Things American Employers Should Know About Canadian Employment Law
If you want to learn more about Canadian employment law, particularly Ontario employment law, please continue reading.
An Article from Our American Contributor .
The US and Canada have strong economic ties. Today, thousands of Canadians commute to or work remotely with American companies and vice versa. Even though both countries share many similarities, things are different when it comes to employment law. Many employers already familiar with the American market might assume that the regulations are the same, but this is far from the truth. Take time to grasp the differences if you’re hiring workers in Canada or opening a new branch there.
If you belong to the second group that is setting up a new office, you know how complex it is. You have to do everything from renting some space to looking for ways to promote your new regional website. You can outsource all of this. Your realtor can look for some offices, while plenty of software and freelancers can write lawyer blogs to improve your website’s rankings. But there is one thing you can’t solve that fast – gaining knowledge of Labor Laws in Canada. Of course, you can hire an employment law firm for that, but it is always better to understand your rights and obligations. This article will dive deeper into what American employers need to know about Canadian employment laws.
Canadian Employment Laws: Factsheet
The minimum wage is on average $15- $16.65, but it varies by region.
As of December 18, 2022, qualified employees, who meet certain conditions, can get up to 26 weeks of employment insurance benefits.
All federally regulated employers are to provide menstrual products in their workplaces starting December 15, 2023.
Conducting workplace drug tests is prohibited except in certain circumstances (e.g. when workers take “safety-sensitive” positions).
The labor laws in Canada are specific about the rules that all employers must adhere to. This varies based on whether the industry is under the federal, provincial, or territorial government. These laws govern how employers may recruit, treat and dismiss workers and other vital aspects of workplace safety.
a. Law Structure Across Canada
It is essential to note that Canadian labor laws also differ by province. The reason for this is simple. The Quebec region's labor laws are based on Europe's civil laws, while Ontario's share similarities with the British common laws, especially when it comes down to wrongful dismissal and severance pay. This has created differences in regulations like minimum wage, employment termination, and so on. For example, In Ontario, the minimum wage is $15 an hour, while in Vancouver, the rate is $15.20 per hour. On the other hand, federal employees get $16.65 regardless of their province.
Still, there are universal regulations that apply to all employees and employers. Examples are the Canadian Human Rights Laws (such as the Canadian Human Rights Act for federally regulated sectors and it's provincial counterparts e.g. Human Rights Code for Ontario) and the Employment Equity Act that applies to federally regulated employees and it's provincial counterparts such as the Pay Equity Act and the Ontario equal pay for equal works under the Employment Standards Act. The Employment Equity Act (EEA) stipulates that employers must make additional protection for vulnerable employees like aboriginal people, people living with disabilities, minorities, and women.
Do note that the Employment Equity Act may also apply to certain Ontario companies that have contracts with the federal government. These companies would be bound by the Ontario Human Rights Code as well.
You may also want to take a look at this blog post to learn more about when a provincial entity will be subjected to federal employment law:
b. Employment Rights
The employment laws in Canada provide a framework that specifies the rights of every employee. Some of these include directives on:
1. Payroll. The law mandates employers to keep accurate payment records for all employees for at least six years. This is important for tax purposes and provides the necessary data for the employees' pension plan, employment insurance, and other supplemental insurance benefits.
2. Working hours and overtime. The general working hours in Canada are 40 hours per week, but it could be higher in certain provinces like Ontario. The overtime pay differs across the different regions. The rate is generally 1.5x the regular wage or an equivalent of paid time off. This also depends on regional differences stipulated by law.
3. Benefits. Workers who meet the requirements are entitled to benefits such as annual leave, pension plan contribution, insurance pays, severance pay, vacations, and more. The laws regarding severance pay differs between federally regulated employees and provincial employees such as Ontario employees.
4. Holidays. Under each provincial regulation, employees qualify for a vacation. It ranges from 2 weeks to more based on their years of service. The days off do not include public holidays. Workers can also apply for extended leave based on special circumstances such as a death of a family member, etc. Click here to see holidays and leave under the Canada Labour Code for federally regulated sectors. Click here to see the same for Ontario under the Employment Standards Act for vacation and leave.
5. Right to disconnect. Employees in some provinces such as Ontario are allowed to disconnect from work activity outside their working hours pursuant to the Working for Workers Act, 2021. Click here to learn more. It means that companies shouldn’t expect their workers to answer work emails or calls and do other work-related activities when they are off. The right to disconnect law protects them from burnout and ensures a better work-life balance. These laws apply to businesses with over 25 employees.
6. Parental leave. The laws on parental leave work for either one of both genders. An eligible parent can get up to 63 weeks or more in some cases after birth or when a child becomes the employee's responsibility under both federal and most, if not all, provincial regimes.
7. Privacy. Employment laws in Canada also protect workers' rights and ensure that businesses and organizations respect their workers' right to privacy. One such example is the Privacy Act. This means that invasive workplace surveillance is not allowed. It is also illegal to secretly monitor employees outside their office and off working hours.
c. Employment Procedure and Agreement
In most cases, the location where workers carry out their activities determines what does or doesn't apply to them. Therefore, a company should draft a relevant employment contract compliant with Canadian labor laws. Having an employee sign a contract drafted elsewhere, like in the US, means it is not enforceable by a Canadian court. The court may use common law principles to deliver judgment in such situations. Also, it is advisable to have a lawyer and a legal marketing writing team to communicate its terms and conditions clearly and effectively.
Click here to contact HTW Law - Employment Lawyer for assistance and legal consultation.
d. Contract Termination
Canadian employment laws are clear on the rights of termination of employment. Here, the employer must give proper termination notice or provide payment in lieu of notice. The laws regarding termination differ between federally regulated firms and their provincial counterparts.
Provincial workers, such as those in Ontario, have the option of accepting termination pay and severance pay, if applicable, under the Employment Standards Act, or suing for wrongful dismissal or constructive dismissal depending on the situations.
Termination without any notice other than the statutory minimum guaranteed by the employment protection statutes mentioned above may be possible for cases of severe employee misconduct, such as office harassment or theft.
By including a termination provision in an employment contract, the company may be able to limit certain legal liabilities. However, it is extremely technical, and the Court will strike down any employment agreement with even the slightest violation of employment law legislation.
For instance, in Ontario, in Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, the Court of Appeal has stated that a termination clause will rebut the presumption of reasonable notice only if its wording is clear, and employees should be made aware at the beginning of their employment what their entitlement will be at the end of their employment.
Following the Court of Appeal decision in 2020 in Waksdale v SwegonNorth America Inc., 2020 ONCA 391, many termination provisions in employment contracts were invalidated by the Waksdale rule, which states that the termination clause will NOT be enforceable unless the entire employment contract is in line with the Employment Standards Act (ESA).
Bill 27: Working for Workers Act, 2021 was introduced in late October 2021 which prohibit Non-compete clauses or non-compete obligations in employment contracts, if such agreement was entered into after October 25, 2021.
After Gracias v Dr David Walt Dentistry Professional Corp, 2023 ONSC 2052 (Div Ct), aff'g 2022 ONSC 2967, the divisional court has confirmed that the employment agreement will be enforceable only if it in its entirety complies with the minimum employment standards of the Employment Standards Act, 2000; if the contract does not comply with the Act, then the employee is entitled to reasonable notice of termination. This is so even if the provision that breaches the ESA has nothing to do with termination.
If you are an employer, you are very strongly advised to retain an experienced employment lawyer to draft a legally enforceable employment contract. In many cases, it’s a make-it-or-break-it move. If you are an employee, you are well advised to seek legal advice from employment lawyers before signing any employment agreement or accepting "severance package" or "termination package" to protect your employment law entitlements.
Understanding Canadian employment laws is necessary for business owners with employees working in Canada. Such laws protect the workers' rights while safeguarding the company's interests. Taking the time to be duly acquainted with the regulations regarding employment will help you avoid legal issues in the future.
You don't have to fight the battle alone. Speaking with an employment lawyer who is familiar with the laws and regulations regarding employment contracts and employment law in general will go a long way. If you are in doubt, it's essential that you reach out for help as soon as possible right away.
Click here to contact HTW Law - Employment Lawyer for assistance and legal consultation.
Thomas Lore is a 27-year-old writer. As a creative and diligent freelance blogger, he is always seeking new ways to improve himself.