Employment relationship

State-specific laws

What state-specific laws govern the employment relationship?

In Ontario, approximately 90% of employees are subject to provincial (Ontario) statutes, while 10% (e.g., banks and airlines) are covered by federal (Canada) statutes.

ProvincialThe most notable Ontario statutes which govern private employers are:

  • the Accessibility for Ontarians with Disabilities Act 2005;
  • the Agricultural Employees Protection Act 2002;
  • the Employment Protection for Foreign Nationals Act (Live-In Care Givers) 2009;
  • the Employment Standards Act 2000;
  • the Human Rights Code;
  • the Labour Relations Act 1995;
  • the Occupational Health and Safety Act;
  • the Ontarians with Disabilities Act 2001;
  • the Ontario College of Trades and Apprenticeship Act 2009;
  • the Ontario Labour Mobility Act 2009;
  • the Pay Equity Act;
  • the Retail Business Holidays Act;
  • the Rights of Labour Act;
  • the Smoke-Free Ontario Act;
  • the Wages Act; and
  • the Workplace Safety and Insurance Act 1997.

There are other statutes affecting the Ontario government (e.g., the Ontario Pubic Service Act) and the broader public sector (e.g., the Colleges Collective Bargaining Act).

FederalThere are separate statutes, including the Canada Labour Code, the Canadian Human Rights Act, the Personal Information and Protection of Electronics Documents Act, and the Accessible Canada Act. A bill that has received royal assent will enact a new federal Pay Equity Act effective on a date to be announced.

Who do these cover, including categories of workers?

In general, both provincial and federal statutes cover employees. The definition of “employee” is not consistent from statute to statute, but is generally interpreted broadly. Depending on the statute and the facts, “employee” has been found to include independent contractors, employees of temporary help agencies, and consultants. Ontario recognizes a “dependent contractor” category. The Ontario Labour Relations Act 1995 defines “employee” to include a “dependent contractor;” therefore, dependent contractors can join a union and engage in collective bargaining. A broad approach to “employee” is also found in occupational health and safety so that self-employed individuals can be covered by that legislation.

Misclassification

Are there state-specific rules regarding employee/contractor misclassification?

Misclassification issues arise in several contexts, including wrongful dismissal and tax, the Canada Pension Plan, and employment insurance. There may be a difference in the rules or approach applied to addressing the misclassification issue depending on the specific statute. The Employment Standards Act 2000 specifically prohibits employers from treating workers as independent contractors if they are in fact employees.

Contracts

Must an employment contract be in writing?

No, but a written employment contract is strongly recommended, especially with respect to obligations on termination of employment. Absent a written contract, every employer-employee relationship is based on an oral contract which exists common law. Given the fluid nature of employment relationships, it is not unusual for an employment contract to be partly oral, partly written (e.g., policies), partly subject to common law implied terms, and partly determined by the parties’ course of conduct. A written contract can be a simple hiring letter or a more formal employment agreement.

Are any terms implied into employment contracts?

Yes. There are several terms implied at common law, affecting both employers (e.g., obligations to provide reasonable notice of termination where there is no just cause and a safe and healthy workplace) and employees (e.g., duty of loyalty).

Are mandatory arbitration agreements enforceable?

Mandatory arbitration agreements were traditionally held to be enforceable if they were compliant with the Ontario Arbitration Act 1991. However, a recent ruling held that mandatory arbitration cannot apply to an employee’s statutory claims for which they can choose to access a statutory complaint procedure. An appeal will be heard by the Supreme Court of Canada, likely in late 2019.

How can employers make changes to existing employment agreements?

This is a difficult area. When an employer introduces a unilateral change to a fundamental term, the employee can:

  • accept the change either expressly or implicitly, in which case employment will continue under altered terms;
  • reject the change and sue for damages for constructive dismissal; or
  • make it clear that the new terms are rejected. An employer may respond to this rejection by terminating the employee with reasonable notice at common law and offering re-employment on the new terms. If the employer does not take this course of action, it is acquiescing to the employee’s rejection of the new terms.

An employment agreement may contain a provision which specifically addresses amendments. For any agreed amendments—especially material amendments—employers should provide consideration (continued employment is generally not consideration).