Dear Premier Wynne:
As Food and Beverage Ontario’s (FBO) Board of Directors, we are writing on behalf of Ontario’s 3,800 food and beverage processors with respect to the recently released legislation, Bill 148: “Ontario’s Fair Workplaces, Better Jobs Act, 2017”.
The food and beverage processing industry in this province is a primary contributor to the Ontario economy[i] and its number one manufacturing employer. Our products are nourishing Ontarians and building Ontario’s brand as a trusted food leader around the globe. Food and beverages made in this province are safe, high quality and highly diversified, supplying many different markets and consumer segments. We are proud of our industry’s contributions to the health and wellness of Ontarians as well as our significant positive impact on the provincial economy and the environment.
The food and beverage processing industry is unique and does not operate in the same way that other manufacturers do in the province. Our raw materials are perishable, much of our value added product is perishable, there is biological content and our business is often seasonal in nature which can make processes very dynamic. Add to this other external factors such as weather, seasonal variability and changing consumer demands and it is easy to see how challenging it can be to control every phase of operations. Production flexibility is critical to our industry’s success as a job creator and economic driver.
Many of the proposed changes within Bill 148 are welcome, however we do have some concerns with specific changes that will clearly have a negative impact on food safety, industry sustainability and the growth of the sector. Our review of Bill 148 has been conducted within the context of acknowledging the economy is changing and the importance of ensuring fairness for all Ontarians.
After careful consideration, we have the following recommendations for amendments to Bill 148 that will ensure a robust working environment with a continued commitment to producing the highest quality and safest food and beverage products in the world.
Employment Standards Act – Changes to Scheduling
In our industry, flexibility in scheduling is a fundamental requirement to operating in a safe manner and in maintaining the highest standards for food safety. The requirement to provide at least four days’ working notice of a shift change (or an employee can refuse to work) compromises food safety, impacts the wellbeing of employees, creates animal welfare concerns[ii] and unnecessarily increases food waste. For consumers, this will impact the quality and price of the local goods they purchase. To be clear, there are no other provinces in Canada where labour legislation prescribes scheduling to this degree and for good reason. Other jurisdictions in Canada and around the world recognize that the agri-food sector has a unique set of production challenges. To address this, we need to have flexibility in our operational processes, including scheduling. We are dedicated to producing food that meets the highest standards for food safety and quality and we know how important this is to our consumers. To achieve this, we require a complement of highly trained and dedicated employees on every shift. As mentioned previously, the food and beverage processing industry is unique. Changes to the Employment Standards Act must consider our distinct production and scheduling requirements if we are to continue to provide safe and healthy food. We request that the four-day working notice be removed from this legislation.
Employment Standards Act – Personal Emergency Leave (PEL) Without A Doctor’s Note
The proposed changes granting all employees ten PELs, (two of those being paid) and no longer requiring employees to produce a doctor’s note will create significant problems in our industry, especially when combined with the proposed new scheduling regulations. With this change, absenteeism will dramatically increase and labour costs will rise.[iii] Increased absenteeism may also compromise food safety, the quality of our food and the safety of the work environment. To mitigate this potential situation, processors will need to add additional untrained workers or increase the workload for its remaining employees in order to maintain operations. In many cases we will be forced to stop production, which will mean lost wages for those that choose to come into work on their scheduled shift. We do not believe that requiring a doctor’s note when someone is legitimately ill is an unreasonable request and does not unfairly inconvenience our employees.
To maintain a fair workplace for all employees, our recommendation is that employers still have the ability to require a doctor’s note in the case of illness.
Employment Standards Act – Equal Pay for All
Full-time employees are highly trained to ensure food safety procedures are followed and maintained. Our processors invest substantial time and money to support a skilled workforce which is instrumental to producing high quality and safe food. Requiring employers to provide equal pay to a temporary help agency (THA) employee, or part time/seasonal employees will act as a deterrent to employers looking to hire unskilled labour. It also does not recognize the significant investment processors make in their employees. Additionally, this requirement will act as a deterrent to hiring additional people in times of need and it will have a negative impact on our existing employees and could result in increased layoffs.
Full-time employees bring a different level of expertise, speed and precision to the job, which is why they are paid more than seasonal, part-time and temporary employees regardless of the pay structure system used.
We request that the government eliminate the Equal Pay provisions for the food and beverage manufacturing industry for THA, seasonal, part-time and temporary employees.[iv]
Labour Relations Act – Consolidation of Bargaining Units
Many companies have had collective bargaining agreements (CBA) for decades and have made conscious decisions directly with the union for provisions that support a specific regional difference to ensure they are appropriate for the marketplace. This provision would render these efforts moot and companies would be less inclined to accommodate specific regional requests, with the fear of that flowing into a broader-scope bargaining unit at a later date. This provision also seriously hampers the right and ability of a company to continue its operations in the event of a labour dispute and removes the rights of unionized employees to work within the CBA that they negotiated and voted for. We recommend that the current LRA parameters for the establishment, maintenance and dissolution of a bargaining unit remain the same.
Labour Relations Act – Release of Employee Lists
For a union to request a certification vote, it needs to demonstrate support from 40% of its potential constituents. This is a fair and balanced representation of a company’s employees. Lowering this threshold to 20% (as a requirement for employers to provide the union with contact information) is a breach of employee’s rights to privacy and independent decision-making. It will also be disruptive to the industry through ongoing certification attempts. To maintain a fair representation, avoid unwarranted pressure and support our employee’s right to their privacy and personal choice, we recommend that the union must demonstrate they have support from a minimum of 40% of the workforce before an employer is required to provide the full employee list and contact information.
The current implementation plan of higher minimum wages will cost companies in our industry hundreds of thousands to millions of dollars. The food and beverage sector is a low-margin, high-labour intensive industry and our businesses simply can’t absorb these cost increases over such a short period. The shock to our industry will result in significant job losses and potentially business closures. The new minimum wage policy clearly runs counter to your challenge for the agri-food sector to create 120,000 new jobs by 2020. If the minimum wage is increased as quickly as has been proposed our industry will not be able to comply. .
We recommend responsible implementation of wage increases by extending the implementation period evenly over five years from the proposed 18-month period.
Finally, throughout the Changing Workplaces Review, our industry (and others) repeatedly asked that an economic impact study be conducted to fully understand the effects of any changes to the ESA and LRA prior to implementation. In the absence of this study, our member companies have completed their own analysis and it has become clear that the combined changes will have profound negative consequences on the Ontario economy through drastic increases in labour costs, reduced job creation and fewer opportunities for youth and low-skilled workers. This will ultimately hurt the very people your government is trying to help and we know this is not the intended consequence.
We would be pleased to meet with you to further discuss our industry’s unique circumstances and to advocate for responsible change in advance of the next Bill reading. We request your continued support of the food and beverage industry and the agri-food sector as a whole. Thank you in advance for your consideration and we look forward to meeting at your earliest convenience.
CEO Food and Beverage Ontario
(on behalf of the FBO Board)
Hon. Jeff Leal, Minister Responsible for Small Business and Minister of Agriculture, Food and Rural Affairs
Hon. Brad Duguid, Minister of Economic Development and Growth
Hon. Kevin Daniel Flynn, Minister of Labour
[i] With more than 3,000 businesses generating $41 billion in revenue, providing over 130,000 direct jobs and exporting $7.6 billion in product annually. The food and beverage processing sector generates another $24.1 billion in indirect economic impacts. Additionally, the sector is the first customer to farmers, with Ontario-based food processors buying about 65% of food-related farm production directly from the farmers. It is this kind of local sourcing that promotes the development of new, high-quality products that improve the health and wellbeing of people.
[ii] To explain using a specific example: Between farm environments, growing conditions, temperature and weather fluctuations, unplanned plant shutdowns and changing production specifications, scheduling flexibility is critical for the transport of live chickens from farm to processor. Unlike a non-biological product, even slight variations in any of these inputs can create a need for a short term schedule change (i.e. less than 48 hours’ notice). If transport drivers can refuse shifts and/or the new scheduling rules create scenarios where we lose flexibility in scheduling, this could easily result in any or a combination of the following: Chickens being readied for transport (taken off feed) and then not picked up on a timely basis leaving them off feed for longer than is within acceptable animal welfare guidelines; processors being fined for being over supply quota if chickens are left at farm too long and grow bigger/become heavier due to transport delays; animals being exposed to adverse weather conditions (heat or cold) during transport negatively impacting their health/welfare and increasing the number of chickens which are dead on arrival at the processing facility; and in the worst case, chickens not being able to be picked up as planned and having to be euthanized.
[iii] Essentially through this provision, the government has condoned a 3.9% absenteeism increase in Ontario (10 days off out of a targeted 260 days). Using this percentage, one company estimated the need to hire 14 more people to account for these absences resulting in an incremental labour cost of $700,000 a year. This increase in cost will force us to increase prices and puts us at a disadvantage in an already highly competitive market.
[iv] A member company of FBO currently hires 100 seasonal workers during its peak season, offering five months’ employment at forty hours per week; all paid above minimum wage, but not equal to their 80 full-time workers. As a result of this new requirement, the company is progressing automation plans with the objective of eliminating 60 seasonal jobs. Another company indicated that as a result of the increased cost to temporary workers, they will be forced to hire more permanent employees which will simply create cyclical lay-offs based on the fluctuations of the business.