The Employment Standards Act (ESA) governs the employment relationship between most employers and employees in BC. However, there are important exceptions with which you should become familiar.
The Act applies to all employees, subject to the following exceptions:
- The act is only applicable to employers within the province of British Columbia that are not federal works or undertakings.
- Even if the act applies to an employer, it may not apply to persons engaged by the employer if they are independent contractors.
- Even if a person is an employee, the act may not apply if the employee falls under the specific exclusions listed in the regulations.
Employees covered by a collective agreement with certain provisions that meet or exceed entitlements required by the ESA will be governed by their collective agreement with respect to those matters
PROVINCIALLY REGULATED EMPLOYEES
The Act does not apply to employees employed in a federal work or undertaking, since the British Columbia legislature is only competent to enact legislation within its jurisdiction. The Canada Labour Code contains provisions that pertain to employees employed in a federal work or undertaking.
EMPLOYEES VS. INDEPENDENT CONTRACTORS
The Act only applies to employees. Independent contractors are excluded.
The Act does not define independent contractor or give guidance as to the difference between an employee and an independent contractor. However, the Act defines employee as including:
- a person, including a deceased person, receiving or entitled to wages for work performed for another;
- a person whom an employer allows, directly or indirectly, to perform work normally performed by an employee;
- a person being trained by an employer for the employer’s business;
- a person on leave from an employer;
- a person who has a right of recall.
See the Guide to the Employment Standards Act – Section 1 for more information.
The Branch uses a combination of four tests to distinguish between employees and independent contractors. Briefly stated, they are:
- The Control Test essentially considers whether the worker is truly independent of the employer and asks, “Who controls the worker and the work?” Factors to consider include whether the employer has control over the selection of the worker, the dismissal of the worker, the manner in which the worker performs his or her work, and the remuneration paid to the worker.
- The Four Fold Test considers four major factors in assessing a worker’s independence. The first factor is the degree of control the employer has over the worker. The second concerns ownership of the tools, space, supplies and equipment necessary to perform the work. The third and fourth factors consider the worker’s chance of profit or risk of loss, if any.
- The Organization or Integration Test considers whether the worker performs work that is integral to or contributes to the operation of the employer’s business. The more integrated the work is with the employer’s business, the more likely it is that the person is an employee and not an independent contractor.
- The Permanency Test considers the duration of the relationship. Generally, the more permanent the relationship is between the employer and the worker, the more likely the person is an employee and not an independent contractor.
These tests will be used to examine the entire relationship between the parties to determine whether the independent contractor is truly in business for himself or herself. More than one of these tests can apply to a case, and there may be other considerations.
The existence of a written contract between the employer and the worker does not settle the issue. Even if a contract expressly states that the relationship is one of an independent contractor, the Branch or Tribunal will still look at the actual circumstances, using the above tests to determine whether the relationship is one of independent contractor or employer/employee. View the Employee or Independent Contractor Factsheet for further information concerning the distinction between an employee and an independent contractor.
EMPLOYEE OR MANAGER?
Managers are excluded from Parts 4 and 5 of the Employment Standards Act which deal with hours of work, overtime entitlements and statutory holiday pay.
The Employment Standards Regulation defines a “manager” as:
- a person whose principal employment responsibilities consist of supervising or directing, or both supervising and directing, human or other resources, or
- a person employed in an executive capacity
Simply having the title of “manager” is not sufficient. To determine if an employee is a manager, the Employment Standards Branch considers:
- How much can the individual, on their own or otherwise, materially and substantially affect the employment conditions of those for whose work they are held responsible by the organization?
- What kind of responsibilities does the employee have with regard to company resources, even if there are certain checks on their authority?
Generally, managers have the ability to act independently and make decisions using their own discretion. This may include things such as:
- Ensuring company policies are followed
- Authorizing overtime, time off or leaves of absence
- Calling employees in to work
- Altering work processes
- Establishing or altering work schedules
- Training employees
- Committing or authorizing the use of company resources
- Managing a budget
See the Manager Factsheet for more information.
EMPLOYEES COVERED BY A COLLECTIVE AGREEMENT
In a unionized workplace, many of the terms and conditions of employment are set out in the collective agreement between the union and the employer. Nevertheless, many of the provisions of the ESA continue to apply to unionized employees. Any collective agreement made or renewed after May 30, 2019, must meet or exceed certain ESA entitlements.
If you are an employer, you must understand how the collective agreement overlaps with the Act. Where the employees represented by a trade union, and thus their terms and conditions of employment are covered by a collective agreement, the ESA may only have minimal application. View Section 3 of the Act for further details regarding the application of the Act to employees covered by a collective agreement. Also view the Collective Agreements and the Employment Standards Act Factsheet for more information concerning employees covered by a collective agreement.
The ESA is designed to protect the rights of workers; therefore, its provisions have been given a broad interpretation in order to ensure the protection of the statute to the widest possible group of individuals. It does not define “volunteer” and does not explicitly exempt volunteers from the Act.
The definitions of “employee”, “employer” and “work” under the ESA are broad and are designed to be very inclusive. In short, these definitions are as follows:
- an “employee” includes a person an employer allows, directly or indirectly, to perform work normally performed by an employee;
- an “employer” includes a person who has or had control or direction of an employee; and,
- “work” is defined as labour or services an employee performs for an employer.
In light of these definitions, depending on the day-to-day duties of the individual and surrounding circumstances, the risk is that the “volunteer” might be deemed to be an employee. Tourism and hospitality employers must take great caution in how they engage volunteers. For more information on how the work of volunteers, practicum students and interns may be interpreted by the Employment Standards Branch, visit our article on Volunteers.
Part 9 of the Act provides a mechanism for employers to get permission from the Branch to alter certain requirements of the Act. Variances are not granted as a matter of right. Thus, employer must apply and make their case for an alteration of the application of the ESA to the employer’s unique circumstances. The Employment Standards Branch will only grant variances in very rare and unique circumstances.
Please view the Variances Fact Sheet for further information regarding variances.
Information provided by Ryan Anderson, an employment lawyer with Mathews Dinsdale & Clark LLP. The information provided in this article is necessarily of a general nature and must not be regarded as legal advice. For more information about Mathews Dinsdale & Clark LLP, please visit mathewsdinsdale.com.