Statutory Minimum Standards

• Pages: 993-1063

993

Chapter 13: Statutory Minimum Standards

13:100 INTRODUCTION

In this chapter, the focus shifts from collective bargaining to statutory regulation of the indi-

vidual employment relationship. As we have seen in Chapter , the common law of employ-

ment treats the relationship as one based in contract. In light of the disparity in bargaining

power between most employers and employees, it is commonly argued that the law of con-

tract, which rests upon notions of individual autonomy and market freedom, is ill-equipped

to eectively and fairly govern the employer-employee relationship. Statutory intervention,

such as legislated minimum standards of employment, is aimed at levelling the playing eld

by ensuring a basic oor of rights for workers. Employment standards legislation, such as the

Employment Standards Act, SO , c  in Ontario and Part III of the Canada Labour Code,

RSC , c L-, in the federal jurisdiction, governs a wide range of terms and conditions of

employment (such as minimum wages; deductions from pay; internships; hours of work

and overtime; public holidays; vacation; pregnancy, parental, and other leaves of absence;

termination of employment). This chapter examines the purpose and evolution of statutory

minimum standards, some of the diculties related to enforcement, and their relationship

to the common law of contract. A selection of caselaw oers a sample of some of the sub-

stantive statutory entitlements (such as minimum wage, vacation pay, overtime pay, and, in

the federal jurisdiction, the protection against unjust dismissal) alongside a consideration of

some of the potential gaps in the legislation’s coverage as it applies to “employees.”

In his  report on federal labour standards for the minister of labour, commissioner

Harry Arthurs articulated the “decency principle” against which, he argued, statutory min-

imum standards ought to be judged [Canada, Commission on the Review of Federal Labour

Standards, Fairness at Work: Federal Labour Standards for the st Century (Ottawa: Human

Resources and Social Development Canada, ) at x–xi]. He writes,

The fundamental principle of decency at work underlies all labour standards legislation

and is the benchmark against which all proposals must be measured:

Labour standards should ensure that no matter how limited his or her bargaining power,

no worker in the federal jurisdiction is oered, accepts or works under conditions that

Canadians would not regard as “decent.” No worker should therefore receive a wage that

is insucient to live on; be deprived of the payment of wages or benets to which they

are entitled; be subject to coercion, discrimination, indignity or unwarranted danger in

the workplace; or be required to work so many hours that he or she is eectively denied a

personal or civic life.

CHAPTER : STATUTORY MINIMUM STANDARDS

994

This decency principle must be read alongside a number of other important principles.

For example, Canada must maintain the dynamism of its market economy in order to

sustain high labour standards; regulatory interventions in that economy must be care-

fully considered and implemented in such a way as to ensure that competing employers

operate on a level playing eld; labour standards can and should balance the legitimate

interests and concerns of workers and employers through a strategy of “regulated ex-

ibility;” and legislation should be drafted and administered so as to achieve the highest

possible levels of compliance consistent with the ecient use of public resources and

the achievement of multiple public policies.

Statutory regulation of employment is often met with criticism by proponents of a free

labour market. The following passage provides an historical overview of this debate, and the

subsequent one considers challenges posed to realizing the principle of decent work in the

contemporary economic and social situation.

Barry J Reiter, “The Control of Contract Power” () : Oxford Journal of Legal Studies  at

– [footnotes omitted]

It is important to appreciate at the outset the implausibility of a claim that society should

be organized on the basis of private contracting behaviour. The claim advocates appar-

ent anarchy and amoralism. Never before the birth of faith in markets had gain been

advanced as an inherently worthy motive. Nor had economic structures ever been

sharply dierentiated from social structures and relations. But in an eort to throw o

feudal and religious shackles, to release energy and to give vent to new theories of social

justice, a broad coalition was forged over the sixteenth through the nineteenth century.

The coalition, including economic liberals, utilitarians, and classes rising in power pol-

itically and intellectually, adduced powerful arguments in support of the market. The

central benets they attributed to organization in this form included the following. First,

the market would provide powerful incentives motivating individuals to work and to

produce wealth in society. The resultant gain would improve the lot of all (or of most,

depending on the economist) individuals in society. The notion of incentives could be,

and indeed was, pushed to the point of urging the necessity of a substantial level of

poverty in society and of starvation as a sharp stick to keep the incentive structure keen.

Second, market organization oered promises of eciency. The consumer would deter-

mine what society produced: the cheapest mode of production of the right quantities of

goods and an ecient distribution network were explicit outcomes of the model. Third,

market organization would allow for innovation. This was a particularly critical attribute

given the substantial barriers to innovation that had been erected by the guilds and other

local protective arrangements. Fourth, the market meant freedom from imposition by

governmental or religious authorities. This freedom oered a consent basis to society, a

basis seen both as good in itself and as a legitimating force. Finally, the market promised

justice. The entire notion of market rewards and failures could be and was linked to a

personal merit principle.

The case was powerful, but it was never wholly accepted. Instead, strange and shift-

ing alliances of intellectual and political power combined to prevent the excesses of the

Introduction | :

995

market through the assertion of political power. Society reacted in a ‘spontaneous out-

burst’ to assert its primacy over economics. The details of the social reaction and the

proof of what I assert about its success are provided in Polanyi’s classic study, The Great

Transformation and in Atiyah’s interesting and extensive recent work, The Rise and Fall

of Freedom of Contract. It may suce to describe the nature of the rejection of market

principles in one critical sector only, that of ‘the supply of labour.’ The commodication

of labour was a critical step necessary to establish a market-based economy. Older feudal

notions of the relationship between workers and those responsible for them had to give

way if mobile labour was to be available to be bought and sold as supply and demand

dictated. The commodication of labour was not really achieved even in theory until

the repeal of the Poor Laws in . However, as the momentum to turn labour into a

commodity grew, the social reaction was already taking shape. It appeared in the form of

the reassertion and the continued assertion of values limiting market values in respect

of human labour. The force of the social reaction demonstrates that the nineteenth cen-

tury was anything but an era of laissez-faire. The best known reactions involve those

associated with the various Factory Acts, dating from . The Acts dealt with employ-

ment of children, hours of work, and safety matters. Similar legislation regulated other

important industrial sectors. A bureaucracy was created, industrial inspection Commis-

sions were established, Reports were issued and legislation followed frequently. Com-

bination laws were enacted early in the nineteenth century and Truck Acts were passed

frequently thereafter.

All of this social reaction occurred early in the ‘era of market economy.’ Today, the

dimensions of the reaction are even more apparent. Industrial codes and related legis-

lation govern virtually every aspect of employment: hiring, union rights and responsibil-

ities, hours of work, health and safety standards, compensation for injury, redundancy

arrangements (in some cases), minimum or prescribed wage rates (in many cases),

terms of payment, pension and unemployment benets. In modern society, it is a fact

that all but the most subsidiary features of the ‘labour contract’ are determined by insti-

tutions other than contract. The labour relationship is governed by political rather than

market power. Similarly, the permitted uses of lands and of capital were never and are

not now determined by other than a most tightly controlled market. The same may be

said of all other signicant features of modern life. Contract may be a medium, but as a

social directing and organizing principle, it is left well to the margins.

In the face of the powerful case adduced by the ‘market coalition’ how could this be

so? The answer has been provided by students of the social sciences. First, it is import-

ant to realize the historical fallacy on which the market economists built their theory.

When Adam Smith said that the division of labour in society was dependent on the

existence of markets, on ‘man’s propensity to barter, truck and exchange one thing for

another’ he was quite clearly historically wrong. This fact is not adduced so much t o cast

doubt on Smith’s historical facility as to point out the striking nature of the theory he

advanced. Nowhere before had society been subservient to economics, and a sharp break

with the past would have been necessary in order to implement the dramatic change in

the relationship between social and economic principles that the classical economists

and the utilitarians were, therefore, advocating. Second, it became apparent early on that