New labour standards: Quebec government reforms miss the target for SMEs. (Government Issues).

The Quebec government unanimously passed a major reform to the Labour Standards Act earlier this year to provide better protection for employees. But the amendments have their detractors, especially among small business owners.

Before work on the Labour Standards Act reforms even began, company owners were threatening to lock their doors, and advocacy groups for non-unionized workers were warning the government that they expected major improvements.

When Bill 143 -- The Act to Amend the Act respecting Labour Standards -- was passed, small- and medium-size business owners expressed their disappointment loud and clear. Advocates for non-unionized employees, although generally satisfied with the reform, wanted to see it go even further.

Obviously, you can't please everyone in such situations, but the Minister of State for Human Resources and Labour at the time, Jean Rochon, told the Quebec media at the very outset that he was ready for the bosses, because well-being in the workplace can only improve productivity.

The primary objective of Bill 143 is to provide more support for low-income and at-risk employees. The previous legislation, which dated back 20 years, provided employees with very little protection, according to Au bas de i'echelle (Rank and File), an advocacy group for non-unionized workers.

After much debate, on December 19 last year, the members of the Quebec National Assembly unanimously passed the amendments to the Labour Standards Act. Forty groups from every socioeconomic sector participated in the reform process.

Lobbyists for the rights of non-unionized workers demanded changes in job security, paid statutory holidays, sick leave, leave for family-related reasons, parental leave, working hours, recourse for wrongful dismissal, psychological harassment in the workplace, and compensation. They made headway in most of these areas, though not all of their demands were met.

Minister Rochon maintained that the amendments would improve the lives of more than 1.6 million workers in Quebec who have only this law to fall back on. "The measures to balance work with home and family life, as well as those measures to protect against psychological harassment in the workplace are significant improvements that will benefit everyone," he claimed.

Human resources managers now have to apply the new labour standards that came into effect on May 1, except for a few minor amendments and measures concerning psychological harassment, which come into effect on June 1, 2004.

PsychoLogical harassment

Until now, the Labour Standards Act has never included any provisions for psychological harassment in the workplace. Nancy Larue, Rochon's political attache, noted that psychological harassment is defined in the act as "any vexatious behaviour, in the form of repeated and hostile or unwanted conduct, verbal comments, actions or gestures, that affects an employee's dignity or psychological or physical integrity and that results in a harmful work environment for the employee." The Labour Standards Act now stipulates that employees have the right to work in an environment free from psychological harassment.

Larue points out that the law addresses co-workers as well as superiors and business owners. The tribunals will decide whether complaints are well-founded or not. "Someone who is chastised in front of co-workers will be considered a victim of psychological harassment," she says, as an example of a case that could be submitted to the Quebec Labour Standards Commission, the organization that is currently in charge of both handling labour standards complaints and applying the law.

The Human Rights Commission is responsible for promoting and safeguarding human rights in Quebec. It currently handles discrimination complaints on the basis of sex, age, handicap, race and so forth. As of June 2004, if an employee feels he or she is being harassed or discriminated against in any way in the workplace, the employee will have recourse to the Quebec Labour Standards Commission.

The law also states that "a single serious incidence of such behaviour that has a lasting harmful effect on an employee may also constitute psychological harassment." Once the new provisions come into force, employers are required to take reasonable steps to prevent psychological harassment, and when such behaviour is brought to their attention, to stop it. If they fail to do so, specific recourse against psychological harassment is included in the law.

The new provisions come into effect later to give everyone time to adjust to the new rule, and to give organizations time to put harassment prevention measures in place.

"The psychological harassment rule was introduced into the act to make sure that the issue is addressed early in the process and that people do not wait until the victim falls into a major depression before action is taken," maintains Lame. The Commission will investigate as soon as the complaint is filed to determine whether the case will be heard. After the investigation, if conciliation efforts fail, the complaint will be referred to the Quebec Labour Relations Commission. The labour relations commissioner will then render the final decision about re-integrating the employee, paying compensation to the employee to cover lost wages or a job loss, ordering the employer to take reasonable steps to stop the harassment, ordering the employer to pay punitive or moral damages or for the employee's psychological bills, or changing the employee's disciplinary record.

Other provisions

Employees can now challenge wrongful dismissal after two years of service, instead of three years.

The new legislation gives employees the right to refuse to work shifts longer than 12 to 14 hours and weeks longer than 50 hours, and increases the minimum period of rest to 32 consecutive hours in a sevenday period, up from 24. The number of unpaid weeks available for sick leave is extended to 26 from 17, and the number of unpaid days an employee can take off for family-related reasons is increased to 10 from five per year. Employees are also entitled to take up to 12 weeks off to take care of a close relative. The parents of a minor who has a serious, potentially terminal illness are allowed to take up to 104 weeks off to care for their child.

New rules were introduced to calculate compensation for paid statutory holidays, which will be calculated in proportion to the wages earned in the pay periods preceding the holiday, regardless of whether an uninterrupted service requirement applies or the holiday is a workday for the employee. Also, annual leave, under certain conditions, may now be taken early or deferred to the following year.

Employer dissatisfaction

Andre Lavoie, senior policy analyst with the Canadian Federation of Independent Business (CFIB), has assessed the impact of the new legislation for SMEs.

"Labour Minister Rochon's intentions to increase minimum labour standards could well have a marked impact on overhead costs and management methods for thousands of small-and medium-sized businesses in Quebec," maintains Lavoie. He added that in his view the reform would be easier to apply for large corporations than SMEs whose resources are more limited and where the impacts could be far greater. Moreover, he says, the reform seems to fly in the face of the needs of thousands of business owners who were simply asking for a little more flexibility to do business in Quebec.

"You have to consider that 97% of Quebec companies employ fewer than 50 people. Changes to the labour standards that affect these companies head on will not only increase operating costs, but also add to their administrative burden," notes CFIB vice-president Richard Fahey.

Lavoie fears that the combined effect of the reform in a province where there is a shortage of skilled labour and an aging population will lead to major management constraints for SMEs. He believes that the situation will trigger such pressure on labour negotiations that SMEs will be even less competitive. "Quebec is already considered to have the most restrictive labour laws in North America, a labour code with an employee bias, and labour standards that are far more generous than elsewhere in Canada. This new legislation is once again asking SMEs to pay the cost of yet another reform. The result could bring investment to a halt," he says.

Economic costs

In collaboration with JG Duchaine consultants, the CFIB conducted an impact assessment of the economic costs of the labour standards reform on Quebec SMEs. "Our study clearly demonstrates that the Ministry of Labour seriously underestimated the cost of this major reform on small-and medium-sized business owners in Quebec," confirms the CFIB's senior economist Pierre Emmanuel Paradis. "We're not talking $188 million in additional costs for businesses, but 1.6 billion recurring dollars, or 8.7 times more than the government's evaluation. What is more, since we could not factor in other amendments the government wants to make, our figures are actually very conservative."

As for psychological harassment, the CFIB believes it doesn't really apply to SMEs. The CFIB study showed that 95% of respondents indicated that in the past five years they have not had to intervene with any employees for reasons of psychological harassment.

According to Lavoie, abolishing the 60-day continuous service criteria before new employees are entitled to paid statutory holidays is not only highly inequitable, but makes for a working environment that is completely out of kilter. "A new employee working two days a week for two months is treated the same as an employee with 25-years service." Harmonizing this measure with the other Canadian provinces would not unduly undermine the competitiveness of Quebec companies.

The CFIB suggests that the Quebec government opt for the Ontario solution to the work-family balance issue and the maintenance of benefits during leave, by extending family-related leave only for companies with 50 employees or more. Small companies simply don't have the capacity to adequately control this type of absenteeism.

According to the CFIB, the most equitable solution for Quebec SMEs would be to take the size of companies into consideration, applying the measures using scales that take the daily realities of the companies into account. Although the Quebec government did consider this approach, in the end it decided to apply the new rules the same way across the board. It'll be a few years before we know whether they've made the right decision.

Julie Demers ([e-mail]) is associate French editor of CMA Management magazine.