What You Should Know About The Employment Standards Act

What You Should Know About the Employment Standards Act

Staying compliant while expanding your team internationally isn’t easy. When hiring in Ontario, US companies contend with learning local tax and payroll laws and navigating the complexities of the Employment Standards Act (ESA). While the ESA sets out the basic rules that govern employment, from hours of work to wages, to vacation, there’s nothing basic about the act itself. Understanding the act, the impact of new legislation, and how it is enforced is a core employer responsibility. The consequences of not complying with it range from fines to prosecution. 

That’s why so many companies opt to work with a PEO like Canadian Payroll Services, that can take on local legal compliance. Our expert HR team keeps on top of changes to the Employment Standards Act of Ontario, so you don’t have to. 

What is the Employment Standards Act (ESA)? 

The Employment Standards Act was passed in 1968, consolidating several different labour and employment laws. It sets out minimum rights of workers and responsibilities of employers in Ontario. The act pertains to full and part time employees, some temp agencies, and PEOs operating in Ontario, like Canadian Payroll Services. In this blog, we will cover specifically what you should know about the Ontario Employer Standards Act, as a US company hiring internationally. 

What the Employment Standards Act Cover? 

Who Does the Employment Standards Act Apply To? 

The Ontario ESA applies to workers and employers in the province, including some temp workers and those employed through a PEO. This includes most employees working in Ontario, but not independent contractors or volunteers. (When hiring across the country, keep in mind that each province has its own Employment Standards.) However, the ESA does not cover: 

  • Workers employed in federally regulated industries (including airlines, railways, banks, post offices, TV and radio and federal civil servants)
  • Inmates working in prison and people on probation performing community service
  • Police officers
  • Politicians, officials, and judges
  • Religious leaders 
  • Trade union officials 
  • Volunteers

What is the Purpose of the Employment Standards Act? 

The ESA creates minimum standards for how employers operate and what workers can expect. These standards apply to several different aspects of employment, but some of the most important pertain to how and when employees are to be paid. 

  • Minimum Wage: Sets the minimum per hour wage for employees in Ontario.
  • Overtime Pay: Sets the rate at which employers must pay for overtime, when overtime begins, and who qualifies for it.
  • Severance: Defines the rate of severance pay for long time employees and under what circumstances it must be paid out. 
  • Vacation Time and Pay: Sets out minimum rates of paid vacation time and vacation pay for full and part time workers. 
  • Termination: Defines cause to terminate, required length of notice, and what employers must pay at termination. 
  • Statutory Holidays and Pay: Defines paid holidays, holiday pay rates and rules, and how days in lieu may be paid.  
  • Hours of Work: Sets out the minimum and maximum hours of work for various types of employees and when Overtime Pay should be paid. 

What Happens When You Don’t Comply with The Employment Standards Act? 

If you fail to comply with the Employment Standards Act, the consequences can be severe. In addition to being forced to finally comply with the act, you may be levied a fine, ordered to pay any monies owning (in backpay, overtime, and severance) and even prosecuted. Working with a PEO is a great way to stay compliant and avoid fines and prosecution. 

  • For minor violations you may be levied a fine of up to $295 plus any monies owing
  • For more serious violations you will be given a summons to appear in court and be levied fines of up to $1000/offence, plus any monies owing
  • For the most serious violations, individuals may face prosecution, a fine up to $50,000 and 12 months in jail. Corporations may face fines up to $100,000 for the first offence, $250,000 for a second offence and $500,000 for a third or more offences.

Work With A PEO Like Canadian Payroll Services 

Keeping up with the Employment Standards Act of Ontario can be hard for US companies that just want to hire in Canada and focus on their core business. Working with a PEO like Canadian Payroll Service makes it exactly that easy. Our in-house staff of HR experts and employment law partners stay on top of the ESA and enforcement trends so that you don’t have to. We ensure that you can hire quickly and compliantly in Ontario, without worrying about stumbling into fines or prosecution. 

Want to learn more about how we keep you compliant? Contact us today! 

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