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Ontario's Cancelled Sick Leave Policy Would Have Cost Little More Than A CEO's Salary

For 10 multinational companies operating in Ontario, it would have been 0.8 per cent of gross profits.
Ontario's cancelled sick leave policy would have amounted to little more than the CEO's pay for the large multinational and Canadian companies analyzed by HuffPost Canada.
Ontario's cancelled sick leave policy would have amounted to little more than the CEO's pay for the large multinational and Canadian companies analyzed by HuffPost Canada.

Ontario's cancelled paid leave days would have cost multinational businesses in the province just 2.2 times their CEO's salary, according to an analysis carried out by HuffPost Canada.

The government of Premier Doug Ford recently repealed a labour bill that, among other things, guaranteed employees two paid personal leave days a year. That came after intense lobbying efforts from the province's largest corporate advocacy groups.

For a full-time employee with two weeks' vacation, the change would have been the equivalent of a 0.84 per cent raise. For the large multinational and Canadian companies analyzed by HuffPost Canada, the average wage cost would have been $22 million a year, or 0.8 per cent of gross profits.

That's the equivalent of 2.2 times average CEO's annual salary of $10 million for these companies.

HuffPost Canada was able to determine the impact of the paid sick leave policy on 10 large companies that belong to the Ontario Chamber of Commerce. Due to data constraints, smaller companies were not considered.

In November of this year, the Ford government passed a bill that scrapped or scaled down most of the measures in the previous government's Bill 148, which — on top of the paid leave days — included new equal pay rules and a third week of vacation upon reaching five years of service. It also repealed future minimum wage increases.

Lobbying efforts from corporate advocacy groups including the Ontario Chamber of Commerce (OCC) and the Retail Council of Canada helped to encourage the government to repeal the labour reforms.

"Our efforts to repeal the bill were reflective of the scope of the bill, the implementation timeline and the way the bill was kind of 'one size fits all' in the way it was written," said Ashley Challinor, vice-president of policy at the Ontario Chamber of Commerce. "With respect (to) the personal paid emergency leave days, it was really a problem with implementation."

Challinor would not confirm whether the OCC would support Bill 148's individual measures if they were to be introduced over a longer time period.

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She added that there was no instrument for employee accountability when it came to the use of personal leave days, because no documentation like a medical note from a doctor was required.

The Chamber's role in lobbying for the repeal of the legislation has recently come under fire after a New Year's Eve tweet from the CEO, Rocco Rossi. Alongside photos of champagne and caviar, Rossi said "Celebrating New Year's the 1-percenter way! Let them eat cake :-)." Rossi later apologized and deleted the tweet, saying it was satire.

Challinor said some chamber members voiced concerns that employees had used both of their paid sick day entitlements in the first few months of the year. Small business owners complained that because of Bill 148, they would show up in the morning not knowing if they would have sufficient staff.

"There was a financial cost, obviously, you're paying for a day where people aren't working," said Challinor. "And in more extreme circumstances, you're losing money because you're not able to meet demand for that day."

Challinor said the new rules encouraged employees to call in sick.

She explained that she didn't think employees were abusing the personal leave days, but rather that employees took their two days in the first few months following the bill's introduction because the previous government had not properly rolled out or informed employees about the changes.

However, according to the Centre for Disease Control, December to February is the peak of flu season, providing a reasonable alternative explanation as to why employees would take sick days during the first few months of the year. January and February of 2018 had 765 influenza outbreaks, the highest level since data was available in 2011.

Research suggests that in Canada the average person is sick nine days a year, more than four times the allotted paid personal days by bill 148.

Although Canadians take more sick time off than some of their counterparts in developed countries, they don't have the same access to paid sick leave. Canada, along with Japan and the U.S., are the only ones among 22 Western countries that do not legislate paid sick leave, according to a report in the International Journal of Health Services. Many countries — including Australia, Germany and the Scandinavian countries — offer five days of paid sick leave.

Shrinking the bottom line

The numbers above refer to the wage cost of those leave days, but another way to look at it is to calculate the profits lost. Assuming that a company loses all the profit that an employee would have generated in those two sick days, the average lost profit for the 10 companies can equate to $36 million, or a median profit loss of $21 million.

Canadian Tire Corporation's gross margins are financially impacted the least amongst the 10 companies analyzed. The two paid personal leave days equates to approximately 0.27 per cent of its gross profit or an estimated $9.9 million for the companies 29,710 employees.

Bombardier would absorb the biggest financial impact of the 10 selected companies, with the paid personal leave days setting them back by $52 million, or 2.1 per cent of gross profit. The cost would be equivalent to 3.8 times its CEO's salary.

It's hard to argue that Bill 148 damaged Ontario's economy. With the bill's changes in place for the majority of the year, the Ontario economy has been one of the leaders in job growth among Canadian provinces.

According to a report from Royal Bank of Canada, Ontario, along with B.C., boasts an unemployment rate of less than six per cent in 86 per cent of their respective local economies, something the report authors says in unheard of in modern times.

In a recent report, TD Bank predicted Ontario would continue to be an economic leader next year, with GDP growth of 1.9 per cent, tied for the strongest in the country and behind only British Columbia.

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