Statutory Minimum Standards

Chapter 13: Statutory Minimum Standards
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.
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 | :
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

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