Are Employee Benefits Regulated by the Law? Here’s What the Law Says About Your Employee Benefits:

Employee benefits are absolutely a perk that can bring employees to your company in droves, but they are not a legal requirement. That is to say, no employer is legally obligated to provide employee benefit plans to their employees. In fact, in Canada the government provides roughly 70% of all healthcare expenses, so you might think that employee benefits aren’t quite as important. May be worth listing some of the benefits not covered by the government?

However, many employers still choose to offer benefits, because it improves employee quality and loyalty. Once they make that decision, there are some legal implications. The law governing these benefits is the Employment Standards Act, 2000 (ESA).

The Employment Standards Act, 2000

The ESA is an Act of Legislature in Ontario which regulates employment standard within the province. It outlines the minimum standards employers and employees must follow with regard to many different aspects of employment, including:

• Benefits plans
• Continuity of employment
• Equal pay
• Holidays
• Hours
• Leaves of absence
• Overtime
• Termination
• And much more

One of the many very important reasons for this Act is to regulate the fair administration of benefits plans by employers to employees. It serves many purposes, but mainly helps maintain fairness, accuracy, and efficiency in the handling of employee benefits. By offering employee benefits, an employer is agreeing to follow all of the rules outlined by the ESA, which includes the Anti-Discrimination Rule.

The Anti-Discrimination Rule

According to the rules of the ESA, discriminating between employees, employee dependents, beneficiaries, or survivors with regard to their age, sex, or marital status is prohibited. This rule of anti-discrimination applies to almost every employee benefits plan, including the following:

• Accident benefits
• Death benefits
• Dental benefits
• Disability benefits
• Drug benefits
• Hospital benefits
• Medical benefits
• Pensions
• Retirement
• Sickness benefits
• Superannuation

While there are very few exceptions to the anti-discriminations rules laid out by the ESA, they are complex and often difficult to navigate. The best policy is usually to assume that the rule applies to every benefit offered by your company to avoid problems.

Common grounds of discrimination

Though it may seem like discrimination should be a thing of the past, it is unfortunately alive and thriving today. In 2013 alone the Canadian Human Rights Commission received over 1,200 complaints of discrimination.

Even companies with the best intentions can make discrimination mistakes that land them in trouble with the Ministry of Labour, which administers the ESA and its regulation. The best way to avoid these issues is to be aware of how they can happen so you can make sure they aren’t happening in your workplace. Discrimination can happen with regard to:

• Age – Employers are not allowed to discriminate between their employees based on their ages if the employees are at least 18 years of age and under 65 years of age. In the eyes of benefits law, all employees within this age range are the same.

• Sex – There can be no discrimination between male and female employees, and there cannot be discrimination against pregnant employees. Men and women are to receive equal benefits treatment, and they can’t be distinguished for being, or not being, the primary wage earner in their home.

• Marital status – Employees can’t be discriminated because they are single or married, and employers cannot distinguish between same sexes and opposite sex couples, or common law marriages. Unmarried parents supporting children also may not be distinguished.

Employee benefits apply for all employees equally except in very few cases, and employers can consult with the Ministry of Labour if they have concerns or questions about how these rules affect their own situation.

There are some areas where benefits can be different and not be discriminated against. The following are some practices Benecaid’s customers’ use in differentiating plan design amongst employee groups including:

• Having different plans based on the tenure of employees. For example employees less than a year might get a less generous plan which incents them to stay beyond a year to get the more generous plan
• Different classes of employees will get different plans based on their needs and the importance of that group
• Health Spending Accounts is a great way to top up a benefits plan and can be offered to different segments of employees or even negotiated at an employee level for those that have specific medical needs. This is a huge employee attraction and retention tool where employees have huge medical needs not typically covered by a regular benefits plan (e.g., special needs kids, elder parent in critical care, fertility treatment)

Benecaid is a solution provider and would be happy to discuss your specific clients’ needs and some of the best practices we have employed.