Nearly seven years ago, the federal government’s Budget Implementation Act, 2018, No. 2 introduced new provisions to the Canada Labour Code (the “Code”) applicable to federally regulated employers, aimed at legislating on equal treatment and temporary help agencies. As of today, these provisions are not yet in force and await their effective date, which will be set by an order of the Governor in Council.
On February 22, 2025, the federal government published draft regulations amending, among other things, the Canada Labour Standards Regulations (the “Regulations”), to support the eventual implementation of the new Code provisions. In this article, we outline the main changes to the Code, as well as the proposed new amendments to the Regulations.
WHAT WILL THE CANADA LABOUR CODE PROVIDE?
Equal treatment
When they come into force, the provisions of the Code will prohibit federally regulated employers from paying an employee a lower rate of wages than they pay another employee because of a difference in their “employment status” when they are performing substantially the same kind of work under similar working conditions. It is important to note that this prohibition will not apply when the difference in the rate of wages is due to a specific reason such as seniority, merit, the quantity or quality of each employee’s production, or any other criterion prescribed by regulation. Employers will, of course, be prohibited from reducing an employee’s rate of wages in order to comply with this new requirement.
In addition, the Code will impose obligations on employers when an employee requests a review of their salary on the grounds that they believe they are the victim of unequal treatment. The employer must then provide the employee with a response within 90 days of the request and, if necessary, increase the rate of wages to bring it into line. The employee may also be offered compensation, if applicable. It should be noted that an employee will benefit from protection against any disciplinary action related to a request for a salary review.
Temporary help agencies
When they come into force, the new Code provisions will also prohibit federally regulated employers who are temporary help agencies from paying an employee working for one of their clients a lower wage rate than that which the client pays its own employees when they perform substantially the same kind of work under similar working conditions. Once again, this prohibition would not apply when the difference in the rate of wages is based on criteria listed in the Code, i.e., the system of seniority already established by the employer, merit, the quantity or quality of each employee’s production, or any other criterion prescribed by regulation.
The Code will also impose a number of prohibitions on temporary help agencies, including a prohibition on charging a fee to a person in connection with them becoming an employee and a prohibition on preventing or attempting to prevent an employee from establishing an employment relationship with a client.
In addition, the amendments introduce a salary review mechanism for employees who feel that their rate of wages does not comply with the Code, as well as job protection for employees who request such a review.
NEW AMENDMENTS TO THE REGULATIONS
From the outset, the Regulations, as amended, will clarify how to interpret an employee’s “employment status” in cases where an averaging agreement or a modified work schedule is in place. The Regulations will also describe how to determine to which industrial establishment an employee is attached and will add other exceptional circumstances in which pay differences would be justified and legitimate.
To support implementation of the Code, the government is proposing to add certain definitions to the Regulations, in particular to the term “employment status”. While the term “industrial establishment” is already defined in section 166 of the Code, notably for the purposes of the provisions relating to group terminations, the Regulations will introduce a new, more precise definition that will apply only for the purposes of the provisions pertaining to equal treatment and temporary help agencies.
The Regulations, as amended, will also introduce a provision to ensure fair comparison of the wages and working conditions of comparable employees, providing that employees can only be compared if they are paid the same type of wage rate.
Also, the Regulations will add to the list of exceptions already provided for in the Code that allow for pay differences in specific circumstances, including when the employer’s pay system is based on a criterion such as the geographic area in which an employee works.
Finally, minor amendments to the record-keeping provisions are proposed to enable the Labour Program to investigate complaints received in relation to the new provisions pertaining to equal treatment and temporary help agencies.
ENTRY INTO FORCE
According to the most recent announcements, these changes to the Canada Labour Code and the most recent changes to the Canada Labour Standards Regulations are expected to come into force in late 2025 or early 2026.
Our Labour and Employment Law team will continue to monitor the progress of these draft regulations and will keep you informed of any changes that may be made and when they will come into force.