Corporate Training Magazine

Legislating Change
Vol 1 Issue 1 - Sept 2005

By Kevin S. Liskowich

In many ways, business and industry have done well in terms of self-regulating. However, when public safety and the rights of individuals are at stake, the balance between corporate interests and the protection of individuals and communities can be difficult for companies to maintain. In these cases, government steps in to ensure the protection of all stakeholders.

In the last two years alone, federal and provincial legislation has been passed in numerous areas to address business practices in order to safeguard the rights of individuals and to make sure that companies 'follow the rules'.

Ensuring Safety
Criminalizing Violations
"Bill C-45 establishes a new, positive duty on all persons in authority and their organizations to take 'reasonable steps' to prevent bodily harm," reported Norm Keith of Gowling Lafleur Henderson.

And unlike past regulations that had been more bark and less bite, Bill C-45 has some teeth. Failure to comply may result in fines for organizations in the millions of dollars; and jailing officers and directors. In the case of a workplace fatality, the legislation goes as far as criminal prosecution and penalties up to life imprisonment.

"To date there has only been one post-Bill C-45 charge. The facts involved a trench cave-in that caused a workplace fatality. The supervisor that was charged was also charged with eight counts under the Occupational Health and Safety Act (OHSA). In a plea bargain agreement, he pleaded guilty to three offences of contravening the OHSA and the criminal charges were withdrawn. He agreed to a fine in the amount of 50,000 dollars."

No Bully For Me
Harassment policies and legislation are nothing new. For years, companies have governed workplace behaviour. However, much of the attention has been focused on high-volatility areas such as sexual harassment, leaving lesser-profile forms of harassment in the background. It's only in recent years that workplace bullying has gained attention.

Human Resources Magazine has labeled workplace bullying "one of the most insidious and destructive problems" in the workplace, and a 1993 study determined that one in seven adult suicides is a result of workplace bullying.

Bullying is not usually a single event, but tends to be an accumulation of many small incidents. Workplace safety specialist Betty Connolly reported, "Some of the most common forms involve isolating, excluding, threatening and degrading; yelling and ridiculing; and discrediting an individual's professional reputation.

"This form of workplace violence can result in a long list of symptoms, including depression, suicidal thoughts, anxiety, insomnia, post-traumatic stress disorder, and alcohol and drug abuse. The results for business are increased stress and absenteeism, decreased productivity and morale, and a tarnished corporate image;" she conveyed.

Internationally, bullying legislation has been passed in many countries, including Sweden, Australia, France and Britain. In 2004, Quebec became the first jurisdiction in North America to have legislated against bullying with its Psychological Harassment at Work Act. Federal legislation has also been proposed in the House of Commons and will be discussed in the Fall session of Parliament. Connolly believes it's only a matter of time until the rest of the country follows Quebec's lead in dealing with psychological harassment.

Protecting Your Privacy
"While the preceding legislation mainly applied to government organizations, the new rules apply to most organizations in the private sector, including corporations, unincorporated associations, private colleges, trade unions, partnerships, and individuals who are acting in a commercial capacity," stated Gowlings' David Corry.

The new legislation has created additional administrative work for affected organizations. "Businesses are still allowed to collect and use personal information, but they must ensure it is for 'reasonable' purposes. Further, Before any personal information is used, the business must explain the purposes for which it will be used, and get consent from the individual."

Every business must now have a designated privacy officer to ensure that consents are on record, reasonable security measures are in place to protect the privacy of personal information, and information is stored in a way that allows it to be accessed, corrected, and severed if necessary.

Corry noted that compliance can sometimes be difficult, but companies cannot afford to ignore it. "Many companies have not given any priority to privacy compliance and have been subject to one of the many privacy complaints filed since the legislation came into effect. They have learned the painful and expensive lesson that preventive compliance is far cheaper than responding to a privacy complaint and related legal action."

Governing How Business Operates
Nowhere has the spotlight shone more brightly than on corporate governance. Unethical practices that have lurked in the shadows under relative obscurity have been brought into the light by a number of high-profile scandals, and both government and industry have stepped in to combat the problem.

"A number of initiatives have been introduced to address the escalating business scandals of the last few years," reported Brian Mainwaring of Gowlings. "These initiatives have principally come from the regulatory authorities such as the securities commissions and stock exchanges. To some extent, the legislative assemblies have also introduced new laws. The regulatory authorities have created new rules and policies dealing with corporate governance and have significantly stepped up their enforcement of rules by more diligently prosecuting wrong-doers."

A significant example of a government initiative is the introduction of "civil liability" legislation for secondary market trades. The aim is to improve the overall quality of information for investors to make decisions. "Under this law, investors in the secondary marketplace will have a right of action against corporations who have failed to provide adequate information to the market about the corporation's affairs."

Overall, the reaction has been positive as companies now have placed a far greater eye on corporate governance than ever before. Mainwaring reported, "Companies and potential directors are paying more attention to the skills and qualities of a good director and consequently put more thought into choosing board members. In line to this, schools for directors have now been started, which will likely result in an echelon of very qualified directors."

However, Mainwaring noted that the legislation isn't the magical pill that will permanently solve the problem and eliminate future scandals. "Honest people will continue to do what is required of them, while less than honest people will continue to find a way to short-cut new rules."

The Changing World of Training
Part II: Delivering the Results
Part III: Legislating Change