The Ontario Employment Standards Act, 2000 (the “ESA”) requires employers to create and retain detailed records pertaining to the employment of each employee for specific periods of time. It is important to ensure your record keeping practices conform to the ESA’s requirements, as failure to do so may result in fines or other consequences for non-compliance. Our newsletter this month outlines the ESA’s various record keeping requirements.
Basic Employee Records
Employers must keep up to date records of each employee’s basic information, as follows:
Retain for three (3) years after the employee ceased to be employed:
- the employee’s name and address; and
- the employee’s start date.
Retain for three (3) years after the day/week to which the information relates:
- the dates and times the employee worked and the hours worked by the employee in each day and each week, but this is not required for a salaried employee if:
- the employer records the employee’s weekly and daily excess hours of work (i.e. hours over and above eight (8) hours worked per day); or
- the employee is not entitled to overtime pay pursuant to the ESA; and
- if the employee has two or more regular rates of pay, and, in a work week, the employee performed work for the employee above the overtime threshold (i.e. 44 hours in a week), the dates and times the employee worked in excess of the overtime threshold at each rate of pay.
Retain for three (3) years after the information was given to the employee:
- the information contained in each employee’s wage statement (i.e. the pay period, wage rate, gross amount of wages and how it was calculated, the amount and purpose of each deduction from wages, any amount deducted for room and board (if applicable), and the net amount being paid to the employee);
- all written statements provided to employees in respect of agreements to work on public holiday days (including the date of the written statement, the public holiday the employee will work, and the date of the substitute holiday the employee will receive); and
- the amount of vacation pay being paid to the employee, where the employee elects to receive vacation pay on each pay cheque.
Employers must also retain the employee’s date of birth, if the employee is a student and under 18 years of age. This information must be retained the earlier of three (3) years after their 18th birthday, or three (3) years after they cease employment.
Records of Employee Leaves
Employers are also required to retain all notices, certificates, correspondence and other documents given to or produced by the employer that relate to an employee taking any of the job-protected leaves provided under the ESA, such as pregnancy leave, parental leave, sick leave, family medical leave, etc., for three (3) years after the day on which the leave expired.
Vacation Time and Vacation Pay Records
With respect to vacation, employers must keep detailed records of the following:
- vacation time earned since the date of hire but not taken before the start of the vacation entitlement year;
- vacation time earned during the vacation entitlement year;
- vacation taken during the vacation entitlement year;
- balance of vacation time remaining at the end of the vacation entitlement year;
- vacation pay earned during the vacation entitlement year and how the amount was calculated;
- vacation pay paid during the vacation entitlement year (note: this is not required if vacation pay is paid to an employee on each pay cheque); and
- the amount of wages on which the vacation pay paid during the vacation entitlement year was calculated and the period of time to which those wages relate (note: this is not required if vacation pay is paid to an employee on each pay cheque).
There are slightly different record keeping requirements if your workplace has established an alternative vacation entitlement year for a specific employee.
Employers are required to make a record of the above information regarding vacation time and pay for each vacation entitlement year no later than seven (7) days after the completion of the vacation entitlement year, or the first pay day following the completion of the vacation entitlement year, whichever is later. Employers must retain these records for five (5) years after the record was made.
Other Recording Keeping Requirements
- Employer must retain every agreement it has made with an employee to permit the employee to work hours in excess of the ESA’s time limits for three (3) years after the last day on which work was performed under the agreement.
- Every written policy on disconnecting from work, or on electronic monitoring, must be retained for three (3) years after the policy ceases to be in effect.
- With respect to overtime averaging agreements, every averaging agreement the employer has made with an employee must be retained for three (3) years after the last day on which work was performed under the agreement.
- Every agreement for an “extended lay-off” pursuant to the ESA that the employer has made with an employee must be retained for three (3) years after the date the approval of the extended layoff expires.
- With respect to job postings, employers must retain copies of public advertised job postings and any associated application forms, as well as information provided to interviewed job applicants, for three (3) years after the job posting is removed or after the day the information was provided to the applicant (as applicable).
- Every written policy on sharing in tips or other gratuities that is required to be posted by the ESA must be retained for three (3) years after the policy ceases to be in effect.
Consequences for Non-Compliance
The purpose of the ESA’s recording keeping requirements is to ensure critical evidence related to potential employee complaints made to the Ministry of Labour are preserved for investigation. Pursuant to the ESA, employers are required to readily produce any of these records for inspection if requested by an employment standards officer, even if the records are being retained by another person or entity on behalf of the employer.
Employers may be subject to significant fines or be found to have violated the ESA if they failed to produce records requested by an employment standards officer, or if they have failed to maintain the above records in accordance with the ESA.
Maintaining accurate records is the best way to defend your business against allegations of improper pay (including vacation pay), overtime violations, or other common allegations brought by employees to the Ministry of Labour. Without accurate recording keeping, an employment standards officer is left to guess as to what may have happened, and may take an employee’s word in rendering a decision.
Do not hesitate to contact us if you are unsure of your business’ record keeping obligations.