Spring 2021 HR Insights

STHGISNI RH SARC'S HUMAN RESOURCES AND LABOUR RELATIONS NEWSLETTER Each quarter, SARC HR/LR Consultants expand on topics pertaining to nonprofit management and HR/LR risks.

ISSUE 11 | SPRING 2021

C O N T E N T S

04 TURNOVER TELLS A STORY

What story is turnover telling at your organization. SARC HR Consultant, Leanne Zacharias, discusses the broader tale of turnover and what it means for an organization.

VS HOURLY 06 SALARIED EMPLOYEES Salaried vs Hourly employees; how do you know how which compensation is acceptable.

08 OVERTIME REQUIREMENTS IN SK Do you offer overtime at your ornganization? Knowing what is required of you by law will help you determine what is appropriate.

MEET THE CONSULTANTS

ABOUT MARRION Marrion can assist SARC’s Regular and Associate Members with a variety of LR/HR issues, including progressive discipline, performance management, and duty to accommodate for unionized and non-unionized organizations. She can also provide specific support in collective bargaining for unionized organizations. Accessing this service is free of charge and can minimize organizational risk.

Having a quick check-in or a review done before decisions are made can save you time and money in the end.

ABOUT LEANNE Leanne is available to assist SARC’s Regular and Associate Members who would like to have additional expertise on a variety of HR topics.

Whether you have an internal HR professional or not, organizations can contact Leanne for best practices in the sector to strengthen your workforce. Areas of service include recruitment and retention, organizational structure analysis and workforce planning, job descriptions, HR policies and procedures, compensation and total rewards, and succession planning.

ABOUT AMY Amy Gibson carries on a general labour and employment law practice. She advises employers on a variety of labour issues, including union certification drives, collective agreement interpretation, labour disputes, workplace policies, discipline and discharge, employment contracts, OH&S, workers’ compensation, labour standards and human rights. She has experience with a variety of court and administrative proceedings as well as representing clients before the Saskatchewan Labour Relations Board and in Canada Labour Code unjust dismissal adjudications.

How to Calculate Turnover

"Not all turnover is created equally. And not all turnover is bad, either."

TURNOVER TELLS A STORY

by Leanne Zacharias SARC HR Consultant

What is your organization’s turnover telling you? Employee turnover is an important metric to measure to understand who is leaving the organization and why are they leaving. It’s not the whole picture or a perfect measurement, but it will tell a story of your organization’s culture, leadership, processes and practices.

Tracking employees movement out of the organization is valuable so you can look for and minimize the causes and costly effects of turnover.

Types of Turnover An employee’s departure from the organization is never without reason. There are hundreds of scenarios and different explanations, and not all turnover is created equal. There are two main distinctions to make when categorizing turnover: voluntary and involuntary.

Voluntary turnover generally means an employee departure that is of their own volition. In other words, they quit. Now, this category can be quite varied, ranging from the example of the employee moving to a new city, or tougher scenarios involving compensation, toxic workplace culture, and burnout, to name a few.

Involuntary turnover is when the employer concludes to terminate the employment relationship either with just cause or proper notice/pay in lieu of notice.

Turnover is calculated by dividing the number of separations by the average number of employees. You should be able to pull these numbers from your payroll system or other HR software/systems.

When calculating the number of employees, use headcount and not FTE. Headcount can fluctuate in any organization, so use the average throughout the time period.

Include all employees on the payroll, including those on leaves of absence and temporary workers that are on your payroll, and exclude independent contractors.

When calculating the total number of separations, include voluntary and involuntary terminations. This does not include employees who go on a leave of absence. However, if you want to distinguish between voluntary and involuntary turnover, then calculate these separately.

Turnover is usually reported as a percentage, so simply multiply by 100 to get the turnover rate.

At minimum, this can be calculated annually to get a turnover rate for the year.

Calculating it quarterly or monthly would give an even more detailed picture. Depending on your organizational structure, you could calculate by department or position, and by timeframe such as first year turnover or the 90day turnover rate.

Conducting employee exit interviews can provide insight into the reasons employees are leaving, and inform strategies for improving retention.

HR INSIGHTS

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Analyzing Turnover As I mentioned earlier, not all turnover is created equally. And not all turnover is bad, either. For example, if a poor performer is let go and replaced by a more competent performer, there can be a boost to productivity, team morale, and client outcomes.

In another scenario, high turnover in among new hires can be indicative of a problem in recruitment and/or onboarding.

This is where breaking turnover into voluntary and involuntary turnover can be helpful to tell the turnover story at your organization.

Remember, turnover is not completely avoidable. Sometimes you do everything “right” and that brand new employee quits after the first week. And the reason turnover data can be so valuable is that it puts what might otherwise be a one-off scenario into a bigger and more depictive context.

For example, that new hire turnover might be a small number compared to turnover of longer-term staff, so instead of looking into recruitment or onboarding improvements, ou might want to look more into other things

such as whether the other staff are leaving perhaps in the same department or program (indicating a possible issue with the manager), your compensation or growth opportunities at other employers. Focusing your efforts there will more likely have greater impact on the turnover story.

It is tempting to think that the underlying causes of turnover will be obvious. While anecdotal evidence for turnover is valuable, tracking may help you notice patterns or trends that would otherwise not be apparent. For example, if you track a consistent trend in voluntary turnover at a particular time of year, this can help prepare for recruitment proactively instead of reactively, or support an investment in retention initiative prior to that season.

A turnover rate on its own will tell a story, but it will be fairly one dimensional unless it’s relative to some other data. Beyond looking at your voluntary or involuntary turnover rate, you may be interested in comparing the turnover rate to previous years, or between positions, departments, or other segments of your organization.

The Cost of Turnover How much does turnover cost?

Depending on the position and the industry, it could range from 2-6 months of that employee’s annual salary. When you add up the time and money spent on recruiting, training, and managing the employee, not to mention the productivity losses and effects on other staff and/or clients, turnover can be very costly.

The reality is, employers can’t control turnover 100%. What you can do is build a workplace that encourages retention of engaged employees, and lets disengaged employees move on. Calculating and analyzing the turnover rate in your organization can provide more insight into your human resources and leadership practices. When this data informs your decisions, the losses related to turnover can be reduced and retention improved.

That is the turnover story we all want to write.

This will give the turnover story more depth. Also, some industries have higher turnover than others.

This is not necessarily bad or good, but relative.

HR INSIGHTS | TURNOVER TELLS A STORY

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WHAT IS THE DIFFERENCE BETWEEN SALARIED EMPLOYEES VS HOURLY EMPLOYEES?

by Marrion Wolff SARC LR Consultant

HR INSIGHTS

The only significant difference between the two types of employees is the method by which they are compensated. When hiring new employees, employers will need to determine whether it is more suitable for them to be set up as salaried or hourly employees.

Usually, managerial positions are paid on a salaried basis, while other positions such as front-line workers are paid hourly; however, there is no rule that this must be the case.

It will be dependent on the type of work schedule the employee has as to which would be more appropriate. If, for example, the employee works a regular Monday to Friday schedule with little fluctuation, they may be set up as a salaried employee. If, on the other hand, they work varying schedules with different hours from day to day or week to week, it would make more sense to pay them by the hour.

Whichever method you choose, make sure that you are adhering to the applicable legislation regarding paymentof wages and your collective bargaining agreement, if unionized.

The Saskatchewan Employment Act requires the employee be paid the total wages to which they are entitled up to a day not more than six days before the employee’s payday. Further the employee must be paid monthly, semi-monthly or every 14 days. An employer may only pay an employee on a monthly basis if the employee is paid a salary expressed as a monthly wage or a wage expressed for a period longer than a month.

A common misconception is that salaried employees are not eligible for overtime, but this is not the case in Saskatchewan. Overtime pay is payable to both hourly wage earners and employees paid by salary.

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Only where the duties of the employee are of a managerial character is the employer exempt from paying overtime, whether that employee is paid by wage or salary. For more information on overtime pay, refer to Amy Gibson’s article in this issue of HR Insights.

For salaried employees, it’s important for employers to clearly state the regular hours of work required and include this information in their employment contract or in policy. A clause stating “Regular hours of work shall be 8 hours per day Monday to Friday”, for example.

"A common misconception is that salaried employees are not eligible for overtime".

If the employee works additional hours, then overtime would be payable or banked, depending on what has been determined in that work place. Remember also that hours of work include hours when the employee is required to work, permitted to work, or required to remain at the disposal of the employer.

Further, “permitted to work” can refer to hours when the employee is working and the employer knows or ought to reasonable know they are working, and the employer has not instructed them to stop. This can occur with employees choosing to come in early or stay late and working extra hours. Unless the employer directs them not to do so, they may be liable for a claim for overtime hours.

Regardless of which method is used to compensate employees, the best practice is to ensure the expectations are clear to both parties through the employment contract, in HR policies, and in the collective bargaining agreements, if unionized.

HR INSIGHTS | SALARIED VS HOURLY EMPLOYEES

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OVERTIME PAY IN SK: Tips for Reducing Unnecessary Overtime Pay Costs

by Amy Gibson MLT Aikins

Overtime costs can be a significant expense for many organizations. As a result, it is important to understand when overtime is payable to employees, which employees may be exempt from overtime, and the tools available to employers for reducing overtime expenses.

A day is defined in the Act as any 24-hour period. A week is defined as the period between midnight on a Saturday and midnight on the following Saturday, or any other period of seven consecutive days that the employer has consistently used when determining the schedule of an employee.

Overtime Requirements

Exemptions

In Saskatchewan, overtime pay is primarily governed by The Saskatchewan Employment Act (the “Act”). Employers are permitted to provide overtime pay in circumstances beyond what is required by the Act as contained in the employment agreement, employer policies or in the context of unionized operations, within the collective bargaining agreement. It is important to note, however, that an employer cannot provide overtime pay that is less than what is required by the Act. The Act requires employers to pay employees overtime pay at a rate of 1.5 times the employee’s hourly wage rate for each hour or part of an hour where the employee works or is required to be at the disposal of the employer: 1. beyond 8 hours in a day (where an employer operates on a five day work week with 8 hours of work per day); 2. beyond 10 hours in a day (where an employer operates on a four day work week of 10 hours of work each day); or 3. beyond 40 hours in a week.

HR INSIGHTS | SALARIED VS HOURLY EMPLOYEES

Certain positions and shifts are exempt from overtime pay under the Act. Common SARC Member positions which are exempt from overtime include management and direct support workers while working a 24-hour group home operator shift where the specific shift requirements are met.

Management employees are exempt from overtime payments. However, just because an employee is referred to as a “manager” does not automatically mean that they are considered to be a manager for the purposes of the overtime pay exemption. To be exempt, the position must perform services that are of managerial character.

The following are common job duties that have been found to be of “managerial character” as required by the overtime pay exemption: Supervision and direction of other workers; Discipline of subordinates; Evaluating performance of subordinates; Hiring and promoting of subordinate staff; Some independence and discretion in performing duties; and Performing administrative rather than operational duties.

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"It is1 8 recommended that organizations work with their legal cousel to develop a careful strategy [if] altering the organization's overtime pay structure."

If ever challenged, the totality of the employee’s job duties will be evaluated to determine if they are a manager for the purposes of the overtime exemption. In hiring management positions, it is recommended that the hiring letter or employment agreement expressly indicate that the position is exempt from overtime pay under the Act. Direct Support Workers or Group Home Workers are also exempt from overtime when working a 24-hour group home operator shift. This exemption only applies to one employee scheduled per group home.

This exemption also requires that an organization be registered as a residential-service facility pursuant to The Residential Services Act and the corresponding regulations before the exemption will be found to apply.

It is important to note, however, that an exempt 24-hour group home operator shift may still result in overtime pay for an employee for shifts that the employee is scheduled for later that week. The hours worked by an employee during that 24-hour shift are still factored into an overall calculation of the maximum 40 hour work week, after which overtime is payable.

As a result, if an employee works one 24-hour shift in a week, they can work another 16 hours during the week without incurring overtime pay, presuming the daily limit is not exceeded. Any additional hours worked beyond those 16 hours would be payable at the overtime rate.

However, if an employee has worked under 40 hours during the week and then subsequently works a 24-hour group home operator shift, those operator hours during the 24-hour shift remain exempt from overtime. The following example demonstrates how this applies:

No Overtime Payable: Monday – 8 hours of work Tuesday – 8 hours of work Wednesday – 8 hours of work Thursday – 24-hour shift as "operator" under section 15

Overtime Payable: Monday – 8 hours of work Tuesday – 8 hours of work Wednesday – 24-hour shift as "operator" under section 15 Thursday – 8 hours of a work (all at an overtime rate) The manner of scheduling operators is, therefore, a very important consideration for employers in controlling overtime pay costs.

Overtime Banking Agreements: The Act also permits employers and non-union employees to enter into overtime banking agreements to address the recognition and payment of overtime. While this is an option that can be offered under the legislation, there is no requirement to do so.

Where this option is implemented, the agreement must be entered into in writing, mutually agreed upon by the employer and the employee, and the agreement must be signed by both parties. Where such an agreement has been entered into, every hour of overtime worked results in 1.5 hours of banked time that can then be utilized by the employee as paid time off at a later date.

HR INSIGHTS | SALARIED VS HOURLY EMPLOYEES

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Modified Working Arrangements

Fixing Improper Overtime Pay Practices

Employers and full-time non-union employees may also mutually enter into a modified work arrangement (MWA) which provides for more flexibility on when overtime hours accrue. Available MWAs permitted by the Act include the following:

Should a SARC Member have any questions or concerns as to how it has been (or has not been) providing employees with overtime pay, it is recommended that the organization seek out legal advice specific to their circumstances prior to changing the organization’s overtime pay practices.

A change in pay structure may have the potential to trigger constructive dismissal of employees or be a breach of the collective bargaining agreement in the case of unionized operations. Further, a change in pay structure may result in claims for retroactive unpaid overtime. As a result, it is recommended that organizations work with their legal counsel to develop a careful strategy for altering the organization’s overtime pay structure to best protect against these possible claims.

1. Averaging 40 hours over one week; 2. Averaging 80 hours over two weeks; 3. Averaging 120 hours over three weeks; or 4. Averaging 160 hours over four weeks.

Pursuant to the Act, upon the proper execution of an MWA, an employee’s hours of work would be averaged over the agreed-to period before overtime pay would be payable to the employee. For example, if an MWA averaging 160 hours over four weeks has been agreed to, the employee would only receive overtime pay for hours worked in excess of 160 hours over that fourweek period.

This provides the organization with more flexibility in scheduling hours of the employee, which may require more hours of work during some weeks, and fewer hours of work during others. It is important to note that an employer is not permitted to schedule an employee for more than 12 hours per day under a MWA before overtime is payable.

It should also be noted that the weeks used to average an employee’s hours of work must run consecutively with a set start and end to each set of four weeks. In other words, an employer is not permitted to adjust the weeks considered in an averaging period to avoid paying overtime pay.

To be enforceable, an MWA must be in writing, signed by the employer and employee (or a majority of the group of employees subject to the agreement) at least one week before the MWA comes into effect. In addition, the agreement must specify the number of weeks over which the hours will be averaged, the daily hours of work after which an employee becomes entitled to overtime pay, the work schedule that reflects the daily and weekly hours of work agreed to by the parties, and the start date and expiry date of the agreement. Further, employees who average less than 30 hours a week and managers cannot be part of a MWA. A MWA can also only be for a maximum period of 2 years, after which a new agreement would need to be entered into.

For unionized operations, an employer and union may agree to average employees’ hours of work for periods of time greater than permitted by the Act as part of the collective bargaining agreement. The negotiations for an MWA would become part of the collective bargaining agreement, or a separate letter of understanding, rather than a separate agreement with employees.

HR INSIGHTS | OVERTIME PAY IN SK

A Note from SARC About Averaging of Hours Permits An Averaging of Hours Permit is different from a Modified Work Arrangement (MWA). The Averaging of Hours Permit allows employers to condense employee work time for shift cycles requiring a longer day or a longer period of averaging than allowed in a Modified Work Arrangement (MWA).

Section 2-20 of The Saskatchewan Employment Act outlines the requirements that allow these permits. This permit requires the support of a majority of the employees.

Where employees and employers can agree to a MWA without having to apply for approval from Employment Standards, the Averaging of Hours Permit requires an employer to apply and get approval. A MWA provides flexibility in scheduling hours of full-time employees, where a permit allows all employees (including casual and part-time that work less than 30 hours per week) to participate in a scheduling system that provides for shifts that are longer than eight hours. Under the permit, these employees can cover full shifts without the payment of overtime. For example, where an employer and a majority of the employees agree to a 12-hour shift rotation and obtain an averaging permit, the employer can schedule casual or parttime employees to cover the normal 12-hour shift without the payment of overtime.

If you have an existing permit, make sure it has not expired. If it has expired, you will need to apply for a new one and attach a typical work schedule of the affected employees.

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YOU'RE INVITED...

- SK Labour Update 2021 Webinars

Workplace rules and practices evolve continuously. As an employer you need to be aware of new developments in labour and employment law, regardless of how many employees you have. Effective human resource strategies depend on it.

We’re going virtual for this year’s labour law update.

This webinar series will take place over two consecutive half-day morning sessions and will inform you of recent developments in the law and help you learn how to deal successfully with the issues they raise. The MLT Aikins Labour Update is designed for both unionized and non-unionized employers. We’ll get you up-to-date on changes to the rules and help you develop proactive human resources policies.

On the Agenda: OH&S During a Pandemic – Helping Employers Address Work Refusals, Outbreaks and Remote Work Challenges Wrongful Dismissal Update and COVID-19’s Impact on Severance Cancel Culture: Social Media Use and Workplace Considerations COVID-19 Vaccinations and Return to Work – Important Considerations for Employers Accommodating Employees During a Pandemic Open Forum

Wednesday, May 26 | 8:30 a.m. to 12 p.m.

Thursday, May 27 | 8:30 a.m. to 12 p.m.

Cost: $427.50 + GST - use SARC Member discount code, SARC50 for 50% off at registration.

Register Now