Otherwise known as
Michael’s soapbox

2018-01-30T11:55:32+00:00 January 30, 2018|Employment Law, Employment Standards|

Employer Reactions to Legislation Could Have Far Reaching Implications

People react to change in different ways – some relish in it, while others fear it to the point of paralysis.  I’ve been giving a lot of thought of late to Bill 148, Fair Workplaces, Better Jobs Act, 2017 not so much about the significant changes that it introduced, but the opportunities and choices it presents to employers.

Here’s what I mean.  Bill 148 was introduced, in part, to provide protection and safeguards to so-called precarious workers, though the amendments to the law, and in particular the changes to the Employment Standards Act, 2000 extend well beyond precarious workers (in fact, recent reports suggests that We Don’t Know the Extent of Precarious Work). 

Corporations are in the business of offering goods and services to consumers at a profit. When laws are passed that notionally impact adversely on the company’s bottom line, employers are put to the test.  How will they respond to this?  They have options.

They can, of course, chose to absorb the costs with an adverse financial impact on the organization.  They can pass the costs onto the consumer of their goods and services in an immediate or phased in manner through, for example, price increases.  They can also look at other means of containing the cost consequences of legislation through various initiatives that pass these costs, in whole or in part, onto their employees.  Or they can do a combination of these things (and others).  

Some of these alternatives seem simpler than others but they each have consequences.  For example, increasing prices and passing these onto consumers might have a negative impact on demand where customers simply do without, reduce spending or go to a less costly alternative. 

But, and this is what I’m thinking about these days, where costs are “taken out” of the very employee group who have been touted as “vulnerable” and in need of protection through government intervention, what are the consequences of that decision? 

We’ve read countless articles about how some employers have decided to respond to the increased costs associated with Bill 148.  

However, surely, before implementing any decision of this nature thought must be given to how that would play to the employees, themselves, and to the public and whether that decision would have other consequences. 

Introducing any change in the workplace, particularly a change that impacts pay and benefits, could give rise to a claim of constructive dismissal.  It’s important to think of that, but is that the most important consideration?  I’d say that it’s not. 

Historically, precarious employees, particularly in certain sectors, have been significantly under represented by unions.  Bill 148, and the amendments to the Labour Relations Act, 1995, were designed to at least in part facilitate unionization in these sectors.  Read the Final Report of the Special Advisors as well as the debates in the Legislature

That’s all well and good and, I suspect, these changes will indeed have some impact on unionization rates over time in these sectors.  But employer reactions to Bill 148, and specifically, passing costs onto the very employee group that the legislation was intended to protect, surely is a problematic approach. 

Negative publicity abounds, protests are organized, and a crack in the door has been opened not by the government, but by employers who give the unions a basis for saying, “we can help you.  This wouldn’t have happened if you were represented by a trade union.”  

The point here is simply to say that implementing changes in the workplace is never easy, but it is important to consider not only the legal issues (i.e. does this amount to a constructive dismissal, what can the employee do, and how do we implement this to manage the legal risks?) but also the broader issues and implications associated with change, including, for example, how the changes will play in the court of public opinion and the repercussions of that on the workplace.   

While employers can’t control the government’s agenda or the legislation they pass in furtherance of that agenda, they are fully in control of their responses to that legislation.  It is important to think practically and holistically about these issues before implementing any changes including developing a communication strategy and timeline that seeks to manage any negative reaction.  Knee jerk reactions that “feel right at the time” and seem benign, often have unanticipated consequences which a more methodical and thoughtful approach could have uncovered and addressed before, rather than after, the fact.