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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.

Foreign workers

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. 

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