Employment & Labour Law 

On June 19, 2017, the Governor General signed Bill C-16 into law, amending the Canadian Human Rights Act and the Criminal Code. Here’s what you need to know about the changes:

Canadian Human Rights Act

The Canadian Human Rights Act applies to federally-regulated employers and service providers, such as banks, airlines, and telecommunications companies. The amendments add “gender identity or expression” as prohibited grounds of discrimination in the Canadian Human Rights Act.

“Gender identity or expression” are not defined in the Canadian Human Rights Act, but more clarity can be found in policy documents produced by the Ontario Human Rights Commission (these protected grounds were added to the Ontario legislation several years ago), and other provincial bodies.

The Ontario Human Rights Commission defines “gender identity” as “each person’s internal and individual experience of gender. It is their sense of being a woman, a man, both, neither, or anywhere along the gender spectrum. A person’s gender identity may be the same as or different from their birth-assigned sex. Gender identity is fundamentally different from a person’s sexual orientation.”

The Ontario Human Rights Commission defines “gender expression” as “how a person publicly presents their gender. This can include behaviour and outward appearance such as dress, hair, make-up, body language and voice. A person’s chosen name and pronoun are also common ways of expressing gender.”

Though the Ontario Human Rights Commission’s interpretation does not have the force of law, one can expect this interpretation to be persuasive to the federal Tribunal/Courts when interpreting the Canadian Human Rights Act in the future.

Currently, all provinces and territories have legislation in effect which prohibits discrimination based on “gender expression” or “gender identity”, but the addition of these terms to the Canadian Human Rights Act expands this protection to individuals who claim discrimination on the grounds of gender expression or identity from federally-regulated entities.

As with provincially-regulated employers however, federally-regulated employers or service providers may deny or differentiate the provision of service, facilities, or employment on the basis of gender expression or identity when it can be shown that there is a “bona fide justification”. A justification is “bona fide” when it can be proven that accommodation of an individual would impose undue hardship on the employer or service provider, considering the factors of health, safety, or cost. If an employer can demonstrate that an occupational requirement is necessary to the job and the individual cannot be accommodated without undue hardship, the requirement is permissible.

Criminal Code

Bill C-16 also amended the hate propaganda sections of the Criminal Code, adding “gender identity or expression” as a characteristic of an identifiable group.

Specifically, the amendments clarify that it is a criminal offence to advocate or promote genocide, incite hatred, or communicate statements that promote hatred against a group identified by their gender expression or identity.  In addition, committing a crime against an individual on the basis of their gender identity or expression is an aggravating factor for a court to consider when sentencing.

If you’re an employer or administrator of an Ontario-registered pension plan, you’ll be interested to know that the Financial Services Commission of Ontario recently published a detailed report on the filings of Statement of Investment Policies and Procedures (SIPPs) in Ontario (the “Report”). The Report which was published at the end of July, 2017 can be accessed here.

One particular finding in the Report that employers and administrators will likely want to know is how often, really, are plan administrators monitoring investment managers and investment fund performance.

Monitoring the investments in a pension plan is part of good governance. In fact, Guideline No. 4 of the Canadian Association of Pension Supervisory Authorities (CAPSA), which was revised last December, specifically provides for performance monitoring standards as its fourth principle.

Prudent plan administration requires the plan administrator, who is often times the employer, to establish criteria for the periodic review of investment managers and investment options, and, more importantly, to follow through with that monitoring.  For defined contribution (DC) pension plans where members are responsible for directing investments, CAPSA Guideline No. 3 recommends that investment options be reviewed at least annually.

So what are employers and plan administrators actually doing (or at least promising in their SIPPs to do)?

The Report includes the following findings:

• The majority of defined benefit (DB) plan administrators, 65.2% to be exact, have set  out in their SIPP that they will monitor the performance of investment managers at least once a year.  In addition, approximately 25% of DB plan administrators have committed to quarterly or more frequent monitoring.
• In member-directed DC plans, the frequency of monitoring investment fund performance was generally comparable to that of DB plans.  Most plans, 63.3%, require investment options to be reviewed by the plan administrator at least annually.  However, only about 10% of these types of plans require monitoring at quarterly or more frequent intervals.

Takeaways:

If you’re an employer or plan administrator of an Ontario-registered pension plan and you’re monitoring the investments in your plan at least once a year, you’re among the majority. Whether it’s prudent and advisable to monitor your plan’s investment managers and/or investment options more frequently will depend on the specifics and details of the plan itself.

It’s not so much the frequency of monitoring that’s set out in your SIPP that’s important, but actually following through on your stated monitoring schedule that’s crucial. If you haven’t reviewed your investment managers and investment options recently, now is a good time to do so.

A helpful change to Ontario pension law has come into effect, coincident with the arrival of patio season. It is a refreshing tonic that will help administrators deal with pension plan members who are difficult to locate.

Until now, the obligation to send pension statements to former and retired plan members has been an absolute legal requirement. The fact that an administrator did not have correct (or any) address information, did not relieve the administrator from the legal obligation to send pension statements.  That has changed.

The Ontario Superintendent of Financial Services now has the authority to waive the administrator’s legal obligation to provide a pension statement that would otherwise have to be sent to an unlocatable member.  This is not automatic.  The administrator has to write to the Superintendent and demonstrate that the inactive member should be considered “missing”.

A message to pension plan administrators: please take this seriously.  Do not assume that there will be no repercussions if you simply don’t send statements to unlocatable members.  Have any of the biennial statements sent out this spring to former and retired members been returned to sender?  Find out who those people are, and write to the Superintendent now to request that he waive the pension statement obligation for those individuals.  Doing so will demonstrate that you understand and care about compliance with Ontario pension law.

This welcome change to Ontario pension law does not solve the problem of what to do with the payments owed to unlocatable members.  The Ontario government has promised to address that challenge.  In its April 2017 Budget the government stated that it was considering initiatives such as the possible establishment of a public registry where employers or administrators could post information regarding missing beneficiaries and individuals could search for missing benefits.  There may be more good news on this front in the coming months.

As part of the enhanced governance requirements under British Columbia’s Pension Benefits Standard Act and Alberta’s Employment Pension Plans Act, pension plan administrators in Alberta and British Columbia are required to conduct an assessment their plan every three years. The deadline to complete the first assessment is December 31, 2017.

December may seem far off with summer just getting into full swing, but if you administer a pension plan in Alberta or BC you should start the assessment process soon in order to meet the deadline.

Contents of the assessment

The scope of the assessment under the legislation is broad, covering the “administration of the plan”. The assessment should at a minimum cover the following areas and policies:

• the plan’s compliance with the applicable pension legislation
• the plan’s governance
• the funding of the plan
• the investment of the pension fund
• the performance of the trustees, if any, and
• the performance of the administrative staff and any agents of the administrator

The Alberta Superintendent of Pensions has issued draft guidelines stating that the use and completion of the CAPSA Guideline No. 4 Pension Plan Administrator Governance Self-Assessment Questionnaire is acceptable as the written assessment. The British Columbia Superintendent has not yet issued assessment guidelines, but we understand guidance is under development.

Administrators may also develop their own assessment framework or use one prepared by a third party. Regardless of which assessment framework you use, you should be satisfied that it is appropriate for your plan.

Does the assessment need to be filed?

No. You must complete and retain the written assessment and make it available to the relevant Superintendent of Pensions upon request.

Confidentiality concerns

Although required by statute to complete the assessment, you should be careful about what you include in the final written assessment. Much like pension committee minutes, the assessment may contain confidential information about your plan and is a potential source of liability. Further, an assessment in the hands of a Superintendent may be subject to a request under freedom of information legislation.

A review by a lawyer prior to finalizing a plan assessment can mitigate some of these confidentiality concerns and identify potential liability in the written assessment.

Yesterday the Ontario Deputy Superintendent of Pensions released a formal statement that included the comment:  “these are interesting times in the pension sector.”  How true.

Many long-anticipated improvements to Ontario pension legislation, regulation and policies are finally coming into force.  The pension regulator will have more specific, helpful powers to target non-compliance issues.  Plan sponsors will have more choices in the design of pension plans, especially in the defined contribution sphere.  And many employers who sponsor defined benefit pension plans will be pleased by this morning’s Ontario government announcement about an entirely new framework for funding defined benefit pension plans, which will come into effect “in the coming weeks”.

We have written about some of these promised changes in prior posts (here and here).  We will be providing more details and strategic suggestions about these interesting developments, in future articles.  In the meantime, you can find information about this this morning’s announcement by the Ontario government here.

Please contact a member of Dentons’ Pensions and Benefits group for information and advice about how these significant changes will affect your business.

The countdown is on.

Over the weekend the Toronto Star and the CBC each published stories detailing what Ontarians can expect to see in the long awaited final report from the Changing Workplaces Review when it is released later this month. Citing unnamed government sources, the media outlets report that the Changing Workplaces Review has proposed a number of changes to Ontario’s labour and employment legislation including:

• making it easier for cleaning staff and home-care workers to unionize;
• requiring that employers provide employees with paid sick days;
• increasing the minimum amount of vacation from 2 weeks to 3 weeks;
• providing certain protections to independent contractors;
• eliminating some of the exemptions to the Employment Standards Act, 2000 so that more workers are entitled to overtime and certain leaves of absence.

In addition, there is speculation that the Government may increase the minimum wage to $15.00 per hour.

We will continue to follow this story and will provide a comprehensive review once the final report is released.

Pension plan sponsors and administrators have much to anticipate with the release of the 2017 Ontario Budget: A Stronger, Healthier Ontario (Budget) on April 27, 2017.  The Budget provides updates to several pension reform initiatives that many stakeholders have been waiting for, as well as new proposals aimed at benefiting plan sponsors, administrators and members.  The Budget also recaps recent major changes to the pension landscape, including the future enhancements to the Canada Pension Plan and the ability to implement Pooled Registered Pension Plans in Ontario.

Review of Ontario’s Solvency Funding Framework

Plan sponsors of defined benefit (DB) pension plans will be most interested in the Ontario government’s progress in reviewing the solvency funding regime in Ontario. Last summer, a consultation paper was released outlining two general approaches for reforming Ontario’s solvency funding framework: (i) maintaining the requirement to fund on both going concern and solvency bases, while modifying solvency funding requirements; and (ii) enhancing going concern funding requirements while eliminating current solvency funding requirements. The Budget provides that guiding principles for the new solvency funding framework will be released before the end of June 2017, along with measures to support transition to the new framework.  Draft regulations will be released for public consultation later this fall.

• If you sponsor an Ontario-registered DB pension plan, you should continue to follow Ontario’s review of its solvency funding framework.  In particular, if an actuarial valuation report will be filed for your pension plan in the coming months, you should assess how the new framework could impact your pension plan and whether adjusting your funding objectives may be beneficial.

Framework for Target Benefit Multi-Employer Pension Plans

The Budget reiterates the Ontario government’s commitment to establishing a new regulatory framework for target benefit multi-employer pension plans (MEPPs). Later this spring, the proposed framework for target benefit MEPPs will be announced and draft regulations for public consultation will be released this fall.  The new framework will be of greatest interest to unionized employers participating in certain MEPPs, known as specified Ontario multi-employer pension plans (SOMEPPs), as the new framework would replace the current time-limited funding rules for SOMEPPs.

• If you participate in a SOMEPP, you should continue to monitor these changes and consult with you plan administrator to confirm whether modifications will be made to your plan.

Modernizing the Framework for Defined Contribution Pension Plans

Several proposals to modernize rules relating to defined contribution (DC) pension plans are included in the Budget. Most notable are (i) the introduction of amendments to allow DC pension plans to pay variable benefits directly to plan members; (ii) potential updates to DC disclosure rules on plan member annual statements; and (iii) discussions with stakeholders regarding new approaches for managing the decumulation phase.

• If you sponsor a DC pension plan, you may want to consider the advantages and disadvantages of offering variable benefits through your pension plan and the additional expenses that could be imposed in doing so.  Note that regulations regarding variable benefits will be developed this spring.
• If you are a plan administrator, you should be mindful of the possible changes to pension governance obligations and administration costs if your pension plan provides variable benefits directly to plan members.  Among other things, you would continue to owe a fiduciary duty to plan members who choose to leave their assets in the plan, be required to maintain accounts with your DC service provider for these members and be obligated to provide ongoing plan information, such as member statements and investment disclosure, in accordance with legislative requirements and the CAP Guidelines.  We encourage you to assess the possible impact to your pension plan in light of the proposals and consider how best to discharge your obligations in the most effective and cost efficient manner.

Dealing with Missing Beneficiaries

The Budget acknowledges the challenges faced by plan administrators in trying to locate missing plan beneficiaries as well as the lack of guidance in dealing with this issue. In response, the Ontario government will instruct the Superintendent of Financial Services (Superintendent) to develop a policy to assist plan administrators in locating missing plan beneficiaries.  In addition, amendments to the Pension Benefits Act will be made to allow the Superintendent to waive requirements for providing pension statements to beneficiaries who cannot be located.  Other measures such as creating a registry for such beneficiaries will also be explored.

• If you are a plan sponsor or administrator, you can look forward to the helpful guidance on dealing with missing plan beneficiaries as the proposed measures should have a positive impact on your pension plan administration policies.

New Pension Regulator and Powers of the Superintendent

The Ontario government reaffirmed its commitment to establishing a new financial services and pension regulator, the Financial Services Regulatory Authority (FSRA), in the Budget. The government expects to appoint a board of directors for FSRA in spring 2017.  It will also continue to consult with stakeholders and review recommendations from the expert advisory panel in developing FSRA’s mandate and governance structure.  More information regarding FSRA can be found in our November 24, 2016 blog post.

The government is moving forward with expanding the powers of the Superintendent. Draft regulations regarding the Superintendent’s authority to impose administrative monetary penalties (AMPs) were posted on April 28, 2017 and comments are due by June 12, 2017.  Additional amendments will also be introduced to further expand the Superintendent’s powers, including the ability to direct plan administrators to provide certain information to plan beneficiaries and to hold meetings to discuss matters specified by the Superintendent.

• If you are a plan sponsor or administrator, you should be aware of the new rules regarding AMPs and when and how they can be applied.  Taking care to fulfil your fiduciary obligations will be key to avoiding possible AMPs and orders from the Superintendent.

Conclusion

Many of the pension reform initiatives announced in the Budget provide for further information to be released and action to be taken in the coming months.  We will keep you updated on these changes.  For more information and assistance in reviewing how these changes impact you and your pension plan, please contact a member of Dentons’ Pensions and Benefits group.

Are you an employer who is uncertain about what you should be doing to prepare for the changes to the Canada Pension Plan (CPP)?  This guide will help you.

The changes were announced by the federal government a year ago, and formal rules became law at the end of 2016.  Unlike the infamous Ontario Retirement Pension Plan, these government-run pension changes are here to stay.

Here is a summary of the changes.

 Mandatory contributions to the CPP by employers and employees will increase, starting January 2019.  The increases will be phased in gradually over several years.  By 2023 employers and employees will each be paying 5.95% of their eligible income to the CPP.  Right now they are each contributing 4.95% of eligible income.

It’s a significant increase in contributions.  The combined employer and employee mandatory contributions to the CPP will go from 9.9% of employees’ eligible income to 11.9% of their eligible income.  That’s a 21% increase.

And it’s an even bigger hit for higher-income employees and their employers.  Anyone with an annual salary of more than $70k (approximately), and their employers, will have to make additional contributions commencing 2024.

The upside is that the amount of the CPP benefit paid to Canadians will increase.  It is expected that the annual benefit paid by the CPP will increase by as much as 50%.  In today’s dollars, the maximum CPP annual payout would go from $13,370 to $20,000.  This full enhancement to the CPP benefit probably won’t be seen for approximately 40 years.

If you have Quebec employees, beware:  the CPP does not apply.  Changes to the Quebec Pension Plan are being considered, but it’s not known whether or when any changes will be made.

January 2019 is not far away.  If you will be making changes to retirement and savings plans as a result of the CPP changes, you may want to communicate those changes to employees in the next year or so.

As a starting point, here are some high-level strategic suggestions:

 If you have a Group RRSP or defined contribution pension plan:

• Consider whether to reduce the amount of required employee contributions to your plan, so that there will be little or no impact on your employees’ take-home pay.
• Consider reducing employer contributions to your Group RRSP or defined contribution pension plan, so that the overall employer costs of contributing to the CPP and your employer-sponsored plan remain level.  If you decide to do so, communicate the changes to employees now, so they are well aware in advance of any changes.

If you have a defined benefit pension plan:

• Find out if there is anything in your pension plan that relates to the CPP.  Are employee contributions computed based on how much they contribute to the CPP?  Is there a “bridge benefit” that relates to the CPP?
• Ask your actuary whether the liabilities of your pension plan will increase as a result of any provisions that relate to the CPP.
• Consider amending your pension plan to lessen the impact of the CPP changes, if any, on the design of your plan.

If you have a union:

• Find out if there are sections of the collective agreement that will restrict you from making changes to your retirement savings plans.  Consider letting the union know, in collective bargaining, that changes may be made due to CPP changes.
• If the term of the collective agreement goes beyond 2018, formulate a plan to communicate to the union the fact that employee take-home pay will go down as a result of higher CPP contributions.

Please contact a member of the Dentons Canada pension and benefits group for assistance in understanding how the CPP changes will impact your organization.  Be prepared.

In a recent decision, the Honourable Justice Marrocco of the Ontario Superior Court of Justice denied the request of the Amalgamated Transit Union Local 113 and Robert Kinnear (the “Applicants”) to restrain the TTC from conducting the random drug and alcohol testing of its employees.

The random testing applies to TTC employees who work in safety sensitive, specified management, senior management and designated executive positions, including the TTC’s CEO. The TTC expects to test 20% of its eligible employees per year, which means that statistically, each eligible employee has the chance of being tested once every five years. If selected, employees will be required to take an alcohol breathalyzer test and an oral fluid drug test. A failure to submit to a random test will be a violation of company policy, and employees who test positive will be considered unfit for duty.

The TTC first introduced random testing to its Fitness for Duty Policy in 2011 and the parties have since been involved in an ongoing arbitration on the same issue, which “has no end in sight”. The TTC approved the implementation of the random testing on March 23, 2016. Shortly thereafter, the Applicants applied to the Court for an injunction to stop the testing until the completion of the arbitration hearing.

The Applicants argued that random drug and alcohol testing would cause employees “irreparable harm” by infringing on the employees’ right to be free from unreasonable search and seizure. The Applicants also stated that the random testing: increased the likelihood of psychological harm to the employees, could damage the relationship between employees and management, and raised the risk of false-positive results.

In rejecting the Applicants’ arguments, the Court determined that TTC employees in safety-sensitive positions have a reasonably diminished expectation of privacy concerning their drug and alcohol consumption. In particular the Court noted that:

• The employees’ duties, which include helping people make approximately 1.8 million journeys on the TTC’s system every day, as well as the TTC’s atypical workplace, which is “genuinely Toronto itself”, reasonably diminish the employees’ expectation of privacy concerning drug and alcohol consumption;

• The TTC has chosen minimally invasive methods to conduct the random testing, which are superior to other methods available on the market;

• The nature of the Fitness for Duty Policy is both disciplinary and remedial. Employees have the opportunity to challenge any positive results and have some degree of control over the information collected and generated in the testing process; and

• Employees whose privacy has been “wrongfully infringed” by random testing have the opportunity to claim, and receive, monetary damages.

As such, the Court concluded that the TTC’s random drug and alcohol testing is an appropriate tool, which “will increase public safety”, as follows:

“After considering all the evidence, including the evidence to which I have referred, I am satisfied that, if random testing proceeds, [it] will increase the likelihood that an employee in a safety critical position, who is prone to using drugs or alcohol too close in time to coming to work, will either be ultimately detected when the test result is known or deterred by the prospect of being randomly tested.”

While the decision provides important insight on how the Court will approach the exercise of balancing employee privacy rights with the needs of a safety-sensitive workplace, it must also be remembered that this was an injunction application to prohibit the introduction of the Policy pending the arbitration, not a decision on the merits of the TTC’s Policy, which will be determined at arbitration. That said, the TTC has announced that the random drug and alcohol testing of its employees will begin this month (see the TTC’s press release here). The Court’s decision will likely encourage other employers in Ontario, particularly those in similarly-situated safety-sensitive workplaces, to follow suit.

A copy of the full decision can be found here: Amalgamated Transit Union, Local 113 v. Toronto Transit Commission, 2017 ONSC 2078

The Federal government announced in the budget that it intends to “stretch” employment insurance (“EI”) parental leave benefits to up to 18 months at a lower benefit rate of 33% of average weekly earnings (find that announcement here, at page 65).  That raises the question:  what is the employer’s obligation to hold a person’s job and reinstate the employee who wants to take the longer leave?  Is there an obligation to now have the same/comparable position to return to after the 18 months?

For provincially regulated employers, the short answer at this point is “unknown”.  Except in Quebec (which has its own parental insurance plan and is therefore unaffected by the federal changes), EI benefits are payable under the ‎federal Employment Insurance Act, so employees receive EI benefits (including maternity benefits) under that legislation. The right to a pregnancy/parental leave, and the right to reinstatement, arise under the provincial legislation (in Ontario, the Employment Standards Act).

Since benefits are determined under the ‎EI Act, but the right to a leave (and reinstatement) are entitlements granted by virtue of the provincial legislation, an increase in the length of benefit entitlement does not automatically mean an increase in the length of the leave entitlement.  The provincial governments are likely studying this and may change the provincial legislation to make the leave entitlement correspond to the extended benefit entitlement, but perhaps not. We’ll have to wait and see what the provinces do with the new federal EI rules.

For federally regulated employers, the Federal government plans to amend the Canada Labour Code to protect the jobs of federally regulated employees while they are receiving the extended parental leave benefits.

In the meantime, employers should keep an eye on this issue.  In particular if an EI top-up plan is in place in the workplace, employers should consider now how these changes will affect the plan, and whether amendments to the plan are needed in light of these changes.