Under most circumstances, Canadian Forces Reserve personnel have the opportunity to accept or decline greater military responsibilities. They can choose to voluntarily remove themselves from their civilian lives to deploy on extensive domestic or international operations.
For over a decade, the Reserves have been an essential component in augmenting the Regular Force, as well as meeting Canada’s peacekeeping and security demands. Rightfully so, Reservists should be acknowledged for their commitment and sacrifices, but so should their civilian employers. When a part-time Reservist takes a temporary leave of absence to assume the role of a full-time soldier however, employers tend to encounter some financial drawback.
Employers’ Disproportionate Costs
When Reservists decide to serve on extended military operations, their employers are not obligated to pay their wages or salary for the duration of their absence. At a glance, it would seem that employers are saving money when their Reservists are gone, but in reality there is a demanding price to be paid- particularly for smaller companies and businesses that require specialized skills.
Depending on the duration of a deployment, employers may shift the Reservists’ responsibilities to other employees, or find a replacement. Though one situation is not necessarily more advantageous than the other, employers are more inclined to hire a temporary stand-in. In the former, employers will likely have to pay their employees overtime for taking on the Reservists’ residual workload, which runs the risk of declined productivity and output in the long run. The latter situation can be costly since an employer would have to search, hire and train someone who might not stay with the company beyond 24 months.
In June 2012, all provinces and territories in Canada passed a form of Job Protection Legislation, securing a Reservist’s job when they return home from active military duty. This is conceivably an additional cost that employers must bear because returning Reservists may need to be re-trained and slowly reintegrated into civilian life. As Policy Analyst at the C.D. Howe Institute, Colin Busby explained, “Although Reservist job protection laws are intended to support a Reservist’s choice to volunteer for military deployment, these laws shift the costs of military activities on to individual employers, potentially causing hiring discrimination that, in turn, raises doubt about the effectiveness of these laws.”
In Mr. Busby’s study, he proposes that the Canadian Government cover at least a portion of the costs that employers currently assume when Reservists take a military leave of absence. He further explains that a shift of the costs onto the government could promote and support a better relationship between Reservists and their employers.
Learning by Example
Canada is encouraged to provide fair compensation for employers of Reserve Force personnel. The difficulty with proposing such a program is developing an effective payment distribution plan that provides sufficient assistance to employers, yet something that will not offset the country’s budget plan. Canada can learn from the two different employer compensation models that exist in Australia and the UK.
Australia’s Employer Support Payment Scheme (ESPS) provides financial services to eligible employers of Reservists, as well as self-employed Reservists who are absent due to military service. For full-time employees, the ESPS provides a set stream of weekly compensation to employers, and a proportional payment may be made for part-time employees. This compensation plan is evenly distributed to all eligible employers of Reservists, regardless of the actual costs of their absence.
The UK’s Support for Britain’s Reservists & Employers (SaBRE) provides three different compensation packages. The first helps cover the costs of finding and hiring new employees to fill the position of the Reservist on military leave. The second package covers the cost of paying employees overtime which has resulted from a Reservist’s absence. The third type of compensation provides employers with the necessary funding for any necessary re-training required upon a Reservist’s return home from their deployment.
It is difficult to explain which employer compensation plan would be most effective in Canada; however, the Australian model would likely put a huge strain on taxpayers in a time of economic uncertainty. A hybrid of the two compensation schemes should be examined as a possible model for Canada.
Considering the Options and Canada’s Economic Action Plan
As of March 2012, the Canadian Government has been working towards a fair compensation plan to support employers of Reservists. Mr. Busby’s report suggested that Canada adopt the following payment distribution method:
- Compensate smaller businesses that employ fewer than five employees at 80% of a Reservist’s salary up to $47,000. When this study was published in 2010, this proposed amount was the yearly maximum pensionable earnings for the Canada Pension Plan.
- Compensate businesses that employ five to 99 employees at 70-50% of a Reservist’s salary. Businesses that employed five to 9 people would be compensated at 70%; employing 10-19 people would be compensated at 60%; and employing 20-99 people would be compensated at 50%. Finally, compensate larger businesses that employ more than 100 people at 40% of a Reservist’s salary. This was proposed because larger businesses are better equipped to absorb the loss of a few Reservists.
- Finally, compensate larger businesses that employ more than 100 people at 40% of a Reservist’s salary. This was proposed because larger businesses are better equipped to absorb the loss of a few Reservists.
Commodore (Retired) Bob Blakely, Former Commander Naval Reserve, told the Committee on National Security and Defence that he was opposed to Mr. Busby’s employer compensation proposal. He insisted that employers should not be compensated in the form of payments. Instead, they should be rewarded with tax breaks, regardless of class of service, or the duration that a Reservist is absent.
In Canada’s 2012 Budget Plan, there was a summary on the Economic Action Plan, which intends to support employers of Reservists to offset the costs of replacing workers or increasing overtime hours for existing employees. The details of the plan are still in the process of being drafted. The main challenge the government is expected to confront is designing a plan that will be applicable to all provincial and territorial employment protection laws.
The idea of a part-time Reservist serving in a full-time military operation is more complex than often assumed. The government has been making progress in trying to support the multi-dimensional aspects of being a Reservist. There will be an official announcement from Ottawa in the coming months with the details of an employment compensation scheme. It is only a matter of time before employers will experience the additional benefits of employing a Reservist.