In the current employee-driven job market, many employers are looking for ways to enhance staff retention. The first step you can take is making sure your group insurance plan really meets the needs of your employees. Read this article to learn more!
Several aspects of the group insurance plan can be reviewed, including the benefits offered, the applicable premium sharing and several other administrative features. One way to promote employee retention would be to make your plan more attractive for your most senior employees. However, the Labour Standards Act amendments enacted on June 12, 2018 have an impact on the way group insurance plans can be administered.You will find below a clear summary of these changes along with an explanation of key details to avoid any problems down the road.
Section 87.1 of the Labour Standards Act
Excerpt of the section:
“Any distinction made solely on the basis of a hiring date, in relation to pension plans or other employee benefits, that affects employees performing the same tasks in the same establishment is also prohibited.”
However, it is important to remember that the distinctions that existed prior to June 11, 2018, based on a hiring date before June 11, 2018, are grandfathered.
Does this legislative amendment now forbid employers from advantaging their most senior employees by offering them a more generous employer contribution or more substantial benefits under their group insurance plan? Fortunately, the answer is NO!
Details on Section 87.2 of the Labour Standards Act
Section 87.1 of the Labour Standards Act prohibits distinctions based on a hiring date, but not distinctions based on seniority at work or continuous service. Nothing forbids grouping employees into classes according to their years of continuous service, thanks to Section 87.2 which explicitly stipulates that:
“A condition of employment based on seniority or years of service does not contravene section 87.1.”
A Concrete Example of Seniority at Work
Under the amendments made to the Labour Standards Act, the following employee classification would not be compliant:
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Class 1: Employees hired before June 1st, 2021
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Class 2: Employees hired on and after June 1st, 2021
The classification below would be fully compliant:
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Class 1: Employees with less than 3 years of continuous service
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Class 2: Employees with 3 years or more of continuous service
Did you know that you can also apply seniority-related provisions to your pension plan?
Are You Ready for a Benefits Update?
We are all seeking to retain and favour our best employees. Human capital is certainly a company’s most precious resource. With the information above, you could adapt your group plans and provide the benefits you want while fully complying with the Labour Standards Act.
Do not hesitate to contact us to get expert advice about your benefits. With employee surveys, modular plans, a health spending account, a virtual clinic and more, our experts will be there to advise and guide you in the development of a benefits package that meets your needs and those of your employees!
Samuel Verreault has been working in the business world, group insurance and personal insurance for over ten years. With a strong background in insurance, real estate, and online business, his experience allows him to assist his clients on many levels. Whether it is from a personal, tax, human resources or group insurance perspective, he is passionate and involved with his clients. He goes beyond the simple supplier relationship to become an essential partner in the growth of your business.