MERIT CANADA AT WORK: Find out how we are advocating for best business practices
Volume 22 • Issue 2 • 2014
A FORUM ON OPEN SHOP CONSTRUCTION
Find out if executive coaching is right for you BENEFITS BOOM Build up your perks with the Merit Hour Bank plan
PM #40020055
THE $500,000 TOILET Open tender avoids project inflation
The Fuzzy Line
When is a contractor actually an employee
BY THE NUMBERS: Canada’s construction statistics, from coast to coast
TOGETHER WE BUILD SUCCESS.
Contents Volume 22 • Issue 2 • 2014
6 5 Message From Merit Canada’s Chair By Domenic Mattina
6 The Benefit Boom
20 Find the right corporate coach and establish a relationship that could change your career By Michelle Lindstrom Illustration by Steve Adams
25 Merit, Coast to Coast Regional Merit organizations are making a splash in their home provinces advocating for an open shop approach
Merit member employees worked more than 100 million hours in 2013. The Merit Hour Bank is one of the reasons By Suzanne Pescod
29 Merit Canada’s Efforts
10 The $500,000 Toilet
32 Build Better Apprenticeships
If guaranteeing work to unions is inflating the cost of public projects, why aren’t we open tendering? By Terrance Oakey
14 Independent Contractor or Employee?
Read about how Merit Canada is taking care of business By Terrance Oakey
Look to successful models, rather than legislating a poor solution By Peter Pilarski
38 By the Numbers Canadian construction statistics
Clarify the fuzzy line that exists between and employee and a contractor By William Johnston
20 Coaches’ Corner Find the right corporate coach and establish a relationship that could change your career By Michelle Lindstrom
14
32
10 OPENMIND 2014
3
INVEST IN YOUR TEAM CUSTOMIZE YOUR CORPORATE TRAINING PROGRAM
NAIT’s 40+ years of corporate training experience shows that we are essential to helping business and industry become more productive, competitive and successful in today’s global economy. With more than 200 world-class programs, our Corporate and International office customizes and delivers relevant training across a wide range of competencies, in Alberta and internationally. • • • • •
Aboriginal Initiatives Business and Leadership Computer Training Engineering Technologies Environmental Management
Call today 780.471.6248 | nait.ca/cit
• • • •
Information Technology Project Management Telecommunications Trades
Message From Merit Canada’s Chair
On behalf of Merit Canada, welcome to the 22nd edition of Open Mind magazine and the fourth edition for Merit Canada.
Volume 22 • Issue 2 • 2014 Publisher
Ruth Kelly
Executive Editor
Stephen Kushner
Associate Editor
Suzanne Pescod
Director of Custom Content
Mifi Purvis
Production Manager
Betty Feniak Smith
Production Technicians
Brent Felzien Brandon Hoover
Circulation Manager
Karen Reilly
Vice-President Sales
Anita McGillis
Advertising Representatives
Kathy Kelley Alison DeGroot
Sales Assistants
Julia Ehli Michelle Benz
Art Director
Charles Burke
Associate Art Directors
Andrea deBoer Colin Spence
Contributing Writers Ben Freeland, William Johnston, Michelle Lindstrom, Terrance Oakey, Suzanne Pescod, Peter Pilarski Contributing Illustrators and Photographers Steve Adams, Stockwell Collins, Nick Crane, Kevin Ghiglione, Heff O’Reilly, Ben Rude, Raymond Stockton Open Mind is published two times per year by Venture Publishing Inc. for Merit Contractors Association. Venture Publishing Inc. 10259-105 Street, Edmonton, Alberta T5J 1E3 Tel.: (780) 990-0839 Fax: (780) 425-4921 admin@venturepublishing.ca www.venturepublishing.ca Merit Contractors Association 103-13025 St. Albert Trail, Edmonton, Alberta T5L 4H5 Tel.: (780) 455-5999 or 1-888-816-9991 Fax: (780) 455-2109 meritedm@meritalberta.com www.meritalberta.com Merit Contractors Association is a non-profit organization that offers human resource services to the open shop construction industry. Printed in Canada by Transcontinental LGM Graphics The opinions conveyed by contributors to Open Mind magazine may not be indicative of the views of Venture Publishing Inc. or Merit Contractors Association. While every effort is made to ensure accuracy, neither Venture Publishing Inc. nor Merit Contractors Association assume any responsibility or liability for errors or omissions. Canadian Publications Mail Product Agreement #40020055 Copyright © 2014 by Merit Contractors Association No part of this publication should be reproduced without express permission of Merit Contractors Association.
Open Mind is Canada’s only magazine dedicated
to the open shop construction sector, focusing on issues that affect the livelihood of an industry employing more than one million people across Canada. Terrance Oakey has been leading Merit Canada’s advocacy since 2011. In 2013, Merit Canada led the charge on several initiatives to increase the amount of competition in the construction industry, ending “card check” at the federal level and advocating for the rights of the open shop industry. In the article “The $500,000 Toilet” (page 10), Oakey unpacks the issues of open tendering, explaining how outdated practices are leading to increasing expenses on federal and provincial projects. For an update on Merit organizations across the country check out “Merit, Coast to Coast” (page 25) to learn about the issues important to our provincial associations. What can a good business coach do for your business, and how do you select a good business coach? In the article “Coaches’ Corner” (page 20) we look at the ins and outs of business coaching in the construction industry by interviewing both coaches and leaders to share their insights about their business coaching relationships. Apprentices are the future of the construction industry, and it is important to increase their abilities to learn while endorsing the trades as a viable career option to a younger generation. So how does our current regulation shape the way apprentices are being taught on the job? With an emphasis on the arguments for and against deregulation, check out the story “Build Better Apprenticeships” (page 32) to learn more. A challenge to business owners and a legal conundrum in some cases, is defining the difference between an independent contractor and an employee. Written from a legal perspective, the story “Independent Contactor or Employee?” (page 14) defines the two identities and offers tips on how to run your business smoothly and legally while employing both employees and contractors on projects. We hope you enjoy the 2014 edition of Open Mind, and as always we encourage you to give us feedback or suggestions on future topics. From all of us at Merit Canada, have a great 2014! Domenic Mattina CHAIR MERIT CANADA
OPENMIND 2014
5
6
OPENMIND 2014
ILLUSTRATION: RAY STOCKTON
BOOM Why the Merit benefit plan has seen significant growth over the past 20 years BY SUZANNE PESCOD
T
he year 2013 was record breaking for the Merit Hour Bank program. Merit Member employees worked more than 100 million hours, a significant indicator of Merit’s tremendous growth, not only over the past year, but since its inception. A good benefit package is one of your best tools to attract and retain the best employees. As shown in many surveys, a benefit package is an essential component of preferred employment. But the construction industry has a diversity not seen in many other industries. Project based, seasonally affected, and skills driven, many components of the industry mean you can’t package just any benefit program into something that meets the needs of employers and employees. In Western Canada, open shop contractors make up nearly 80 per cent of the work underway in the construction markets. As you venture east across the country, the numbers rise only marginally for the building trade unions, but economic factors have put open shop contractors in a preferred market, as they have a much better ability to provide their clients with the most cost-effective product. This relationship and the strength of a competitive market are great for economics, but when we talk
about benefits, we need to think about the construction employee. It is with both the employer and the employee in mind that Merit provides a tailor-made benefit plan that has yet to be topped by anything else in the open shop construction industry. Merit’s Hour Bank program is the only one of its kind in the free enterprise, non-union environment.
Merit Hour Bank plan participants know that they and their families will be taken care of. As employees work they build hours in their Hour Bank account in order to qualify and maintain benefits, in contrast to stationary industry who use a monthly premium structure. To become “in-benefit” an employee must first accumulate 300 hours of work for a Merit company, and then for every 150 hours worked following, the employee receives a month of benefit coverage. If any employee ever falls below the 150 hours, they are given a self-pay option in order to maintain their benefits for themselves and their family. The per-project need for labour in the construction industry provides months, sometimes years of steady work for a OPENMIND 2014
7
Benefit Boom
skilled construction person, but once the project is completed, many are laid off, or left to find work on another project with another company. The Merit Benefit Plan is portable, and an employee does not lose their benefits, or standing in benefit, if they find work with another Merit company. The ability for employees to transfer their benefits to another company is an incredibly important factor in the success of the Hour Bank plan. If an employee is unable to find work
efit program as a means to attract new skilled employees. The economics of the Merit Benefit plan and its cost effectiveness are driven by several factors. One is that the Merit plan avoids the costly aspects of dealing with an insurance broker, who then engages an insurance company. With the Merit plan there are no commissions being paid and low fees to insurance companies as Merit’s size allows it to negotiate low rates not offered by any competitors in the market. The result is low premiums to contractors. The Merit plan comes with the added bonus of Mercon administration, which keeps the bulk of the paperwork and issues of dealing with benefits, out of your office. Mercon acts as a third party administration for members, the only thing companies have to do is report their hours, and then Mercon looks after everything else. Communication about benefits, claims issues, and all questions about benefits are handled through the Mercon office. Adding to the growth of the benefit plan, Merit recognized a need from members to develop a plan for their office employees, so Merit constructed a salaried plan that is being quickly taken up by member companies across the country. Although it follows a different set of guidelines tailored to the salaried worker, the benefit plan is competitive, cost effective and, again, recognized by the construction industry.
When we talk about benefits, we need to think about the construction employee. immediately following a downsizing or layoff, the Hour Bank program provides a self-payment option to the employee, giving him up to six months to retain benefits while out of work. Imagine the difference in your quality of life if you knew that you and your family would be OK in the face of job loss. The peace of mind and ease of transition is one of the reasons why employees are often Merit’s biggest source of referrals as they transfer from company to company. The transfer of benefits between Merit companies is also a huge boost to employers as Merit has seen the search term “Merit Benefits” become one of the more popular searches within the industry for online job-seekers. Companies are now using the industry recognized Merit Ben-
WORK HOURS
8
OPENMIND 2014
BANK HOURS
USE HOURS
TOTAL HOURS WORKED YEAR 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
TOTAL 103,774,392 96,729,350 87,908,004 79,583,013 74,140,547 77,595,931 69,743,223 58,264,783 51,931,342 43,693,974 40,670,945 36,126,615 33,033,640 26,644,185 22,617,321 19,474,088 14,990,746 10,843,291 8,232,430 7,332,558 7,244,617 7,188,576 6,585,812 6,729,128 6,341,166 5,713,626 5,045,662 2,158,821
Recently Merit adopted a new tagline, “Your People Have People Too.” This sentiment resonates loudly within the industry. By providing not just medical and dental coverage, but optional benefit coverage, retiree plans and several freeof-charge counselling services, employees know that they and their families will be taken care of. In fewer than eight years, the Hour Bank program has doubled reported hours worked. With its competitive rates, outstanding coverage, and increased adoption across the country throughout the open shop sector, the Merit Hour Bank plan continues to grow in recogntion, use, and value to all of its members.
C
M
Y
CM
MY
CY
CMY
K
Anyone can bring an iPad on to a jobsite. But... it’s what you can do with it that makes an iPad useful! Book Your Demo Today
Using the power of Simplicity to Re-Think Construction Field Reporting. Proud to be a Canadian Company
ipad + web app Enterprise Reporting System 1-888-885-4306 sitemaxsystems.com
10
OPENMIND 2014
ILLUSTRATION BY: NICK CRANE
THE
$500,000 TOILET
Guaranteeing work to unions is inflating the cost of public projects. So why is this happening? BY TERRANCE OAKEY
T
his past year, Merit Canada focused its efforts to bring a truly
open and transparent tendering system to the construction industry at the federal level and – in Ontario and Manitoba – at the provincial level. Merit Canada launched a new website to bring attention to the issue (opportunitytowork.ca) and ran ads in a number of publications, and those outreach efforts are starting to pay off. At the federal level, the House of Commons Transport Committee launched an important study called How Competition Can Make Infrastructure Dollars Go Further and held hearings from April to June. On behalf of members across the country, Merit Canada appeared before the Committee and brought other stakeholders together to advance this important issue. The move was timely, coming during continued fiscal challenges at all levels of government coupled with crumbling infrastructure in many jurisdictions. Since then, Merit Canada’s public engagement has continued to draw attention to outrageous examples of what happens when competitive bidding is not allowed. Consider the lowest bid to build a simple brick public washroom in Kitchener: $564,744. This is 40 per cent higher than budgeted and a whopping 150 per cent more than the average cost to build a house in Kitchener.
OPENMIND 2014
11
The $500,000 Toilet There are other examples from the hall of shame in the area. Consider that the City of Waterloo was forced to appeal to the Ontario Labour Board in its effort to open a public tender for a $140 million sewage treatment plant to 27 contractors, rather than just two. There are many more examples like these across Canada, where too many jurisdictions continue to practice closed tendering, in which specific unionized contractors affiliated with the building trades unions are given privileged access to public sector contracts.
goes down and costs go up. A study conducted by the City of Montreal found closed tendering inflated project costs anywhere from 30 to 85 per cent. As we argued before the Transport Committee, it is time for Ottawa to take a leadership role and ensure projects that use any federal funds be tendered openly. This policy should be included in all infrastructure agreements and apply to all Crown corporations and any other federal mechanisms used to fund infrastructure. However, the debate around open tendering is not only taking place at the federal level. For example, the restrictive policies of the City of Toronto have come under scrutiny in recent months. The city continues to have laws on the books that restrict open tendering of projects, including an official fair wage policy that requires all bidders to meet the specified conditions for salary and benefits. This policy restricts competition since it blocks some companies from even bidding, while making sure that the costs for all bidders are raised to those of union-only shops, thus raising costs for taxpayers. Toronto is also bound by decades-old certifications with This arcane and indefensible practice means that right off the top, seven out of 10 construction workers in Canada are excluded from unions representing electricians, carpenters, plumbers, brickemployment on these projects because they do not belong to a union. layers, painters, glaziers, sheet metal workers, asbestos workers To make things even less competitive, specific unions have privi- and ironworkers in the industrial, commercial and institutional leged access to these contracts over other unions, thereby further sector. In addition, the Toronto Transit Commission (TTC) engages in a voluntary closed tendering process, requiring bidlimiting competition. It does not take a degree in economics to know what happens ders to have membership in the building trades council. All this incurs a major cost to the taxpaying public. During when 70 per cent of any industry is barred from competing. Quality the 2010 municipal election, Rob Ford said the city would save $80 million a year – $320 million in his first term as mayor – by scrapDESIGN-BUILD ping the city’s fair wage policy. According to a Cardus study, construction projects in the ELECTRICAL SERVICES city worth approximately $591,000,000 were subject to restrictions due to construction 13415 - 149 Street, Edmonton, AB, T5L 2T3 labour monopolies and Toronto Councillor Phone: 780-444-6510 • Fax: 780-483-4073 Karen Stintz has put the price of restrictive union rules at $100 million a year. Another key development in this fight around open tendering is taking place in Ontario where the provincial Conservatives have proposed a policy that would fix the situation in Toronto. The Conservatives have recognized the harm that union-only tendering has brought to that province and have committed to “abolish the practice of closed tendering across Ontario’s municipal and broader public sector.” The party is currently the official Opposition in Ontario We are honored to be recognized as the with an election expected in the spring of winners for the "2014 Contractor of the Year” 2014. If the Conservatives are elected, this Trade under 15 M. We wish to thank our People could lead to Ontario being the first provwho through their expertise have earned this ince in Canada to legislate open tendering recognition. People are our greatest asset and provisions in public sector infrastructure success is only possible with you. We also wish contracting. to thank our valued clients and contractors who Open tendering is about fairness have given us the opportunity to provide electrical services. Thank you for your trust and for taxpayers. Governments have an
Rob Ford said the city would save $80 million a year – $320 million in his first term as mayor – by scrapping the fair wage policy.
WWW.ALTAPRO.CA
Training our People. We are wired like that.
confidence in our dynamic team!
New to Matrix 2014: obligation to use their money efficiently. Real competition ensures that infrastructure dollars go further. Moreover, companies that pay federal taxes should not be precluded from bidding on public contracts – paid for with their tax dollars – simply because they do not belong to the right union. The open tendering fight is also taking place in Manitoba, though in this case it is more focused on the rights of workers. Merit Canada has partnered with its provincial affiliate to launch a court action against Manitoba Hydro over the so-called “Manitoba Hydro scheme.” The scheme requires all contractors who obtain work on certain large-scale Manitoba Hydro projects to agree as a condition of obtaining the work that their employees working on the project will become union members, pay union dues and be covered by a collective agreement. A similar scheme has been put in place for work on the Manitoba floodway. Merit Manitoba’s challenge of both schemes is based on two principle arguments from the Canadian Charter of Rights and Freedoms. The first is that the requirement to join a designated trade union in order to work on the project and/or remit dues to that union, whether or not the employee wishes to be a member of that union or any other, violates the affected employees’ freedom of association, which is protected by s. 2(d) of the Charter. The second argument is that, having been compelled to join a union and/or remit dues to the union in order to work on the project, the employees’ freedom of expression, which is protected by s. 2(b) of the Charter, is violated by the union’s public expressions of support for political parties or policies that the employees do not support. These breaches of employees’ freedom of association and expression are not justified in a free and democratic society as required by s. 1 of the Charter. This Charter violation is nowhere more apparent than where unions are participating in the political process, and are using union dues for political or other purposes outside of representation of workers in collective bargaining or contract administration. These battles continue in 2014 and Merit Canada will happily take them on because the issues at hand deal with fundamental rights for workers and fairness for taxpayers. It is time for governments to abolish these policies. If not, they will be forced to publicly defend them to taxpayers.
* Matrix Online is Canada's FIRST integrated online HR community for the skilled labour workforce. Our technology connects the industry's best companies with the industry's most promising talent. Launching Summer 2014. * Purchased Office Space next door to our existing office now have double the office space and new training facility. * New Safety Program (HSE TRAX) all our sites will now have tablets to keep up with all safety documents for our COR and instant filing of any WCB Claims on site.
Matrix Labour Leasing Ltd. is a qualified, professional Full-Service Human Resources Company for construction contractors across Canada. At Matrix Labour Leasing we are proud to provide you with our expertise, experience, and professionalism gained over the past 11 years in the construction and mining industry. Our success has developed over time by continuing to be consistent and committed to both our clients and employees. We are dedicated to providing top quality skilled labour to our clients for any project they may require. For our employees, Matrix has been able to commit, and maintain employment for highly skilled trades from day one based on trust, dedication, and experience. And in turn, our clients will consistently receive the reliability, knowledge, and experience from our resources they require to complete any project.
www.matrixlabourleasing.com 403-201-9520 • info@matrixlabourleasing.com Suite 204, 11420 27th Street SE Calgary, AB T2Z 3R6
14
OPENMIND 2014
ILLUSTRATION BY: KEVIN GHIGLIONE
INDEPENDENT
CONTRACTOR OR
EMPLOYEE There are plenty of people working hard on your site. You should know where the potential pitfalls lie that may blur the line between employee and contractor
BY WILLIAM JOHNSTON (LAWYER WITH THE FIRM MCLENNAN ROSS)
T
he use of independent contractors (or “direct service
providers”) in business is a means for companies to reduce costs. However, improperly classifying a worker as an independent contractor can have serious implications. Regardless of the parties’ written agreement or any clear understanding of the intention that a worker is an independent contractor, courts, Labour Tribunals and the Canada Revenue Agency cannot be bound. The government will assess the putative employer to determine his liability for unpaid taxes, workers’ compensation premiums or other levies owing in an employment relationship. The employer may amass penalties if the essence of the relationship is actually one of employment. The independent contractor can also potentially be awarded damages under employment standards legislation or human rights legislation if the relationship is truly an employment relationship.
OPENMIND 2014
15
Independent Contractor or Employee
Companies must be aware that in pursuing this type of business relationship with a contractor they may not achieve the arms-length relationship intended and could be liable just as though the independent contractor were actually an employee. What are the factors that inform whether an ostensible arms-length independent contractor is actually an employee, despite to the intentions of the parties? The answer should drive home the implications of improperly designating a worker as an independent contractor. FACTORS INFORMING THE NATURE OF THE PARTIES’ RELATIONSHIP
The tests labour tribunals rely on, in tax court and in regular court, are all very similar although there may be a different emphasis on the various factors, depending on which type of issue is under review. The intention of the parties is important but is absolutely not determinative. Beyond the intention of the parties, adjudicators look at other factors to discern the essence of the relationship. Context is extremely important as different types of independent contractors will necessarily present features of an employment relationship due to the nature of the work. No one factor is decisive, and each factor may have a different importance in the assessment depending on the type of services under contract and the forum in which the question is being decided. There are different definitions of “employee” in various pieces of legislation,
some more inclusive than others, but most tend to follow the common law test of “employment,” where five considerations are of primary importance: control, ownership of tools, chance of profit/risk of loss, integration of services into payor’s operations, and frequency of payment under contract. Other factors will also receive consideration, particularly the type of services under contract, and the overall circumstances. There is no exhaustive list of relevant indicators, and we consider each case in context. Control is perhaps the most important consideration of all. The ability to delegate tasks on an ongoing basis and to circumscribe the manner and hours in which the work is to be completed are typically essential in an employment relationship. In making these demands, the payor will typically also impact the person’s ability to make a profit, since he isn’t free to innovate, or increase productivity. For the payor to achieve control, the contractor requires direct and ongoing supervision, which is not usually indicative of an independent enterprise and therefore points to an employment relationship. In the lists of factors set out above, it is easy to perceive control as a common element throughout.
In addition to the above factors, it is also noteworthy to consider the financial dependence of the independent contractor, particularly in lawsuits against the payor company for wrongful dismissal
Determining if a worker is an employee or an independent contractor is not about whether he is performing services as his own business. and for matters relating to unpaid tax remittances and unemployment benefits. Courts are sympathetic to independent contractors terminated after a long history of service and whose livelihood has become dependent on the parties’ business relationship. These people typically provide the overwhelming majority of their services to the other party. The loss of the contract without warning has profound implications to the contractor’s economic well-being. If successful in their action, courts will assess damages for the period of reasonable notice which should have been given in a similar fashion to regular cases of wrongful dismissal of an employee. IMPLICATIONS OF A “DEEMED EMPLOYER” DESIGNATION
Independent contractors in a deemed employment relationship can sue for damages when the contract is terminated without reasonable notice. You might think that a termination provision in the contract saves the day but termination provisions that are less than required by the relevant employment standards legislation will be void. The payor can also be liable for unpaid overtime, vacation pay, holiday pay and other benefits provided under employment standards legislation. Claims may proceed either in court or in an employment standards tribunal. If successful, damages for the employer who is improperly holding wages and benefits, as well as damages for failing to provide
reasonable notice prior to termination, will be awarded to the independent contractor. Though uncommon, if the manner in which the contract was terminated was egregiously wrong or careless, and the independent contractor suffers emotional harm, the court may also award damages over and above the typical damages for wrongful termination. The payor may be liable to the independent contractor under human rights legislation with the potential for damages. An independent contractor whom the court or tribunal deems an employee might claim that the payor discriminated against them on the basis of a protected ground, such as denying maternity and parental leave, discriminating on the basis of family status, or failing to accommodate disabilities. Another unexpected consequence for employers is that labour boards may be prepared to accept applications for union certifications that include signatures of dependent contractors and may certify bargaining units that include these people. A ruling in any court or tribunal that decides this type of issue is not binding on any other. These decisions are made by reference to the purpose of the legislation or right that will be affected. Therefore, even if a court or tribunal decides that a dependent contractor is not an employee for one purpose the possibility remains that the same person will be an employee for a different purpose.
making proper income tax withholdings from payments of employment income to employees; no such requirement exists for payments to contractors. • Contributions and premiums required in respect of CPP and EI. Employers are required to make appropriate EI and CPP contributions and withholdings from an employee’s income, again, something not required with regard to payments to contractors. • Deductions for the recipient in computing taxable income for a taxation year. Contractor businesses (with the exception of personal service businesses addressed below) may deduct numerous expenses used for the purpose of earning income, while employees have only restricted deductions available to them. • Whether services provided by the recipient are subject to GST. A contractor’s services will likely be considered a taxable supply subject to GST, while an employee is obviously not required to charge and collect GST.
General Contracting Project Management Butler Building Systems Design/Build Contracting
Even if the parties believe they have not created an employment relationship, the courts may still find that one exists.
INDEPENDENT CONTRACTOR FROM THE CRA PERSPECTIVE
The distinction between classifying a person as an employee rather than an independent contractor for income tax, the Canada Pension Plan (CPP), Employment Insurance (EI), and Goods and Services Tax (GST) purposes is crucial for determining: • Income tax withholding obligations of the payor. Employers are responsible for
The test to determine whether a worker is an employee or an independent contractor is whether or not the person is performing the services as his own business, on his own account. We base this question on a two-step process of inquiry: first, by looking at the subjective intent of the parties; second, by looking at the reality of how the work is being accomplished to see whether the objective reality matches the parties’ subjective intent. The objective reality considers all relevant circumstances focusing on the same factors as above. Even if the parties believe they have not created an employment relationship, if the circumstances do not support that conclusion, the CRA and the courts may still find that an employment
elan Elan Construction Limited #100, 3639 - 27th Street N.E. Calgary, AB T1Y 5E4 Tel: (403) 291-1165 Fax: (403) 291-5396 www.elanconstruction.com
Independent Contractor or Employee
The unfortunate outcome for the payor/employer is that they can be liable to pay unpaid remittances for income tax, CPP and EI. relationship in fact exists. The unfortunate outcome for the payor/employer is that they can be liable to pay unpaid remittances for income tax, CPP and EI. TRAP FOR THE UNWARY: PERSONAL SERVICE BUSINESSES
Given the added responsibilities, both under employment law and tax law, a payor wishing to avoid being an employer may choose to hire workers as independent contractors as opposed to employees. One of the ways employers will help push workers into the contractor classification is by only paying corporations. Paying only corporations reduces the risk (from the payor’s perspective) that the CRA will consider the payor to be an employer. Workers often believe being paid through a corporation they own and control is a good idea, as there are numerous deductions and tax planning options available to a Canadian small business corporation engaged in an active business. However, both parties should be cautious. Under subsection 125(7) of the ITA, in circumstances where a worker would reasonably be regarded as an employee, but for the existence of their corporation, the CRA could conclude the worker’s corporation is a personal service business. Importantly, as the personal service business classification is an anti-avoidance provision, the Tax Court has indicated that the intention of the parties is not relevant to determining whether the corporation is a personal service business, even though intention is relevant in determining whether a worker is an employee in other 18
OPENMIND 2014
parts of the ITA, the CPPA, the EIA, and the ETA. Personal service businesses are taxed at a higher rate and denied many deductions. While these corporations can take tax planning steps to limit the impact of being classified as a personal service business, at best the worker will end up being taxed similarly to an employee. If he doesn’t take proper planning steps, the worker and his corporation may end up paying significantly more taxes than he would if he had had simply been an employee. As a result, it is better for the worker to be classified as an employee than a personal service business. While the direct risk of being found to be a personal service business is largely borne by the worker, there may be business reasons and overall liability reasons why a payor may prefer not to place this risk on their workers. Resist the temptation to treat employees as contractors. You should only do so when it is clear that there is a good argument that they are truly independent contractors.
RBC Group Advantage
Are you getting the most from your employee benefits? Switch today and earn RBC Rewards® points worth up to $625 in gift cards. As part of Merit Canada‡, you are an RBC Group AdvantageTM member and have access to all-inclusive banking packages that could save you money. Make the switch today and receive up to $625 in gift cards!+
Ask us about the RBC Group Advantage program. Call 1-888-769-2566 or visit rbc.com/meritcanada.
TM
® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. ‡ All other trademarks are the property of their respective owner(s). + To get $625 worth of gift cards/certificates, you will need a total of 75,000 RBC Rewards points. For more details, go to www.rbcrewards.com. For complete terms and conditions of the group banking offer, go to www.rbc.com/groupterms. 102027 (03/2014)
20
OPENMIND 2014
ILLUSTRATION BY: STEVE ADAMS
BY MICHELLE LINDSTROM
A how-to approach to find the right person and establish a relationship that could change your career
A
n executive coach has a relationship with a company leader
much like a sports coach does with an athlete. The sports coach pushes the athlete to improve habits, endurance, knowledge and ability to be better at his or her sport. But the coach can’t do the work for the athlete. FMI Corporation, one of many business-coaching options out there, purposely uses player-to-coach relationship principles when working with executives in the construction industry. Jake Appelman, a principal at FMI, says the fundamental purpose of executive coaching is to help business leaders get better results via a customized, coach-to-coached relationship.
OPENMIND 2014
21
Coaches’ Corner
Most executive coaching relationships start with the two parties creating a goal-focused plan that notes specific items the executive wants to improve upon with the coach’s help. It’s a plan both can refer back to along the journey, which typically lasts six months to a year. Appelman says for FMI, the coach’s first conversation with a client establishes the “criteria for success,” which breaks down how many meetings the two will have, who will contact whom and confidentiality ground rules. Some company owners will sponsor coaching sessions for one of their executives and request to hear the details and plan of what the pair covers each session. The coach makes certain how much detail the coached person is willing to share, and with whom. “From there, we build our coaching plan, which is a critical document that shows how we’re going to measure success at the end of it all,” Appelman says. Executive coaching is a foreign concept to many company leaders and therefore, few purposely seek out such assistance. Appelman says much of the coaching business FMI gets is from referrals, but it stems from the consulting work FMI does for overall organizational improvement. Consulting typically involves a comprehensive analysis of a company, followed by a full report with recommendations of areas on which to improve. Consultants would typically leave it to the company to implement the items in the report afterwards, Appelman explains. “If we’re working with a company around its succession plan, ownership transfer or leader development in general, we’ll bring in executive coaching as a way to accelerate that process and to drive individual change or help it change an organization.” Not all coaches take FMI’s two-pronged approach, but Appelman says that guiding an entire organization, in addition to one-on-one leadership training, tackles a challenge organizations tend to face during phases of change and improvement.
“If you just do the individual executive work, the executive goes back in and no one else has changed,” he says. “It’s the same culture with people who aren’t supportive and don’t give feedback so the coachee [coached person] is trying out all this new, great stuff he learned with his coach but the environment just rejects it.”
looking outside of the organization to get that sort of mentoring, coaching and development.” Knowing when to seek out that outside advice may not be as obvious as some would think. Washington says the right time should be at the middle-point between a company’s roller coaster ride of crisis and growth. “When you’re in crisis, your first job is to solve the crisis,” Washington says of company executives. “If you’re in a rapid growth phase, you’re probably just trying to manage the growth.” Between those two extremes, executives would benefit from setting aside some time to invest in themselves. “The real value of executive coaching is that it’s designed to work for very busy executives,” Appelman says. “Instead of saying, ‘We’re going to send you off for a four-day program and pull you out of operations and executive leadership for four days,’ we integrate it into their daily routine. Most of them can spare an hour for a phone call every two or three weeks.” With each check-in phone call, the coach and executive refer to the initial coaching plan and confirm things are on track. A coach may check if an executive had that planned tough conversation with
Executive coaching starts with two parties creating a goal-focused plan around areas the executive wants to improve.
22
OPENMIND 2014
Exective coaching is not therapy, stresses Dr. Marvin Washington, an associate professor for the Alberta School of Business at the University of Alberta who also coaches a few executives each year. The relationship with a coach is meant to be a safe platform to talk about the challenges an organizational leader faces, he says. It is also to guide the conversations, keeping the executive focused on his or her professional goals. This type of coaching is geared to the top two or three levels of a company because, the higher up in an organization you go, the fewer people there are who have gone where you’ve gone and who have a sense of what you’re going through, Washington says. “This means you have people
an employee to see how it went. Also, a coach may suggest a book to read or listen to that pertains to the executive’s current situation, and may ask for feedback at the next scheduled call. When company leaders have a specific request, such as guidance on how to better develop talent for the organization, Appelman has asked executives to keep a journal, noting at the end of each day the success, failure, and general progress of an initiative. The regularly scheduled check-in calls also present an opportunity for the people being coached to provide feedback about the relationship. If they aren’t getting what they expected, then they need to speak up early on and be clear about what they really want and need. This way the coach can adjust his or her guidance. Appelman says a good executive coach has no ego and remains committed to the executive’s success. He also cites other attributes a coach should have: great listening skills to provide guidance, not answers; flexibility to the day’s concerns of an executive, which can completely change the focus of a check-in call; and candor because the higher up in an organization an executive goes, the less direct feedback he or she will receive from colleagues. “I would say that the executives should be prepared for anywhere from four to five hours of homework in between check-in calls to really make it work,” Appelman says. He’s wary of anyone who requests coaching but then hesitates with the mention of the effort that both parties have to contribute to this type of relationship. His company has walked away from engagements with potential clients who were not committed enough. “The coachee really has to be willing to learn, do the work and show up – literally – for the calls and not skip them. He must be committed to the process,” Appelman says. “For that reason, we usually recommend the ideal coachee to be someone who is already a highperformer.”
my time because I could be doing this with someone else.” When a good connection is made, Washington guides executives to structure their thinking. They have spent years running from crisis to rapid growth and back again and lost the ability to think effectively. “We know that when they do think, good things happen,” Washington says. “The hour of structured thinking time [with a coach] will solve many hours of problems.” After working his way up through the
From an executive’s perspective, it’s important that he finds the right coach to motivate him, and sometimes the first coach isn’t the right one. Washington compares executive coaches to personal trainers at a gym. “If I’m a yeller-in-yourface, and you need somebody to hold your hand and be a cheerleader, instead of me trying to become that, let me go find you a cheerleader,” he says, adding that a good coach will have relationships with other ones to be able to refer clients appropriately. He jokes that to determine if a relationship will work for him and a client,
company his parents founded, Cory Jodoin became a co-owner of Jen-Col Construction Ltd. in 2000. Then last year, he bought his parents out, becoming the sole owner and president of the 36-year-old commercial contracting company in Stony Plain. The shift from managing to leading triggered Jodin’s memories of an attempt to self-train for an arduous backpacking trip years ago. He trained alone but didn’t pace himself properly or do the specific exercises needed to be truly prepared for the trip and paid for it physically. “At the end of the day, it really boils down to this,” he says, “You don’t know everything and, to be truly successful, you need to surround yourself with the best people to help you achieve your objective. It doesn’t matter how high up the ladder you are, you do not know everything and everyone can learn and grow.” In construction, Jodoin says that when competitors talk it is never to share industry insight or to ask for advice. It’s just simple chit chat. So if the solution isn’t in-house, where do you go? Jen-Col hired FMI to consult the company through its leadership transition, which led to Jodoin and two other executives signing up for about a year’s-worth of executive coaching. He liked that FMI’s sole focus is the construction industry, then he didn’t have to spend time explaining what he does and why. He wanted coaching because the timing felt right but also he saw the folly
Knowing when to seek outside advice may not be obvious. The right time should be at the middle-point between crisis and growth. it’s a “three-date thing.” He doesn’t count the first meeting as one of the “dates” because it is just for coffee and it’s free. If there’s enough of a match after that to go further, then they meet two more times to discuss the goals and overall plan. The third date is to finalize a few things and ensure both parties feel this will be a good use of their time. If they don’t, both can walk away and no harm is done. “It’s an intimate relationship,” Washington says. “I don’t want to waste your time, but I also don’t want to waste
OPENMIND 2014
23
Coaches’ Corner of taking the same approach to issues over and over and expecting different results. “Coaching funnels you in the right – or different – direction to analyze something or look at it differently,” Jodoin says. “When you become a leader of a company, you change from doing to leading, and leading is basically working with your people and coaching them to achieve the vision and goals.” He doesn’t suggest taking the coaching route if it’s just another thing to check off your to-do list. “You’re not going to get what you want out of it,” he says. “But if you’re really committed to growing, coaching is a great way of doing it.” The benefits come back to a sports analogy. “The vast majority of executives spend 90 per cent of their time performing and 10 per cent of their time practising,” Appelman says. “If you look at really great performers from an athletic perspective, they spend the vast majority of their time preparing to perform.”
WHERE CAN I GET ONE? The International Coaching Federation (ICF) is currently the leading certification body for executive coaches. Certification levels are based on the number of hours a person spends coaching and whether he or she has taken an accredited coaching training program. See coachfederation.org for more information. Once you identify a potential coach based on the coach’s certification level or resumé, it’s time to interview him or her with the following questions: REFERENCES: Can I speak to a couple of people you have coached? STYLE: What is your coaching approach? How do you get results? BENCHMARKING: How do you measure results and mark progress? EXPERIENCE: How many people have you coached? How long have you been coaching? What level of executives do you coach? SPECIALIZATION: Do you focus on any particular industry? Do you understand my business at a day-to-day level? Have you worked in my industry before? (Note: The U of A’s Dr. Marvin Washington coaches all industries – police, health care, small-business entrepreneurs – and says if the relationship is good, a coach can provide effective guidance across industries.)
George Pinckney, Director Business Development Suite 1250 10303 Jasper Avenue Edmonton, Alberta Phone (780) 429-3500
ILLUSTRATION BY: BEN RUDE
Across
NATION
Regional Merit organizations are making a splash in their respective home provinces as they continue to advocate for a fair open shop approach
All over Canada, Merit Contractors Association is having an effect on the
training, compensation and continuing advocacy for the construction industry. Their efforts are transforming our industry’s landscape.
OPENMIND 2014
25
Across the Nation
Merit Alberta
Merit Manitoba
This year the Alberta associ- Merit Contractors Association ation has stayed strong with of Manitoba continues to its commitment to training expand its footprint across the by redeveloping and intro- province. The membership is ducing more updates to the currently growing at about 10 Leadership Development for per cent annually, and comSupervisors course, focused prises 235 companies with on harnessing an employee’s more than 5,000 employees. natural leadership abilities In 2012, a group of construcand providing him or her with tion workers, supported by the skills to truly mentor and lead within an organization. Merit Manitoba, filed a statement of claim in the Court of Queen’s On the public policy front, Merit Alberta has continued to Bench challenging the Manitoba NDP government policy, and work to improve construction competitiveness by participating Manitoba Hydro PMAs that put the interest of trade unions in an industry stakeholders consultation led by former Alberta over the charter-protected rights of workers who chose to remain Labour Relations Chair, Andy Sims. That process has been com- non-unionized. Essentially “Does the Canadian Charter of Rights pleted, and the report has been submitted to the government and Freedoms protect the rights of open shop or non-unionized for review and action. workers?” The association is now In 2013 the case THE MERIT HOUR BANK BENEFIT PLAN IS A engaged in a lobby began to slowly find effort to encourage the STRONG DIFFERENTIATOR FOR OUR MEMBERS, AS THEY its way through the government to amend court with briefs and CONTINUE TO GROW THEIR BUSINESS IN A HIGHLY legislation in such a affidavits filed, and COMPETITIVE MARKETPLACE. way that it improves preliminary hearcompetitiveness. ings set for 2014. Merit Alberta has also taken a lead role on the Alberta Merit Manitoba continues to provide a voice for open shop Coalition for Action on Labour Shortages. This group of indus- construction and is very active in providing Gold Seal Credit try associations, representing 21 industries across the country, Courses and other education and training opportunities advocates for changes to immigration laws and enhancements to members. to the temporary foreign worker program. New construction in all sectors has sustained a fairly high For another year in a row Merit Alberta saw growth in the level of activity across Manitoba, which is experiencing a lack Merit member employee hours worked under the Hour Bank of skilled trades. And although Merit is well represented on program, as well as growth in the number of new firms partici- trade advisory committees, this situation is only exacerbated pating in the program. The growth allowed Merit to lower rates by the fact that the apprenticeship system has refused to relax and increase coverage for a second year in a row, putting Merit’s apprenticeship ratios that would permit two apprentices to plan head-and-shoulders above the rest. each journeyperson. Merit Saskatchewan
Merit Ontario
Merit Contractors Association of Sask-atchewan celebrated its 25th Anniversary in 2013. The association has continued to grow and now provides services for approximately 250 members, with close to 5,000 employees. In 2013, Merit Saskatchewan launched an annual awards program to recognize the achievements of employees of member companies. Merit Saskatchewan continues to be very vocal as an advocate for the open shop construction sector, lobbying for change to various legislation and regulations pertaining to labour standards, workers’ compensation, OHS, and procurement.
Under the leadership of Premier Kathleen Wynne, the minority Liberal government, propped up by the NDPs, continues to stand in the way of an equitable and competitive marketplace for construction in Ontario. In May, 2013, Merit Ontario stood alongside MPP Michael Harris as he tabled Bill 73, the Fair and Open Tendering Act, which was designed to preserve and maintain open bidding for public infrastructure projects tendered by Ontario municipalities and school boards. In September, despite overwhelming support from municipalities, local contractors and taxpayers throughout the province, the Liberals and the NDP joined forces and voted against Bill 73.
26
OPENMIND 2014
THE YEAR AHEAD WILL PROVIDE NEW TRAINING OPPORTUNITIES FOR OPEN SHOP EMPLOYERS AND EMPLOYEES AND FOCUS ON CHANGING UNION-FAVOURABLE LABOUR LEGISLATION THAT HURTS OPEN SHOP CONTRACTORS. As a result, thousands of contractors who have been unfairly barred from working on public infrastructure – in the communities where they live, work and pay taxes – continue to have their rights ignored. Since its official opening in April 2013, Merit Ontario continues to call into question the integrity of the Liberalbacked Ontario College of Trades. Most recently, MPP Garfield Dunlop has written to the attorney general of Ontario asking for an independent investigation of the apprentice-to-journeyperson ratio review completed by a Ontario College of Trades panel in 2013. The panel’s chairman failed to disclose a 20-year professional relationship with the International Brotherhood of Electrical Workers (IBEW) union. The IBEW made a recommendation to the Ratio Review Panel that the panel accepted. The outcome has served as a prime example of the lack of process and accountability at the College. With a provincial election on the horizon for the spring, issues in construction and labour in Ontario will no doubt remain at the forefront of political debate. Merit New Brunswick
After mourning the tragic passing of the highly respected Linwood Hupman, former executive director of Merit New Brunswick, and facing the huge void he left, the Board of Directors decided to hit the reset button. A new commitment to improved communication, membership, training and awareness of Merit NB became the new mandate. A strategic planning process leads the way, almost immediately after hiring a new executive director, Graeme Scaplen. He brings extensive management, marketing, sales and communication skills to the association. Completion and delivery of the new strategic plan (including its goals and actions) is at the top of his challenges. “Reaching out to our existing members, and delivering Merit’s outstanding success story and Hour Bank benefits program to all New Brunswick open shop contractors are my top priorities,” Scaplen says.
The premier of New Brunswick has officially announced a provincial mandatory health benefits program that affects all employers and employees. Now is the time for open shop construction contractors to embrace and secure an affordable company health benefits plan for themselves and their employees before the government mandates their program, which will not be comparable to Merit’s in terms of coverage and cost. Merit Nova Scotia
Ready to celebrate its 20th anniversary in 2014, Merit Nova Scotia is proud of its efforts in 2013, which included successfully lobbying for amendments to Nova Scotia’s restrictive First Contract Arbitration law, and making workplace safety a priority by calling for more safety oversight and stricter rules on all worksites across the province. The year ahead will provide new training opportunities for open shop employers and employees and focus on changing union-favourable labour legislation that hurts open shop contractors of all sizes on any given day. Merit Newfoundland and Labrador
Members of the Merit Contractors Association of Newfoundland and Labrador are experiencing the benefits of an economic boom in the province. Construction in all sectors is at an all-time high, which brings with it a new set of challenges: recruiting and retaining qualified people to get the work done. The cyclical trade demands of the natural resource mega-projects have put a strain on open shop contractors that will continue through to 2017 with the development of both the Hebron oil project and the Muskrat Falls hydroelectric project. The Merit Hour Bank benefit plan is a strong differentiator for members, as they continue to grow their business in a highly competitive marketplace. Merit has been tireless in its efforts to reverse the decision to replace secret ballot voting with automatic card-based certification when deciding the fate of an employer to be unionized or not. It has the ire of the entire business community. “We are also excited to be working on the harmonization of apprenticeship systems across Atlantic Canada, and providing input to a new provincial immigration strategy and workforce development strategy,” says executive director Paul Dubé. “This will be a very busy year.” OPENMIND 2014
27
WHY IS BIG LABOUR AFRAID OF THE LIGHT? Canadians are a generous people who support many initiatives. Because of the role that labour organizations play, they receive very favourable tax benefits. Dues are 100% tax deductible. They are exempt from income tax. They are exempt from capital gains tax. In return, Canadians have a right to see the
finances of organizations subsidized That’s only fair. Yet, we don’t. by their tax dollars. Unlike charities, religious organiLabour organizations are also very zations and political parties, labour political. Canadians also have the organizations are not required to right to know how organizations disclose their financial information. receiving public benefits are trying And Big Labour leaders are fighting to influence public policy. to keep it that way.
opportunitytowork.ca Blue: C 100 M 84.09 Red: C .91 M 100
Y 11.04 Y 92.14
K 3.08 K 0.02
Whose interests are Big Labour leaders protecting by trying to keep their finances secret? Canadians or their own? It’s time to end the special treatment for Big Labour.
Merit
Canada WORKS FOR
Three federal-level measures will tilt the balance back in favour of transparency, accountability and respect for taxpayers BY TERRANCE OAKEY
M
erit Canada continues to move issues forward that are of concern to the
open shop construction sector and, beyond that, people who share our free-enterprise philosophy. As the federal government considers what’s important for the next two years of its mandate, Merit Canada is focusing on three priorities, which the organization developed in response to a consideration of many examples of flagrant waste. (See “We Couldn’t Make This Stuff Up” on the following page.) The examples we listed in the sidebar are just a handful from a longer list of questionable union activity and bizarre outcomes from union-friendly public policies. The long list could ultimately stretch on for several pages. All of these examples are linked by a simple underlying fact: existing laws governing labour organizations have created an environment ripe for abuse, with no accountability to union members, taxpayers or the general public. It is time to tilt the balance back in favour of transparency, accountability and respect for taxpayers, and there are at least three immediate measures the federal government can implement to make that happen.
OPENMIND 2014
29
Merit Works For Canada
WE COULDN’T MAKE THIS STUFF UP Merit Canada chose to adopt its three federal-level policies in a consideration of the following and other similar events taking place in Canada. A former union executive told the Charbonneau Commission that Quebec’s largest labour union was controlled by high-ranking members of the Mafia and Hells Angels. Union bosses in Quebec helped rebuild a biker strip club that had burned down, and included a $1 million investment from a union-controlled fund. A union boss allegedly filed more than $125,000 in fraudulent expenses over a six-month period. The lowest bid to build a simple brick public washroom in Kitchener, Ontario came in at $564,744, which is 40 per cent more than budgeted and more than 150 per cent in excess of the average cost to build a house in the city – including the cost of the lot. The City of Waterloo was forced to appeal to the Ontario Labour Board in its effort to open a public tender for a $140-million sewage treatment plant to 27 contractors rather than only two. Rank-and-file members from at least 17 unions contributing thousands of dollars to a legal fund for NDP MP Pat Martin to defend himself in a defamation suit that had nothing to do with labour issues.
30
OPENMIND 2014
First, Parliament needs to pass Bill C-377, which will establish new reporting requirements for unions, including annual financial statements, the amount of time spent on political activities and financial support for social causes, such as legal defence funds for NDP MPs. Cases of inappropriate or questionable financial activity by union bosses will persist as along as unions collect over $4 billion annually in forced contributions, and as long as they have no obligation to report how that money is spent to their members or the public – even though they receive $400 million in tax breaks annually. How can there ever be accountability without transparency?
It is stories like those coming out of Quebec’s Charbonneau Commission about inappropriate expenses and links between organized crime and union bosses that led countries like the U.S., Britain, France
The current system is ripe for abuse – both from union organizers and employers. and Australia to implement union transparency legislation. Canada’s peers have had legislation in place for years – decades even in some cases. Continued opposition to Bill C-377 after these latest revelations is confounding and troubling and ultimately raises more questions about what may really be going on behind the scenes.
Second, to address the issues highlighted by the Kitchener and Waterloo examples mentioned at the outset, it is time to end the privileged access to public sector contracts enjoyed by unions in many parts of the country, known as closed tendering. Under this system, bidding on public sector projects is restricted to specific unionized contractors affiliated with the building trades unions. This arcane and indefensible practice means that – right off the top – seven out of 10 construction workers in Canada are excluded from employment on these projects because they do not belong to a
union. To make things even less competitive, specific unions also have privileged access to these contracts over other unions, further limiting fair competition. It does not take a degree in economics to know what happens when 70 per cent of any industry is barred from competing. Quality goes down and costs go up. The example of the half-million-dollar bathroom in Kitchener is just one of many. A study conducted by the City of Montreal found closed tendering inflated project costs anywhere from 30 per cent to 85 per cent. Ottawa should take a leadership role
on this issue and ensure that projects that use any federal funds be tendered openly. This policy should be included in all infrastructure agreements and apply to all Crown corporations and any other federal mechanisms used to fund infrastructure. Open tendering is about fairness for taxpayers, since governments have an obligation to use their money efficiently. Moreover, companies that pay federal taxes should not be precluded from bidding on public contracts – paid for with their tax dollars – simply because they do not belong to the right union.
Finally, the third area in need of reform surrounds union voting. It is time to bring basic democratic practices to unions and guarantee federal workers a secret ballot vote when deciding to join a union. The current system is ripe for abuse – both from union organizers and employers. A secret ballot is the best way to ensure that a decision to join a union is conducted in a fair manner, without any threat of intimidation or offer of reward for voting one way or another. Such a system will help ensure that an employee’s decision to join a union is based on sound personal reflection – not fear of reprisal. In addition, if unions were
also forced to operate in a more transparent manner, as outlined in Bill C-377, potential members could better understand the priorities of the organization they are being asked to join. These three policy changes extend the principles of transparency and accountability – which are the underpinning of all our democratic institutions – to unions as well. This is long overdue and those who continue to oppose timely change risk doing irreparable harm to Canada’s labour movement since the general public will not tolerate more stories like the ones listed here.
OPENMIND 2014
31
32
OPENMIND 2014
BUILD BETTER APPRENTICESHIPS Let’s look to successful models that encourage respect, rather than legislating a poor solution BY PETER PILARSKI
C
anada is experiencing a serious shortage
of qualified tradespeople, which will only get worse in the next decade as we are not training enough apprentices to keep up. In fact, according to the International Labour Organization, Canada had only 30 apprentices per 1,000 employees in 2011, well below Germany with 39, Australia with 40 and Switzerland with 44. To address this problem, governments, employers, industry associations and unions have all implemented a variety of programs, strategies and regulations to get more apprentices into training. They have experienced varied levels of success.
OPENMIND 2014
33
Build Better Apprenticeships
While some government programs – such as tax credits, employment insurance programs and grants, have provided incentives for workers and employers to utilize the apprenticeship training system in greater numbers – other government regulations have created disincentives to apprenticeship training. Now, some governments have been suggesting that mandating a minimum ratio of apprentices on government infrastructure project sites could be a way to increase the number of apprentices being trained. Unfortunately, these governments have made this suggestion with no evidence that this approach will actually increase apprenticeship training numbers. But more regulation might not solve the problem. Government regulation of apprenticeship training could be detrimental to the industry. According to the 2013-14 World Economic Forum’s global competitiveness rankings report, amongst the “most problematic factors” for doing business in Canada are “insufficient capacity to innovate, restrictive labour regulations and an inadequately educated workforce.” Some of these issues were recently studied by the C.D. Howe Institute, too. Its study, called Access Denied: the Effects of Apprenticeship Restrictions in Skilled Trades found that overall, “strict provincial regulations on the rate at which firms may hire apprentices, which is relative to the number of certified workers they employ, reduce the number of people who work in a trade.” The study also concluded that “trades in provinces with the strictest regulations on hiring have lower levels of young workers.” In other words, if provinces want more workers in the trades, they should allow firms to hire more apprentices and should loosen restrictions on entry into apprenticeship training and into the trades. The C.D. Howe study examined the impact of journeyperson-apprentice ratios and found that, among other things, these ratios “reduce the incentive 34
OPENMIND 2014
3192.12 - January Open Mind AD_Layout 1 17/12/2013 9:15 AM Page 1
Great Cars. Great Rates.
MASTERS INSURANCE LIMITED MASTERS LIFE INSURANCE AGENCY LTD.
HAMILTON – WINDSOR TORONTO – OTTAWA
Proven Experience, Knowledge & Service to the Construction Industry for Over 40 Years
As a Merit Contractors Association member, Thrifty is pleased to offer you great cars at great rates. In addition, you’ll enjoy:
• Unlimited daily kilometres at most locations • No charge for additional drivers • No surcharge for underage drivers aged 21-24 • LDW (Loss Damage Waiver) available at $18.00 per day in Canada • FREE membership in Thrifty’s Blue Chip Express Rental Program Quote your Thrifty CD#1660221113 to ensure you receive all your special Merit Contractors Association rates and benefits. Rates do not include any taxes, surcharges, airport related fees or other point-of-sale charges. Vehicles subject to availability. Offer is not valid with any other special or promotions, and may not be combined with any other discounted rate or promotional offer. Vehicle must be returned to renting location. Exception and surcharge city list applies. Thrifty features a wide selection of quality vehicles. ®Registered Trademark of Thrifty, Inc. ©2014 Dollar Thrifty Automotive Group Canada Inc. All rights reserved. 12/13
We’ve had Alberta covered since1911 Available in print and digital formats INDUSTRY NEWS
PROJECT LEADS
ECONOMIC FORECASTING
101 - 4299 Canada Way, Burnaby, BC V5G 1H3 T +1(888) 878-2121 F +1 (604) 433-9549 E salescanada@reedbusiness.com
www.journalofcommerce.com C452-13
Build Better Apprenticeships
substantially over the coming years. With a growing need to A CANADIAN APPRENTICESHIP train more apprentices and an FORUM PAPER FOUND aging and retiring workforce, apprenticeship ratios could CONSUMERS DO NOT VALUE have a crippling effect on the THE CONTRIBUTION THAT industry going forward. The study found that “in TRADESPEOPLE MAKE. trades in provinces where there is a journeypersonfor a firm to grow: if the firm wishes to hire apprenticeship ratio above one, there are additional apprentices, it would first have 44 per cent fewer workers as a share of the to hire more journeypersons (which may provincial workforce relative to otherwise not exist or be available), thus increasing comparable trades for which there is no the effective cost of labour.” This disin- fixed ratio.” The study further found that centive to grow is problematic and can be ratios above one “result in 38 per cent most harmful to smaller businesses that fewer young workers – those between the do not have multiple certified journey- ages of 25 to 34 – in a trade.” persons; this problem will be exacerbated One of the reasons often cited for as the number of certified journeyper- high journeyperson-apprenticeship sons retiring from the trades increases ratios is that they increase the quality of 36
OPENMIND 2014
training and thus protect consumers from unqualified tradespersons. The study’s analysis of the data, however, found no evidence to support these claims. Further, the report concluded that, “while formal apprenticeship does impart valuable skills, there is no evidence that barriers to entry, such as strict journeypersonapprentice ratios, are necessary to increase skills training.” Similar to how restrictive policies such as journeyperson-apprentice ratios distort the number of people that participate in apprenticeship training and the ability of companies to grow, potential government policy that would mandate a minimum number of apprentices on government infrastructure projects would create unnecessary market distortions. For example, regulating a minimum number of apprentices on jobs could
mean that smaller firms may not be able to participate on those jobs, especially if journeyperson-apprentice ratios make hiring more apprentices cost prohibitive. It also means that the most qualified and experienced firms may not be able to participate because they don’t have enough apprentices available, or because their apprentices are working on a different jobsites. Such a policy could also create a disincentive for companies to help their apprentices to become journeypersons. After all, such a move would put a company out of line with its arbitrary contractual obligation to employ a set number of apprentices on a job. Another interesting finding in the study is that the length of apprenticeship training matters. The study found that, relative to trades with apprenticeship terms of less than two years, “employment
is 48 per cent higher in trades with apprenticeship terms of between two and three years. Trades with apprenticeship terms of three to four years have 34 per cent higher employment than trades with less than two years of apprentice training.” The authors concluded that “lengthier apprentice programs induce workers to enter a program, but there are diminishing returns for the longest programs.” This finding is particularly useful given the fact that it takes “roughly one-third longer to qualify as a carpenter or welder in Canada than it does in Germany,” which is internationally recognized as having one of the most effective apprenticeship systems. There is value in aligning the length and structure of apprenticeship training in Canada with countries that are achieving better outcomes. We don’t need more regulation based on unproven claims and assumptions in the apprenticeship system. What we need are policies and partnerships that get to the root of why apprenticeship numbers are not as high as we would like them to be. According to the Canadian Council of Chief Executives, “resistance to so called ‘blue-collar’ work remains much stronger in Canada than in many other countries, especially in
Europe.” This finding is consistent with a recent Canadian Apprenticeship Forum research paper called Youth Perceptions of Careers in the Skilled Trades. The paper found that, “youth did not feel their parents, guidance counsellors or friends encouraged them to consider the skilled trades.” It also said, “consumers and the general public do not value the contribution that tradespeople make to society; stereotypes exist that prevent women from pursuing many trades careers; and negative impressions of the skilled trades are perpetuated in the media.” The C.D. Howe study comes to a similar conclusion about the reasons behind the shortfall of skilled tradespeople in Canada. So, rather than continuing to pursue counterproductive, protectionist policies such as restrictive journeyperson-apprentice ratios, and rather than regulating a minimum number of apprentices on government infrastructure projects without the evidence to back such a policy’s effectiveness, governments should partner with industry. This partnership could reveal real solutions to identified problems – mainly, a lack of appreciation and respect for what have become some of the best paying, highly technical and most exciting careers available in the country. OPENMIND 2014
37
NUMBERS
BY THE
New housing price index
Construction price index for apartment buildings: Halifax
Toronto
Calgary
Vancouver
2012
138.8
144.4
166.4
144
2013
140.2
145.2
169.2
148
($ thousands)
2013
147.2
149.8
108
108.3
Halifax
114.4
117.3
Toronto
116.7
119.6
Winnipeg
129.3
135.6
Saskatoon
118.8
120.5
Calgary
97.1
102.2
Vancouver
98.2
97.1
St. John’s Fredericton
Capital expenditures for construction in Canada (in $ millions):
2012 285,045.4
2012
2013 290,950.4
(preliminary)
Yearly Value of all building permits by Province (in $ millions) 2012
2013
Newfoundland and Labrador
1,184.60
942.7
Nova Scotia
1,551.10
1,171.70
968.5
1,004.90
Ontario
29,547.50
28,932.90
Manitoba
2,485.70
2,608.20
(SOURCE: Merit Contractors Association)
New Brunswick
Saskatchewan
3,114.10
3,173.90
Alberta
14,662.90
17,262.40
British Columbia
10,759.60
9,976.10
Total person hours worked under the Merit Hour
Bank Benefit Plan: 2012 2013
96,729,350 103,774,392
Average number of employees covered under the
Merit Hour Bank Benefit Plan: 2012
2013
48,015
51,169
Wholesale merchants’ sales by industry unadjusted ($ millions) across Canada 2012
38
2013
Building supplies
81,522.1
83,637.2
Metal products
25,660.9
25,792.2
Lumber and millwork
18,827.8
18,694.8
Machinery and equipment
37,033.4
39,150.2
OPENMIND 2014
(SOURCE: Statistics Canada)
TOP MARK’S FOR COMFORT & SAFETY
Since 1993 Imagewear has been supplying more Canadian companies with their branded apparel, footwear and promotional items. From the front office to the warehouse, to out in the field we find exactly what you need to keep your company working in comfort and safety. To ensure your workers are comfortable and have the safest gear, we offer a voucher program and/or employee savings card that’s truly unique in it’s ability to give workers the chance to try on and pick up exactly the right clothing and footwear at any of our 380+ Mark’s stores across Canada. To find what works best for your company, contact one of our knowledgeable sales consultants.
Mark’s is a member of the Canadian Tire Corporation Family of Companies
TOLL FREE 1.855.592.7444 FAX 1.800.683.7790 EMAIL imagewear@erequest.ca WEB www.imagewear.ca