Govt Mandate Rippling Through Supply Chain, Adding Cost and Cuts Productivity: FETCO Study


Absence from work, planned or unplanned, has negative consequences for labour productivity, organizational performance, collective bargaining dynamics and the broader national economy, according to a new study by FETCO, which is comprised of 38 federally regulated organizations, including the Canadian Trucking Alliance.

The study points out the statutory requirement for 10 paid sick days has a significant impact on the productivity of the beleaguered supply chain as it faces massive pressure due to labour shortages, supply disruptions and other economic headwinds.

The requirement, implemented by federal government in 2022, mandates that all federally regulated employers – including trucking and other critical service sectors such as air, rail, marine, banking, telecommunications, postal service, atomic energy – to provide 10 paid sick days. These days are in addition to mandated three paid and two unpaid days that were introduced in 2019. Overall, 15 leave days and 13 paid leave days were provided to all workers in these and other sectors in just a few short years. 

The FETCO study, authored by Dr. Rafael Gomez, Professor and Director of the Centre for Industrial Relations and Human Resources at the University of Toronto, examines the impacts of these changes on Canadian industries. 

The report shows the extraordinary cost and operational challenges these changes are creating for businesses. The impacts are now flowing through to the supply chain and impacting Canadians in the form of potential service disruptions and added costs:  

“Key industries like trucking and aviation report operational disruptions due to increased absenteeism, with potentially detrimental effects on national and international supply chains and sectors like travel and tourism,” the report states. “The additional financial burdens of the legislation on businesses may also contribute to inflationary pressures as costs ripple through supply chains and ultimately onto the consumer.

The associated costs of the new provision for just one bargaining unit (transportation sector) were estimated to be roughly $9.8 million dollars (excluding benefits, which is an addition of 30%). The added PSL/PL days were also associated with a loss of 182 full-time equivalate persons/staff.

“What is abundantly clear is that the mandate has significant negative repercussions on labour productivity, organizational performance, collective bargaining dynamics and the broader national economy…Employers have faced increased costs, operational disruptions, and challenges in managing workforce dynamics,” the report states. 

This analysis by FETCO and Dr. Gomez echoes the concerns that CTA voiced in the lead up to the change. CTA and the broader community did not refute the need for employees to have time off when sick, but argued for a system that was balanced and thoughtful. However, most of these concerns from the business community went largely ignored. 

“What makes the issue more complicated in trucking than other sectors, is that we also have a significant number of workers involved in Driver Inc. arrangements, which is based on misclassification and denial of workers’ benefits, including the 10 sick days, among many other Labour Code entitlements,” said Stephen Laskowski, president of the CTA. “It has created a two-tier system where legitimate companies are following the law and taking on the costs and challenges the new provision has caused, while at the same time, other companies are simply ignoring this change and are being handed an even greater competitive advantage with little attention or consequences from the federal government.” 

This unfair advantage has only accelerated the push towards Driver Inc misclassification as a way for employers to sidestep their responsibilities and the costs of this legislation. 

The FETCO report makes several recommendations to the government to help fix the known issues with the current policy:

  1. Revise its current Interpretive, Policies and Guidance documents to clearly eliminate the option of ‘stacking’ paid medical and personal leave with employer benefits that provide a similar benefit (FETCO has provided specific language previously that would easily accomplish this goal). This should be followed with by a legislative and/or regulatory update that would accomplish the same.
  2. Introduce a legislative and/or regulatory amendment to Bill C-3 that will accomplish the following two goals: Allow employers to request medical documentation for any and all medical leave absences where there is reason to believe there might be misuse; and b) reduce the minimum number of paid medical leave days that an employer is obligated to provide from 10 days to five days (which would still be at the high end of requirements in most other jurisdictions throughout North America).
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