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Which issues would you most highlight to someone new to your country?
Canada is a federation, consisting of 10 provinces and three territories. The Constitution divides legislative authority between the federal, provincial and territorial governments. Provincial governments have primary authority over labour relations and employment law. However, the federal government has legislative authority in relation to labour relations and employment law with respect to activities and undertakings which fall within the federal jurisdiction. Federal labour and employment law applies to:
- interprovincial and international transportation;
- aeronautics; and
- a few other limited areas.
Although the federal government has legislative authority with respect to labour relations and employment law in these fields, basic contractual issues are governed by common law in all jurisdictions except Quebec, where civil law applies. This chapter focuses on federal legislation and regulations and the related jurisprudence. In most areas of labour and employment law, the provinces and territories have comparable legislation applicable to employers who fall within the scope of their constitutional jurisdiction.
Unlike many jurisdictions in the United States, Canada does not recognise the concept of employment at will. Employees – including those governed by federal labour and employment law – are generally entitled to reasonable notice or compensation in lieu of reasonable notice in the absence of cause. Minimum notice and severance pay obligations are defined by statute for employees in the federal sector. Based on common law principles, employees may be entitled to significantly greater notice or compensation on termination than the statutory minimum. An employment contract that complies with minimum standards can limit an employer’s termination liability to non-union employees.
What do you consider unique to those doing business in your country?
The Canada Labour Code permits non-union, non-managerial employees with at least one year of service to file a complaint alleging unjust dismissal. This is an alternative to wrongful dismissal litigation in the courts. If the complaint is not settled, an adjudicator has the authority, after a hearing, to order an employee to be reinstated in addition to awarding damages.
The Federal Employment Equity Act applies to federally regulated private sector employers that employ 100 or more employees and to certain parts of the federal public sector. The act requires employers to identify and eliminate employment barriers against persons in designated groups (eg, women, aboriginal peoples, persons with disabilities and members of a visible minority), and to adopt employment policies and practices which ensure that persons in these designated groups achieve a level of representation in the employer’s workforce that reflects their representation in the Canadian workforce. Employers must prepare an employment equity plan, maintain employment equity records and file annual reports.
Employers that provide long-term disability benefits must do so through an insured plan.
Is there any general advice you would give in the employment area?
Written employment contracts are generally beneficial for employers when defining the scope of their right to, for example, modify duties, responsibilities and benefits and transfer non-union employees. A properly written employment contract can also limit an employer’s termination obligations to non-union employees.
Emerging issues/hot topics/proposals for reform
Are there any noteworthy proposals for reform in your jurisdiction?
The federal government recently amended the Canada Labour Code to extend the compassionate care leave allowance to provide care or support to a seriously ill family member from eight weeks to 28 weeks. An employee’s right to return to his or her position is protected, but his or her employer is not obliged to pay him or her while on leave. Employment insurance is available to eligible employees who are on compassionate care leave.
The federal government recently extended the scope of the occupational health and safety provisions of the Canada Labour Code to include unpaid interns. Other minimum employment standards may apply to interns, unless the internship is for less than four months or for a prescribed number of hours within 12 months if the intern performs his or her activities to fulfil a requirement of an educational programme.
The federal government has proposed legislation which is currently before Parliament that would amend:
- the Labour Code to permit unions to be certified without a secret ballot vote; and
- the Canadian Human Rights Act to prohibit discrimination based on gender identity or expression.
Parliament is also considering legislation which would prohibit an employer from requiring an employee to submit to a genetic test.
What are the emerging trends in employment law in your jurisdiction?
Mandatory retirement was abolished in the federal sector in December 2012. Employers are dealing with the stresses caused by accommodating an ageing workforce in an era where productivity is critical.
There is also an increased emphasis on protecting employees from workplace violence and harassment. To some degree, this conflicts with another trend, which is an increasing concern on the part of employees about privacy and employer monitoring.
Employers are more frequently managing and accommodating employees with mental health issues. Alcohol and drug dependence is recognised as a disability and therefore engages a duty to accommodate under the Canadian Human Rights Act.
The employment relationship
Country specific laws
What laws and regulations govern the employment relationship?
The following laws and regulations govern the employment relationship:
- the Canada Labour Code;
- the Canadian Human Rights Act;
- the Employment Equity Act;
- the Personal Information Protection and Electronic Documents Act; and
- the Employment Insurance Act.
Who do these cover, including categories of worker?
The legislation cited above applies to all employees in the federally regulated private sector, including full-time, part-time, casual and temporary workers. Certain aspects of the Canada Labour Code apply to unpaid interns. Dependent contractors (ie, contractors who are economically dependent on one entity and are obliged to perform duties for that entity) are treated as employees for labour relations purposes. A trade union can apply for certification with respect to a bargaining unit of dependent contractors and engage in collective bargaining with the entity using the dependent contractors’ services. The Employment Insurance Act applies to all employees in Canada, whether provincially or federally regulated.
Are there specific rules regarding employee/contractor classification?
While jurisprudence varies somewhat according to context (eg, tax, labour relations or minimum employment standards), the distinction between employees and contractors focuses on the degree of control by the alleged employer over the employee/contractor and the integration of the employee/contractor into the employer’s organisation. Other factors include the ownership of tools and equipment and the employee/contractor’s opportunities for profit or loss. Some contractors may be entitled to notice of termination. Dependent contractors can be unionised.
Must an employment contract be in writing?
No – although it is preferable from the employer’s perspective to have a written employment contract.
Are any terms implied into employment contracts?
It is an implied term in virtually all employment contracts that employment can be terminated summarily for cause. In the absence of cause, an employer can terminate a non-union employee’s employment only if it provides proper notice or compensation in lieu of notice. If an employer unilaterally makes a fundamental change to an employee’s terms and conditions of employment, that action may constitute constructive dismissal and entitle the employee to be compensated as if he or she were actually terminated. These implied terms can be modified by a written agreement. There are also implied duties on the part of employees (ie, loyalty and confidentiality) and employers (ie, good faith).
Are mandatory arbitration/dispute resolution agreements enforceable?
Yes. The general arbitration legislation applicable in the province in which a non-union employee is primarily employed should be consulted. Arbitration is the primary dispute resolution mechanism in collective agreements (ie, for unionised employees).
How can employers make changes to existing employment agreements?
For non-union employees, employers can reserve the right to make certain changes to, for example, duties, responsibilities and benefits in a written employment contract. If no written employment contract protects those rights, employers still may be able to make minor amendments without the employee’s consent. However, significant unilateral changes may constitute constructive dismissal.
Is a distinction drawn between local and foreign workers?
Foreign workers must comply with immigration laws and have a valid work permit. Newly arrived foreign workers may be ineligible for public health insurance for a period after arrival. Otherwise, no significant differences exist.
What are the requirements relating to advertising positions?
Ads may not express or imply any limitation, specification or preference based on a prohibited ground of discrimination. The prohibited grounds are:
- national or ethnic origin;
- sexual orientation;
- marital status;
- family status;
- disability; and
- convictions for an offence for which a pardon has been granted or a record suspension has been ordered.
The federal government has proposed adding gender identity or expression to the list of prohibited grounds.
What can employers do with regard to background checks and inquiries in relation to the following:
(a) Criminal records?
An employer can request an applicant to consent to a criminal record check, provided that it is limited to offences for which a pardon has not been granted or a record suspension has not been ordered. This should be done as part of a conditional offer of employment.
(b) Medical history?
An employer may inquire about an applicant’s medical history only if he or she has a condition that may affect his or her ability to perform the job safely. Such questions may be asked only if a disability or condition would threaten the safety of the individual or others. Any further questions should be asked during a pre-employment medical examination and must relate to conditions which are relevant to the specific duties of the position in question. A pre-employment medical may be required only as part of a conditional offer of employment.
(c) Drug screening?
Pre-employment and random drug screenings are generally not permitted, subject to extremely limited exceptions (eg, truck drivers who are required to drive in the United States as part of their duties).
(d) Credit checks?
Credit checks are permitted with the applicant’s consent.
(e) Immigration status?
An employer can ask all applicants whether they are legally entitled to work in Canada. If an applicant is hired, he or she must be asked to provide confirmation of her or his entitlement to work in Canada by providing a valid social insurance number and any applicable work permit.
(f) Social media?
Employers can assess an applicant’s social media presence. However, employers should be careful about basing any decision on information gained from social media that might be connected to a prohibited ground of discrimination. Generally, employers should obtain consent from an applicant before reviewing such information to comply with privacy legislation.
Wages and working time
Is there a national minimum wage and, if so, what is it?
Canada has no national minimum wage. The minimum wage for federally regulated employees in each province and territory is the same as the minimum wage applicable to provincially regulated employees in that province or territory. The minimum wage rates in the provinces and territories are adjusted periodically. As of November 1 2016, those rates range from $10.50 to $13.00 per hour.
Are there restrictions on working hours?
For most occupations, the standard working hours are eight hours per day and 40 hours per week; the maximum number of working hours per week is 48. Employees may work more than 48 hours per week in an emergency. An employer and its employees (or the union representing the employees) can agree to modify the application of these rules to some degree. However, a government permit is generally mandatory to require or permit an employee to work hours regularly in excess of 48 hours per week. The standard and maximum working hours are higher for certain occupations (eg, bus and truck drivers). Certain categories of employees are exempt from the hours of work rules altogether,
Hours and overtime
What are the requirements for meal and rest breaks?
No specific statutory requirements exist. However, employers should ensure that employees take sufficient breaks to avoid health and safety issues.
How should overtime be calculated?
Under the Canada Labour Code, overtime is payable at one and a half times the standard hourly rate for all hours worked in excess of the standard hours (generally eight hours per day and 40 hours per a week).
What exemptions are there from overtime?
Standard hours (ie, the threshold for determining overtime) vary in certain industries (eg, trucking). Where working hours vary day to day or week to week, averaging can be adopted with employee or union consent. Modified schedules can be agreed with a union or groups of employees provided the schedule does not exceed an average of 40 hours per week over a two-week period. The hours of work and overtime provisions of the Canada Labour Code do not apply to managers, superintendents, employees who exercise management functions or members of the architectural, dental, engineering, legal or medical professions.
Is there a minimum paid holiday entitlement?
Employees are entitled to nine paid holidays per year (ie, New Year’s Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Remembrance Day, Christmas Day and Boxing Day). In addition, after one year of employment, employees are entitled to two weeks of paid vacation each year. After six years of employment, employees are entitled to three weeks of paid vacation. Minimum statutory vacation pay is 4% (6% after six years of employment) of the employee’s earnings in the previous year.
What are the rules applicable to final pay and deductions from wages?
An employer may not deduct from wages or other amounts due to an employee, including termination and severance pay, unless it is authorised:
- by a federal or provincial statute or regulation;
- by a court order;
- by a collective agreement;
- by the employee in writing; or
- to correct overpayments of wages.
An employer cannot enter into an agreement with an employee to deduct from wages with respect to damage to or loss of property or loss of money if anyone other than the employee had access to the property or money in question.
What payroll and payment records must be maintained?
Employers must maintain the employment records required by the Canada Labour Standards Regulation, generally for three years after the work has been performed. The following information must be retained for each employee:
- hire date;
- termination date;
- social insurance number;
- wage rates;
- hours of work; and
- actual earnings, including overtime pay, holiday pay, vacation pay, termination and severance pay.
Discrimination, harassment & family leave
What is the position in relation to:
Discrimination based on age is generally prohibited. Employers cannot employ individuals who are less than 17 years old in some industries and circumstances. Distinctions based on age are allowed to some degree in benefit plans.
Discrimination based on race is prohibited.
Discrimination based on disability is prohibited. ‘Disability’ is defined as any previous or existing physical or mental disability and includes disfigurement and a previous or existing dependence on alcohol or a drug. Distinctions can sometimes be made on the basis of disability if the employer can establish that the distinction is based on a bona fide occupational requirement.
Discrimination based on gender is prohibited. For these purposes, discrimination based on pregnancy or child birth is deemed to be discrimination on the basis of gender.
(e) Sexual orientation?
Discrimination based on sexual orientation is prohibited.
Discrimination based on religion is prohibited.
If a medical condition constitutes a disability, it will be protected as described above. Parliament is considering legislation that would prohibit an employer from requiring an employee to submit to genetic testing.
The other prohibited grounds of discrimination are:
- national or ethnic origin;
- marital status;
- family status; and
- conviction for an offence for which a pardon has been granted or in respect of which a record suspension has been ordered.
The federal government has proposed adding gender identity or expression to the list of prohibited grounds.
Family and medical leave
What is the position in relation to family and medical leave?
Women are entitled to 17 weeks of unpaid maternity leave. Either parent can take up to 37 weeks of unpaid parental leave to care for a newborn child or a newly adopted child, as long as he or she has completed six consecutive months of service.
Employees are also entitled to up to 28 weeks of leave to care for a seriously ill family member. Employees who are the parents of a critically ill child are entitled to 37 weeks of leave to care for the child. Parents are entitled to up to two years of leave if a child has died as a result of a crime and up to one year of leave if a child has disappeared as a result of a crime. Employees cannot be dismissed due to a non-occupational illness or injury resulting in an absence if the absence does not exceed 17 weeks. Employees may not be dismissed because of an absence due to a work-related illness or injury.
Income replacement benefits may be available to employees for the above leaves under the Employment Insurance Act.
What is the position in relation to harassment?
The Canadian Human Rights Act prohibits harassment based on any prohibited ground. Sexual harassment is specifically addressed by the Canada Labour Code. Further, the occupational health and safety provisions of the Canada Labour Code require an employer to take various steps to prevent workplace violence. This includes bullying and other types of conduct which could be considered harassment, even if the harassment is unrelated to the prohibited grounds of discrimination.
What is the position in relation to whistleblowing?
Under the Criminal Code, it is an offence for an employer or representative of an employer to discipline or dismiss an employee or to threaten to do so in order to deter him or her from providing information to law enforcement officials concerning a potential offence by the employer or an employee of the employer. Labour and employment legislation prohibits reprisals against employees for initiating claims or complainants arising from the legislation.
Privacy in the workplace
Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?
Employers may collect, use or disclose personal information only which is reasonable in the circumstances. Employers must take reasonable steps to protect the security of personal information. Privacy-related policies are required and employers must appoint a designated person who is responsible for the privacy programme. The collection, use or disclosure of personal information requires employee consent, unless it falls under an exemption.
To what extent can employers regulate off-duty conduct?
Employers may regulate off-duty conduct only to the extent that it has a direct and significant connection to the legitimate interests of the employer.
Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?
Trade secrets and restrictive covenants
Who owns IP rights created by employees during the course of their employment?
In the absence of an agreement to the contrary, the employer is the owner of copyright in work created by an employee during the course of employment. Conversely, an invention and any patent rights in the invention generally belong to the employee, unless he or she was hired to invent, in which case the employer owns the invention and patent rights in the invention. Ownership of trademarks, trade secrets and other intellectual property should be addressed in a written agreement between the employer and employee.
What types of restrictive covenants are recognised and enforceable?
Canadian courts will enforce only restrictive covenants which are reasonable with regard to the geographic scope, duration and subject matter of the covenant and the nature of the employee’s employment.
Are there any special rules on non-competes for particular classes of employee?
For most sales and customer-facing employees, non-compete clauses will generally not be enforced if a reasonable non-solicitation clause would have adequately protected the employer’s interests.
Discipline and grievance procedures
Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?
No specific laws address discipline and grievance procedures. These procedures are commonly found in collective agreements. Generally, progressive discipline is required in order to justify termination for cause, except for the most egregious misconduct.
Unions and layoffs
Is your country (or a particular area) known to be heavily unionised?
Unionisation in the Canadian private sector has generally been declining. Overall, approximately 30% of the Canadian workforce is unionised. Approximately 17% of the private sector workforce is unionised.
What are the rules on trade union recognition?
Trade unions generally acquire the right to represent a group of employees (referred to as a ‘bargaining unit’) by filing an application for certification. If the union can demonstrate that it has membership evidence from at least 40% of the employees in the proposed bargaining unit, the Canada Industrial Relations Board will conduct a secret ballot vote. The union will be granted bargaining rights if it wins the vote. Unions and their members are protected against adverse employer treatment in the context of certification drives and applications. The federal government has proposed new legislation concerning the certification of unions. If it is passed by Parliament, a union could be certified as the bargaining agent for a bargaining unit of employees, without a vote, if it can demonstrate majority support in the proposed unit through written membership evidence. If the union has written evidence of the support of 35% to 50% of the unit, a secret ballot vote would be conducted.
What are the rules on collective bargaining?
Employers and unions must bargain in good faith and make every reasonable effort to conclude a collective agreement. Strikes and lockouts are generally prohibited while a collective agreement is in effect.
Are employers required to give notice of termination?
The Canada Labour Code provides that employers must provide at least two weeks’ notice or pay in lieu of notice to employees with more than three months of employment, unless the employer has just cause. Severance pay is also required for employees with more than one year of service. Severance pay is calculated on the basis of two days’ pay per year of service, with a minimum of five days’ pay. In addition, common law principles apply. Employees may be entitled, at common law, to reasonable notice or compensation in lieu of notice which may significantly exceed their minimum statutory entitlements. For these purposes, reasonable notice is determined based on service, age, character of employment and the availability of alternative employment. The employer and employee may agree, by written contract, to an express termination provision, as long as it is not less than the statutory minimum requirements.
What are the rules that govern redundancy procedures?
Layoffs which are more than temporary may constitute termination of employment for the purposes of the Canada Labour Code. For non-union employees, any layoff may be considered to be a termination of employment unless the employee’s employment contract specifically allows for temporary lay-offs.
Are there particular rules for collective redundancies/mass layoffs?
The Canada Labour Code requires an employer to provide notice to the government and a trade union that represents affected employees and post notices in the workplace if it intends to terminate 50 or more employees in a four-week period or less. Notice must be provided at least 16 weeks before the date on which the first employee’s employment will be terminated.
Employers may be required to establish a joint planning committee which includes employee representatives. The purpose of the committee is either to eliminate the need for termination or minimise the impact of the termination on employees and assist those employees in obtaining other employment.
What protections do employees have on dismissal?
Non-union employees are entitled to notice of termination and, in some cases, severance pay. Non-union employees who are not managers and who have at least one year of employment are protected against unjust dismissal. Employees cannot be terminated based on any of the prohibited grounds of discrimination under the Human Rights Act. They are also protected by the Canada Labour Code if they take various forms of leave – pregnancy and parental leave being the most common. In general, unionised employees can be laid off only for lack of work or dismissed for just cause.
Jurisdiction and procedure
Which tribunals or courts have jurisdiction to hear complaints?
The Canada Industrial Relations Board has jurisdiction over all matters relating to labour relations. The Canadian Human Rights Tribunal has jurisdiction with respect to alleged violations of the Canadian Human Rights Act. The minister of labour can appoint a referee to hear an appeal concerning labour standards matters or an adjudicator to hear unjust dismissal complaints. Occupational health and safety orders can be appealed to an appeals officer appointed by the Ministry of Labour. Wrongful dismissal claims may be brought in the courts of the province or territory where the employee was employed.
What is the procedure and typical timescale?
Procedures and timescales vary significantly, depending on the nature of the issue and its complexity.
What is the route for appeals?
Generally speaking, tribunal decisions cannot be appealed. Judicial review may be available based on narrowly defined grounds. Appeals from superior court decisions are heard by the appellate court of the relevant province or territory. From there, appeals may brought before the Supreme Court with leave.