In 2012, the federal government passed Bill C-38, the Jobs, Growth and Long-term Prosperity Act, which among other things amends the Canada Labour Code (the Code) to implement insurance requirements for long-term disability (LTD) plans in the federally-regulated private sector, as previously discussed here.
Federally-regulated employers (that is, those in industries such as telecommunications and banking) will be required to obtain insurance for any LTD plans they offer to employees, thus providing employees on disability with some protection should the employer become bankrupt. The new provisions will come into force on July 1, 2014.
The LTD insurance provisions will apply on a prospective basis only, which means that employers will not have to insure LTD benefits for any employees who are in receipt of LTD benefits on July 1, 2014, nor insure such benefits for any employee where the employee has made an application for LTD benefits before that date.
Regulations related to the new provisions, yet to be released, will provide certain exemptions to the insurance requirements for LTD plans sponsored by federally-regulated employers.
In order to ensure compliance with the new LTD insurance requirements as well as other provisions of Part III of the Code, the penalty provisions of the legislation are also being amended. For instance, the maximum fine for most Part III violations will increase from $5,000 to $250,000, while the maximum fines for failing to comply with an order to pay arrears of wages under Part III will increase from $100 to $1,000 per day.