3 Employment Standards Myths Debunked

mythsAs human resources consulting experts for small business, we find that many small businesses rely on myths about the BC Employment Standards Act to determine terms and conditions of employment for their staff. Here are three common employment standards myths or misconceptions that we repeatedly hear:

Myth 1: If I let an employee go, all I need to pay them is the termination amount required by the Employment Standards Act.

Fact: If you want to rely on the termination notice provisions required by employment standards legislation when letting an employee go without cause, you need to ensure that these provisions are clearly referenced in the employment agreement signed off by your employee. Many employers don’t have employment agreements that outline the terms and conditions of employment. As a result, when there is no written employment agreement, or there is no mention of termination provisions in an employment agreement, then your employees can make a claim through the courts for greater termination notice or severance. Common law settlements (i.e. those cases that have gone through the courts) can be significantly more than what the Employment Standards Act requires.

What to do: We strongly recommend that you include a termination provision in your employment agreements.  Specify how much working notice or pay in lieu of notice, or a combination thereof, to which the employee will be entitled. This notice period must meet, at a minimum, all requirements under applicable employment standards legislation.  Exceeding the minimum requirements is recommended if it is unlikely that an employee would accept minimum notice requirements, or if the position is more professional or managerial in nature. However, it could reduce your potential severance liability and save you money. Remember, provincial employment standards legislation determines the minimum, not the maximum, amount of notice that needs to be provided to an employee upon termination of their employment without cause.

As terminating an employee is one of the most difficult things you can do as a manager, it is strongly recommended that you consult with an employment lawyer or human resource management specialist to determine an appropriate termination offer to provide and to ensure that your legal obligations are met, prior to terminating the employment relationship.

Myth 2: If I pay employees a salary, I don’t need to pay them overtime.

Fact:  Employment Standards legislation does not care how an employee is paid in determining eligibility for overtime.  Overtime is required to be paid for overtime hours worked by overtime eligible employees.  If an overtime eligible employee is paid a regular salary, this salary needs to be divided by the normal or average hours of work in order to determine an hourly rate.  Overtime rates are then based on this hourly rate.  The majority of workers are overtime eligible, with the exception of managers and other employees whose positions or professions are excluded from the Employment Standards Act or from the hours of work and overtime provisions of the Act.  In certain circumstances, employers can also enter into a written agreement to average hours of work over a 1 to 4 week period in order to regulate hours and overtime hours.

Also, although a manager is excluded from the hours of work and overtime provisions of the Act, they are entitled to be paid for all hours worked. In some cases this could result in a manager being entitled to additional compensation.

What to do: Regardless of how you pay an employee, make sure you know which employees are overtime eligible and which ones are not.  The B.C. Employment Standards Act has an excellent Interpretation Guidelines Manual that very clearly explains an employer’s obligations.  Go to Regulation Part 7 – Variances and Exclusions to determine which professions are excluded from the Act as a whole, and which professions are excluded from the Hours of Work & Overtime provisions.

Clearly define in an employment agreement whether the employee is eligible or not eligible for overtime, and if they are eligible, what considerations there are (e.g. pre-approval of overtime hours, when will overtime be paid, whether there is a overtime bank, etc.).

Myth 3: I need to provide paid sick time to my employees.

Fact:  In BC, there is no obligation to provide paid sick leave to employees, and there is no standard number of sick days to offer employees. Any paid sick time provided is at the employer’s discretion and exceeds the requirements of the Act.

What to do: If it’s possible to avoid, we typically recommend against creating an “entitlement mentality” where you define a specific certain number of sick days per year that an employee is entitled to.  They may end up using those days whether they are truly sick or not.

For small businesses, if your unwritten practice has been to pay for a day or two here and there if an employee is sick, then continue with that approach. You might want to put a cap on the number of consecutive days you will pay for (e.g. up to 5) so that employees don’t expect you to pay for extended illnesses. To come up with a number, you may want to think about what you think the average time off an illness will take for recovery – a couple of days, maybe more? A flu could knock a person out for a week and you definitely don’t want the employee to come in to work and infect everyone else if they’re worried about not being paid.

The employer maintains discretion to determine if an absence will be paid or not which allows for greater flexibility.  This type of “honesty” policy works well where the work environment is good and where there is trust.

Also, we’d suggest after a certain number of days that you ask for a doctor’s note which confirms the employee is sick and the number of days they’re expected to be off. A common practice is to ask for a doctors note after 2 or 3 days of illness.

When it comes to managing your small business employees and the relevant employment standards legislation, it’s best to rely on facts, and not on myths and misconceptions. For HR solutions on staying on the right side of the law, please contact Vancouver-based Clear HR Consulting.


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