Q&A: managing the employment relationship in the Canada (Quebec)

Employment relationship

What state-specific laws govern the employment relationship?

The main laws governing the employment relationship in Quebec are:

• the Act Respecting Labor Standards;
• the Quebec Civil Code;
• the Charter of Human Rights and Freedoms;
• the Act Respecting Occupational Health and Safety;
• the Act Respecting Industrial Accidents and Occupational Diseases;
• the Labor Code;
• the Charter of the French Language;
• the Act Respecting the Protection of Personal Information in the Private Sector; and
• the Pay Equity Act.

Who do these cover, including categories of workers?

Generally, only workers who are considered "employees" are protected by employment law. Workers are distinguished on the basis of whether they are employees or independent contractors. Most employment laws will have specific definitions of who constitutes an employee within the meaning of that law. In general, an employee will be a person who works for remuneration according to the instructions and under the supervision or control of another person. Many protective measures benefit employees—including, for example, the right not to be dismissed without just and sufficient cause if an employee has accumulated more than two years of continuous service, and protection against reprisals for employees who are pregnant or must be absent for the purposes of child or family care.

Employees can also be distinguished on the basis of whether they are ordinary employees or management personnel. Employees are distinguished from managers on a number of factors, including:

• whether they can hire and dismiss other workers in the course of exercising their work;
• whether they participate in determining the company strategy;
• whether they can bind the company with third parties; and
• how they are remunerated.

The distinction is relevant as legal requirements relating to the treatment of employees may differ from the requirements relating to managers or senior managers.

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

Yes. If an employer treats an individual as an independent contractor when at law the individual is an employee, the employer faces significant liabilities. If an individual is an employee, that individual will be entitled to reasonable notice if dismissed without cause. If the individual accumulated more than two years of service, they would also be able to a file a complaint for wrongful dismissal and might also be able to claim benefits customarily provided by the employer to other employees. There could also be exposure for vacation pay, statutory holidays and overtime claims.

In addition, employers are required by law to withhold at source and to contribute certain amounts, including in respect of income tax, Canada Pension Plan, Quebec Parental Insurance Plan and employment insurance premiums for all employees (but not for independent contractors). If an employer fails to remit these source withholdings because the employer incorrectly classifies an individual as an independent contractor, the employer may be subject to penalties and interest as prescribed by the tax authorities.

Must an employment contract be in writing?

No. An oral agreement does not need to be evidenced in writing to constitute a valid contract of employment under Quebec law, assuming that its existence can be proven. That being said, it is common for employees to receive a written letter or offer of employment when they are hired. Typically, senior executives will enter into a more formal written agreement which will contain detailed terms and conditions of employment.

Are any terms implied into employment contracts?

Yes. Regardless of what form the employment contract takes, all employment relationships implicitly include the employer’s obligation to provide work, to pay for the work and to provide a safe working environment for its employees. As for the employee, every contract of employment implies that the employee will carry out the work and be loyal to their employer, not only during the term of employment but also for a reasonable period of time after termination of employment.

Are mandatory arbitration agreements enforceable?

The parties can select arbitration as a mode of dispute resolution, especially if confidentiality is essential. The effect of a properly drafted arbitration clause will be to oust the courts from hearing the dispute, in favor of granting an arbitrator exclusive jurisdiction

However, arbitration clauses cannot have the effect of depriving employees of their substantive rights emanating from public order legislation such as the Labor Standards Act. For example, employees (other than senior managers) cannot validly renounce in advance, through an arbitration clause, their right to contest their dismissal or to be reinstated in their position if their dismissal is found to have been without cause. In these circumstances, an arbitration clause will be enforceable only if it offers the employee rights equivalent or superior to those set forth in the Labor Standards Act.

How can employers make changes to existing employment agreements?

Employers cannot impose a unilateral substantial change in the material terms or conditions of employment without proper notice. If an employer unilaterally and substantially modifies a material term or condition of employment, this may entitle the employee to treat the contract as having been repudiated and to sue the employer for damages for constructive dismissal. Conduct that may amount to a constructive dismissal includes the imposition of any of the following:

• a demotion;
• a material reduction in job responsibilities or status;
• a geographical transfer; or
• a reduction in salary.