivity gains.

Based on empirical estimates of the productivity differential between healthy and sick or injured workers, the increase in worker productivity is anticipated to be equivalent to 1.05 hours per week per employee. The benefits of productivity enhancements associated with the introduction of paid medical leave for longshoring employees engaged in multi-employer employment were estimated using this productivity differential, valued using the wage rates of longshoring employees for the affected group of employees over the period of 10 years and one month following the introduction of the Regulations. The resulting productivity benefits were estimated to be $78 million (PV) to employers in the longshoring sector over the period of 10 years and one month following the introduction of the Regulations.

Presenteeism benefit for employers in the longshoring sector: reduced contagious infections in the workplace (qualitative)

As part of improving productivity, employers would benefit from a reduction in presenteeism, which is the loss of productivity that occurs when employees show up to work but are not able to function fully in the workplace due to illness, injury or other condition. Paid medical leave will benefit employers in the longshoring sector by reducing the costs associated with the spread of contagious infections, such as colds, since employees engaged in multi-employer employment would endure lesser financial repercussions if they isolate at home while sick.

Presenteeism benefit for employees in the longshoring sector: reduced progression of illness and lower chance of further injury (qualitative)

Providing paid medical leave could help reduce the cost of presenteeism by allowing employees engaged in multi-employer employment to get timely medical care and recover faster. Employees engaged in multi-employer employment without paid medical leave are more likely to go to work when they are sick and, correspondingly, they would be less likely to seek preventive medical care and health checks compared to their peers with benefits. Correspondingly, paid medical leave could prevent the advancement of illness and development of more serious diseases by supporting employees in managing their health.

Benefit for society: reduced burden on the health care system (qualitative)

Paid medical leave could help ease the financial burden on the health care system. Since a longshoring worker engaged in multi-employer employment with paid medical leave is more likely to stay home and/or go to the doctor, this potentially reduces the likelihood of aggravating the illness or injury, like shortening the duration of a cold or not further aggravating a sprained ligament. If the severity of illness or injury is better kept under control, this may result in less demands on the health care system in the long run because sick or injured workers are less likely to need as much medical attention from illnesses or injuries prolonged or aggravated by continuous work.

Clarification of the scope of the benefit (qualitative)

The Regulations will provide greater certainty to employers and employees by ensuring that student interns will remain eligible for unpaid medical leave but do not have access to the new paid medical leave, and other interns will be fully eligible for paid medical leave. Student interns, as regulated under the Code and SWILAR, are not entitled to pay for their work or access to paid leaves under the Code.

Consistent application of paid medical leave for stakeholders (qualitative)

Record-keeping requirements for paid medical leave will support enforcement efforts by labour affairs officers when a complaint is made by an employee, to allow for consistent application of the regulations on paid medical leave for all stakeholders.

Cost-benefit statement
Table 2: Monetized costs
The total discounted costs of the regulatory proposal are estimated to be $163.1 million for the period from December 1, 2022, to December 31, 2032, or $23.2 million as an annualized average.
Impacted stakeholders Description of cost Sum 2022 (Dec.) and 2023 Sum 2024–2031 2032 Total (present value) Annualized value
Employers Longshoring sector — cost of paid medical days $17,841,420 $101,696,069 $9,682,313 $129,219,802 $18,397,993
Record keeping costs $4,682,109 $26,688,634 $2,541,046 $33,911,789 $4,828,276
All stakeholders Total costs $22,523,529 $128,384,702 $12,223,360 $163,131,592 $23,226,269
Table 3: Monetized benefits
Impacted stakeholders Description of benefit Sum 2022 (Dec.) and 2023 Sum
2024–2031		 2032 Total (present value) Annualized value
Employers Employers in the longshoring sector $10,771,757 $61,399,002 $5,845,697 $78,016,456 $11,107,788
All stakeholders Total benefits $10,771,757 $61,399,002 $5,845,697 $78,016,456 $11,107,788
Table 4: Summary of monetized cost and benefits
Impacts Sum 2022 (Nov.–Dec.) and 2023 Sum 2024–2031 2032 Total (present value) Annualized value
Total costs $22,523,529 $128,384,702 $12,223,360 $163,131,592 $23,226,269
Total benefits $10,771,757 $61,399,002 $5,845,697 $78,016,456 $11,107,788
NET IMPACT −$11,751,772 −$66,985,701 −$6,377,663 −$85,115,136 −$12,118,480
Qualitative impacts

Positive impacts

Distributional impacts

The full costs and benefits analysis report is available upon request.

Small business lens

The small business lens analysis has been updated following feedback received from stakeholders during the prepublication comment period, who noted that bullpen casual employees on the East Coast will not be entitled to paid medical leave.

Estimates of the costs to small businesses of the paid medical leave regulations are based on (i) the compliance costs for small employers in the longshoring sector; and (ii) the administrative costs to all small businesses in the federal jurisdiction.

The compliance costs to small employers in longshoring are associated with the days of paid medical leave taken by workers, including small employers in the longshoring sector who employ casual daily dispatch workers on an as-needed basis. These costs are estimated by multiplying the number of employees in the small business sector by the wage, the number of hours worked per day (8), and days of sick leave (10). It is assumed that small businesses employ 17% of all employees in the longshoring sector. A distinction is made between the longshoring sector in the West Coast and the longshoring sector in the East Coast to account for the wage differential between those two regions. A growth rate of 0.92% is used to project the number of employees over the 10-year period of analysis. These costs are estimated to be $21.8 million (PV) over the 10-year and one month period following the introduction of the Regulations, based on wages and employment by the 14 small employers in longshoring, computed separately for the East and West Coast longshoring sectors. This figure includes costs to small employers in the longshoring sector who employ workers engaged in multi-employer situations.

The administrative costs are associated with the record-keeping provision for all small employers (81 597 employers in 2022) in federal jurisdiction subject to Part III of the Code. To monetize the record-keeping costs, the Labour Program used the hourly wage ($28.66) for a human resources administrative clerk to input the record, based on one minute per day of paid medical used per employee per sick day for each of 10 days and the total number of employees. It is assumed that small businesses in the federal jurisdiction employ 8.5% of all employees. A growth rate of 0.92% was used to project the number of employees over the 10-year period of analysis. The total costs of record keeping to small employers (excluding the longshoring sector) are estimated to be $2.9 million (PV) over the period of 10 years and one month (2022 Canadian dollars). The costs of record keeping to small employers in the longshoring sector are estimated to be $27,563 (PV) over the period of 10 years and one month (2022 Canadian dollars).

The sum of the compliance and administrative costs for the longshoring sector are estimated to be $24.7 million (PV), or $1,562 (PV) per employer over the period of 10 years and one month (2022 Canadian dollars).

Since the costs of the Regulations are dependent on the number of employees hired in businesses, small employers are not expected to be disproportionately affected by the Regulations. Small employers subject to Part III of the Code would face administrative costs directly proportional to their number of employees. Employers in the longshoring sector who employ employees engaged in multi-employer employment will be subject to costs proportional to the number of workers they need to hire, as they will be responsible for paying those workers for periods of paid medical leave taken.

Small business lens summary
Table 5: Compliance costs
Paid medical leave provisions Annualized value Present value
Compliance cost (longshoring) $3,102,426 $21,790,140
Table 6: Administrative costs
Record keeping Annualized value Present value
Administrative costs (federal jurisdiction sectors excluding longshoring) $408,742 $2,870,833
Administrative costs
(longshoring)		 $3,924 $27,563
Table 7: Summary
Totals Annualized value Present value
Total compliance cost (for affected longshoring employers) $3,102,426 $21,790,140
Total administrative cost (for all federal jurisdiction employers) $412,666 $2,898,396
Administrative costs to longshoring employers table b7 note a $3,924 $27,563
Total cost $3,515,092 $24,688,536
Total cost to longshoring employers $3,106,350 $21,817,703
Total cost per impacted small business $222.51 $1,563
Total cost per impacted longshoring employer $221,882 $1,558,407

Table b7 note(s)

Table b7 note a

The employers affected in the longshoring sector consist of those engaged in multi-employer employment. This category of longshoring employers is included in the aggregate cost totals, with results also reported for this sector specifically.

Return to table b7 note a referrer

One-for-one rule

The Regulations will not result in a new regulatory title and are not considered as a title in or a title out under Element B of the Government of Canada’s one-for-one rule.

The Regulations will require employers to keep a record each time an employee takes a paid medical leave. The record-keeping costs cover a 10-year period, i.e. 2023 to 2032, and are based on the following assumptions: it will take employers one minute to produce a record (i.e. 10 times per year,footnote 4 the salary of a human resources administrative clerk is $30.52/hour (2012 Canadian dollars), and a population of 954 853 employees working in federal jurisdiction workplaces is projected to grow at a rate of 0.91%. The total annualized administrative costs for record keeping to employers in the federal jurisdiction subject to Part III of the Code are estimated to be $2,705,598 or $146.25 per business (2012 Canadian dollars, 2012 discount base year).

Regulatory cooperation and alignment

The Regulations are not related to a work plan or commitment under a formal regulatory cooperation forum.

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, as there are no broader environmental impacts.

Gender-based analysis plus (GBA+)

The Regulations will ensure that employees in the longshoring sector who are engaged in multi-employer employment are entitled to paid medical leave. Male employees make up 86.4% of the longshoring industry,footnote 5 and may disproportionately benefit from the Regulations. The Regulations will also positively impact adults aged 45 years or older, as workers in that age category make up 52.6% of the longshoring sector compared to 46.9% in that age group across the industries regulated under Part III of the Code.footnote 6 There are no expected negative impacts of the Regulations on any gender or identity groups.

Implementation, compliance and enforcement, and service standards

Implementation

The Regulations will come into force on the day on which section 7 of the Act comes into force, which will be on December 1, 2022. If the Regulations are registered after section 7 of the Act has come into force, then the Regulations will come into force on the day on which they are registered. The coming-into-force provisions in the Act allow the Governor in Council to make an order that would bring the legislation into force before December 1, 2022. There is no intention to use that authority, and as such, the legislation will come into force for all employers and employees regulated under Part III of the Code on December 1, 2022.

The Labour Program may publish interpretation and guidance materials for employees and employers on their new rights and responsibilities. These materials would be made available on the Canada.ca website.

Furthermore, Labour Program officers and inspectors will receive training on the new provisions prior to their coming into force in order to carry out their compliance and enforcement duties.

Compliance and enforcement

As with all provisions under Part III of the Code, labour affairs officers will detect non-compliance with the paid medical leave provisions by conducting inspections, either proactively or in response to a complaint. Compliance will be achieved using a variety of approaches along a compliance continuum. This may include educating and counselling employers on their obligations, seeking an Assurance of Voluntary Compliance (AVC) from the employer, or issuing a compliance order for employers to cease the contravention and take steps to prevent its reoccurrence. To address more serious or repeated violations, an administrative monetary penalty under the new Part IV of the Code may be issued. To learn more about how AMPs may be issued, please consult the IPG document entitled Administrative Monetary Penalties - Canada Labour Code, Part IV - IPG-106.

Contact

Annic Plouffe
Director
Labour Standards and Wage Earner Protection Program
Labour Program
Employment and Social Development Canada
Email: EDSCDMTConsultationNTModernesConsultationModernLSWDESDC@labour-travail.gc.ca