Canada introduces major changes to labour code

The Canadian government passed Bill C-86, the Budget Implementation Act of 2018, No. 2, which amends the Canadian Labour Code and the Employment Insurance Act.

Bill C-86 creates pay equity legislation and introduces substantial changes to leave and termination policies. The bill received Royal Assent on 13 December 2018 and is expected to enter effect in 2019 with staggered implementation dates.

The Pay Equity Act and the amendments to the Canadian Labour Code apply only to federally-regulated businesses which are limited to certain sectors and account for 18,000 employers in Canada. However, provinces are likely to change their legislation to reflect these amendments.

Below are the most noteworthy amendments introduced by the omnibus legislation in Bill C-86.

Leave of absence amendments

Medical leave

Starting on 1 September 2019, existing “sick leave” provisions will be called “medical leave” and will not only include leave for personal illness or injury but also leave for organ or tissue donations and for medical appointments during work hours. There will no longer be a three-months’ service requirement to be able to take this leave of absence. Employees will be entitled to take the existing 17 weeks any time after being hired. However, employers may require employees to provide a medical certificate for absences of three days or longer.  

Personal leave

Currently, employees with at least three months of service are entitled to three days of family responsibility leave of absence. This leave will be replaced by five days of personal leave per calendar year. The first three days will be paid leave for employees with at least three months of service, while the remaining two days will be unpaid. Employees with less than three months of service are still entitled to take this leave of absence, but all five days will be unpaid. Employees can take this leave for illness, injury, family responsibilities (health or education related), urgent matters or citizenship conferral. The implementation date of this leave has not been set.

Continuous service requirement

Starting on 1 September 2019, employees will no longer need to have six months of service to be eligible for:

  • Maternity leave.

  • Parental leave.

  • Leave related to the death or disappearance of a child.

  • Leave related to critical illness.

Bereavement leave 

Employer-paid bereavement leave will increase from three days to five days per year.

Family violence leave

Employees who have been victims of family violence are currently allowed to take 10 days of leave. Beginning in 2019, with an exact date yet to be determined, the first five days of this leave will be paid for employees with at least three months of service.

Court or Jury duty leave 

On 1 September 2019, employees will be able to take time off to act as a witness, juror or participate in a jury selection process. The terms of this leave are not yet specified. Vacation and holiday pay amendments

Vacation pay

All employees are currently entitled to two-to-three weeks of paid vacation depending on their length of service. Starting on 1 September 2019, the number of paid vacation weeks will increase as follows: 

  • Two weeks of vacation after one year of service.

  • Three weeks of vacation after five years of service.

  • Four weeks of vacation after 10 years of service.

Holiday pay

As of 1 September 2019, employees will no longer be required to have 30 days of service to be eligible for holiday pay. 

Rest periods and work breaks

Effective on 1 September 2019, employers will be required to provide employees with an unpaid 30-minute break for every five hours of work. Employers are also required to provide employees with a rest period of at least eight hours between shifts, except in the case of an emergency. Additional unpaid breaks for medical reasons should be provided. A medical certificate stating the length and frequency of these breaks can be requested by employers. Unpaid breaks for nursing should be provided as needed. 

Termination of employment

Currently, employers are required to provide two weeks’ written notice in the event of termination without cause. The implementation date of this change is yet to be determined. Under the bill, written notice requirements are increased as follows:  

  • Two weeks, if the employee has completed at least three consecutive months of continuous employment with the employer. 

  • Three weeks, if the employee has completed at least three consecutive years of continuous employment with the employer.

  • Four weeks, if the employee has completed at least four consecutive years of continuous employment with the employer.

  • Five weeks, if the employee has completed at least five consecutive years of continuous employment with the employer.

  • Six weeks, if the employee has completed at least six consecutive years of continuous employment with the employer.

  • Seven weeks, if the employee has completed at least seven consecutive years of continuous employment with the employer.

  • Eight weeks, if the employee has completed at least eight consecutive years of continuous employment with the employer.

Parental sharing benefit

Bill C-86 amends the Employment Insurance (EI) Act to implement the EI parental sharing benefit. The benefit, first announced in the 2018 federal budget, entered effect on 17 March 2019. It applies to every Canadian jurisdiction except Quebec, where employees are already covered by similar provisions under the Quebec Parental Insurance Plan. 

Parents who choose the standard benefit option of 55 percent of insurable earnings are now entitled to share 40 weeks of leave instead of 35 weeks, whereas parents who choose the extended benefit option of 33 percent of insurable earnings are entitled to share 69 weeks of leave instead of 61 weeks. 

The new measure is available to birth and adoptive parents. To be eligible for this benefit, both parents must claim parental leave and choose the same EI parental benefit option. The benefit can be taken by both parents simultaneously or at different times. The total period can be divided as they wish so long as neither parent takes more than 35 weeks for the standard option or 61 weeks for the extended option.

Pay Equity Act

The bill establishes a new Pay Equity Act, which requires employers with at least 10 employees to pay the same salary to male and female employees who:

  • Work in the same establishment.

  • Perform substantially the same kind of work and under the same working conditions.

  • Have the same skills and responsibilities.

Employers are also required to establish a pay equity plan within three years from the time the new regulation comes into force. The act creates a new federal role for a Pay Equity Commissioner, who is responsible for monitoring and ensuring compliance with the Pay Equity Act. Employers will be required to submit annual statements to the Commissioner, maintain equity plan records and update their plan every five years. The implementation date of this act is yet to be determined and supporting regulations have not been drafted.

Next Steps

Employers should monitor the implementation process of the bill and review their policies and practices regarding pay rates and leave policies. In addition, employers should budget for an increase in costs resulting mainly from (i) the increase of individual notice of termination time and, (ii) the increased leave allotments.


Useful Resources:

Bill C-86 (opens a new window) – The Budget Implementation Act, 2018, No. 2.

Canadian Labour code (opens a new window) as amended.

LégisQuébec, A-29.011 (opens a new window) – Act respecting parental insurance.