New obstacle to subcontracting for employers subject to provincial jurisdiction
As discussed in our November newsletter (reference The Recent Amendments To The Act Respecting Labour Standards And Their Impact On Your Work Environment), the new provisions of the Act respecting labour standards (ARLS), for the most part, came into force on the very day the bill implementing them was assented to, or on January 1, 2019. However, an entire section remains pending until the government adopts a regulatory framework for it: these new provisions pertain to placement agencies.
In addition to establishing the principle whereby a placement agency may not pay an employee a lower rate than the rate paid to employees of the client company, the new ARLS provisions require agencies to hold a licence to perform their activities. Companies that retain the services of an agency that does not hold a licence will be subject to a penalty. Also, personnel placement agencies and the client companies that retain their services will now be jointly and severally liable to the employee for the monetary obligations established by the ARLS.
- i) Wages
First, the ARLS now provides that a personnel placement agency may not pay an employee a lower rate than the rate paid to employees of the client company who perform the same duties in the same establishment, solely because of the employee’s employment status, precisely because the employee is being paid by such an agency or because he or she usually works fewer hours per week.
- ii) Joint and Several Liability
The new ARLS mentions that in the future, an agency and the client company that retains its services will be jointly and severally liable for the monetary obligations set out by the ARLS. As a result, each of them can theoretically be bound to pay the full amounts owing following a potential claim brought by an agency employee before the ALT.
iii) New Government Regulations
The government will define in its regulations what constitutes a personnel placement agency as well as a client company. During the parliamentary debates on the adoption of the bill to amend the ARLS, the Minister of Labour at the time mentioned that according to her, a placement agency [translation] “provides workers required to fulfill the temporary labour needs of a client company.”
In addition, an agency will be required to hold a licence issued by the CNESST in accordance with the new regulations. A client company cannot, knowingly, retain the services of an agency that does not hold such a license. Any person in breach of these new obligations will be subject to a fine of $600 to $6,000 and, for any recurrence, a fine of $1,200 to $12,000.
The government will also establish different categories of licences as well as the period of validity of each type of licence – administrative measures will be applicable if these conditions are not met. Any person who believes their rights to have been violated by a decision rendered in the application of the new regulations may, within 30 days of its notice, challenge such decision in writing before the ALT.
Effective Date of the Amendments
As mentioned, the regulations detailing the new obligations related to placement agencies have not yet been published. As a result, all the amendment discussed are not yet in effect.
As an indication, the new Minister of Labour recently mentioned that said regulations are being drafted by the CNESST and will be ready very soon. The objective is to release it in spring 2019 or at the latest by next fall.
Companies in the aeronautics industry that use the services of personnel placement agencies must perform an exhaustive review of their practices in this area in order to reduce as much as possible the consequences of the amendments to the ARLS that will soon be in effect. In fact, companies that currently use the services of employees from placement agencies to reduce their operating costs by indirectly paying lower wages to these individuals will have to review their practices to comply with the law.