Federal update: New monetary penalties effective under the Canada Labour Code on January 1, 2021

December 29, 2020 | Inna Koldorf, Catherine Phelps

On January 1, 2021, the Canada Labour Code (“the Code”), which applies to federally regulated employers, will be amended to add a new Part IV, titled “Administrative Monetary Penalties.” The purpose of Part IV is to establish an alternative penalty system to promote compliance with Part II (Occupational Health and Safety) and Part III (Standard Hours, Vacations, and Holidays) of the Code. The government has indicated in a Regulatory Impact Analysis Statement that this new penalty system is necessary to curb what it views as widespread non-compliance with the Code in the federal sector.

Part IV introduces the following key measures to promote compliance with the Code:

  1. Penalties of up to $250,000. Under the new Part IV of the Code, federally regulated employers may be subject to Administrative Monetary Penalties (“AMPs”) of up to $250,000 for certain violations of the Code. The violations that will give rise to AMPs have been identified by government regulation and include contravention of most provisions of Part II and III of the Code.
  2. Publication of violators of the Code. The government may publish the name of an employer who has committed a violation under Part IV of the Code along with the nature of the violation and the amount of the AMP imposed.
  3. Key individuals may be liable for violations. Liability for violations of the Code may extend beyond the corporation itself to certain individuals within the company, including officers, directors, supervisors and managers. These individuals may be party to the violation and liable for an AMP if they “directed, authorized, assented to, acquiesced in or participated in the commission of the violation.”
  4. Violations may be continuing over separate days. A violation of the Code that is committed or continued on more than one day constitutes a separate violation for each day that it was committed or continued. Fines may accumulate quickly in light of this provision.
  5. Certain defences are unavailable. A department or individual cannot argue that they exercised due diligence to prevent the violation or that they “reasonably and honestly” believed in “the existence of facts that, if true, would exonerate the person or department.”
  6. Streamlined review and appeal process. Part IV establishes a framework through which parties served with a notice of violation can challenge the alleged violation of the Code. Within 30 days of being served with a notice of violation, a party may request that the Minister of Labour review the penalty or the facts of the alleged violation. Within 15 days of being served with the Minister’s decision, a party may appeal the decision to the Canada Industrial Relations Board (“CIRB”). Any decision issued by the CIRB is final and cannot be reviewed by a court.

Key takeaways for federally regulated employers

As the above overview makes clear, as of January 1, 2021, there will be significant consequences for employers who fail to comply with Parts II and III of the Code. Not only will there be steep financial sanctions for non-compliance with the Code, there will also be a reputational price to pay as the names of violators may be published by the government. We encourage our federally regulated clients to review their workplace policies and practices now to ensure that they are compliant with the Code. Further, employers should ensure that all employees exercising a supervisory and/or managerial function enforce compliance with the Code, as these employees may be personally liable for any violations and resulting AMPs. A proactive approach to enforcing compliance with the Code will pay dividends when this new penalty system takes effect in the New Year.

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