Case Comments

Legislative Update: PEI’s Employment Standards Act

Andrew Nielsen and Harshini Arumugam

Prince Edward Island’s Employment Standards Act (ESA) was recently repealed and replaced as part of a broader effort to modernize and clarify certain aspects of employment standards in the province.  It’s important for both employers and unions to be aware of these changes, and to ensure practices are updated accordingly.

Some of the most significant changes and additions are discussed below:

Termination Notice Periods

New notice periods will apply where employment is terminated without cause pursuant to Section 59 of the ESA, as stated below:

  • one week of notice, where the employee has been employed by the employer for a continuous period of 90 days or longer but less than one year;
  • two weeks of notice, where the employee has been employed by the employer for a continuous period of one year or longer but less than five years;
  • four weeks of notice, where the employee has been employed by the employer for a continuous period of five years or longer but less than 10 years;
  • six weeks of notice, where the employee has been employed by the employer for a continuous period of 10 years or longer but less than 15 years; or
  • eight weeks notice, where the employee has been employed by the employer for a continuous period of 15 years or longer.

Previously, the ESA only required notice to be provided after six months of employment, and would have required at least two weeks notice for employees between six months and five years of service.

In addition, Section 61 of the ESA will apply to any employer terminating 10 or more employees that represents at least 25% of the total number of employees within a two-month period. The employer must also notify the employees affected by the terminations, any unions that represent those employees and the Minister of Workforce, Advanced Learning and Population, and must give each affected employee at least 6 weeks notice of the termination.

Pay, Holidays, and Vacation Entitlements

The new ESA introduces the following new requirements concerning holiday pay and vacation:

  • Holiday Pay (see Section 28) – Previously, holiday pay was calculated at 1.5 times an employee’s regular way. Now, the ESA provides for holiday pay to be calculated at 5% percent of the employee’s wages, not including overtime pay, earned in the four weeks before the paid holiday.

     

  • Vacation (see Section 29 and 30) – Previously, ESA required employers to provide two weeks vacation for employees with less than eight years of continuous employment with the employer, and three weeks if they had more than eight years of continuous employment. Pursuant to the new ESA, employers must provide three weeks vacation after the employee has completed five or more years of service.

Overtime

Like other provinces, the PEI ESA will now permit employers and employees to enter into “averaging agreements” pursuant to Section 25, which allow for hours to be averaged over periods of two to four weeks for the purpose of calculating overtime pay.

New Medical Leave

The new ESA introduces a new provision that allows employees to take an unpaid medical leave from work in certain circumstances. The leave is for absences of at least 90 days, and up to 27 weeks, for:

  • medical treatment of and recovery from an illness or injury;
  • organ or tissue donation;
  • gender affirming care; or
  •  any other prescribed medical treatment or procedure that renders the person unable to work for an extended period.

Management Exclusions

Various provisions of the ESA will not apply to executive employees or those whose principal employment responsibilities consist of supervising or directing human or other resources, including Part 3 – Hours of Work, as well as:

  • Section 23: Overtime Pay
  • Section 24: Reporting Pay
  • Section 25: Averaging Agreement

    Changes Applicable to Unionized Workplaces

    Where employment is governed by a collective agreement, the ESA does not apply except for certain provisions. These exceptions are currently listed under section 2(4) and set a minimum standard that any collective agreement must follow. The new ESA has also added the following exceptions, all of which are listed under section 3(2)

  • Section 21: Entitlement to Wages
  • Section 43: Respecting Sick Leave
  • Section 44: Respecting Medical Leave
  • Section 61: Respecting Group Termination or Layoff

Since the minimum standards set out in sections 21, 43, 44, and 61 all apply to Collective Agreements per the new ESA, these changes may have implications for any existing agreements that do not meet the baseline requirements.

Key Take-Aways for Unions and Employers

The updated ESA represents a meaningful shift in how the employment standards apply in Prince Edward Island, including in unionized workplaces. The above summary is not intended to be exhaustive. Interested parties should consult legal counsel for further details, but at minimum will want to review these changes against current contracts, policies, and practices to ensure compliance going forward.

Disclosure:
The information provided here does not constitute legal advice and is based on details available at time of writing. Perspectives and interpretations around this information will vary depending on the individual circumstances to which they may apply. Consult legal counsel for information and advice relevant to your individual circumstances.

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