In Canada, the power to make laws is divided between the federal and provincial governments. Generally, provinces have jurisdiction over employment matters, while the federal government has jurisdiction over employment only in respect of specific industries, such as airlines, telecommunications, shipping and banks. Employment law in Canada is quite similar from province to province, and is governed by both federal and provincial legislation as well as by the common law (judge-made law). Quebec is the notable exception to this rule, as Quebec operates under a civil law system, which is based on a written "Civil Code", originally developed from France's Napoleonic Code.
Issues arising on hiring individuals
Employment and labour law in Canada is generally governed under the jurisdiction of Canada's provinces and territories. Immigration law is under the jurisdiction of the federal government. To be lawfully employed in Canada, one must be a citizen, landed immigrant or have a work visa. There is some increased movement of professionals, executives and skilled trades through free trade agreements, notably NAFTA (North America Free Trade Agreement).
Apart from senior executives, professionals, and workers with specialised skill sets, most foreign workers in Canada are employed in the domestic care or agriculture sectors. Temporary foreign workers are protected by the same laws as Canadian employees, including labour and employment legislation and the Canadian Charter of Rights and Freedoms.
Canada's Temporary Foreign Worker Program (TFWP) is designed to address temporary labour shortages while protecting the Canadian labour market. Employers must obtain a Labour Market Impact Assessment (LMIA) by Employment and Social Development Canada (ESDC) to hire through this programme. The LMIA is designed to verify that there is truly a need for a foreign worker and that no Canadians can do the job. Employers of low-wage temporary foreign workers must reapply for an LMIA every year in order to account for potential changes in the labour market. However, under the International Mobility Program (IMP), employers need not obtain an LMIA prior to applying for a work permit for certain highly skilled workers. Employers who fail to comply with the requirements of the TFWP and IMP can be subject to up to CAD 1 million per year in fines, and may be permanently banned from accessing either of the programs.
Issues arising during the employment relationship
The specific obligations an employer owes to its employees will typically depend on the jurisdiction in which it operates, whether it is federal, provincial or territorial.
Wages, annual leave and working time
Minimum wages vary by jurisdiction and as of January 2017, range from a low of CAD 10.50 per hour to a high of CAD 13.00 per hour and are subject to periodic review. Certain jobs are exempt from minimum requirements. Employment standards legislation commonly sets out various provisions regulating how employees should be paid, record keeping obligations, and documentation requirements with respect to the payment of wages. In recent years, certain provinces have established mandatory minimum wage increases, tied to the rate of inflation.
Most jurisdictions have legislation governing the maximum number of working hours. Generally, such legislation sets out maximum daily and weekly figures (most frequently, eight hours per day and between 40 and 48 hours per week). Most jurisdictions require employers to provide employees with at least twenty four consecutive hours of unpaid time off from work every seven days. In certain situations, these maximum working hours may be exceeded, such as where overtime is paid, where employees agree, or if there is an emergency. Each jurisdiction's employment standards legislation includes provisions governing overtime pay when an employee works in excess of the maximum working hours (typically x1.5 basic pay).
Employment standards legislation provides employees with a statutory entitlement to annual vacation leave and corresponding pay for each year worked. In all provinces, employees are entitled to at least two weeks' paid leave per year. In Saskatchewan, employees are entitled to at least three weeks' leave per year. In many provinces, employees' entitlement to vacation leave will increase to three weeks with the employee's length of service. In addition, employees are entitled to between six and ten paid statutory holidays per year. If an employee is required to work on a statutory holiday, they are entitled to premium pay (typically at least x1.5 basic pay) as well as to holiday pay for that day.
The labour legislation of the various Canadian jurisdictions governs: how trade unions become certified; how they retain the authority to act as the exclusive bargaining agent for a group of employees; what obligations are created for the employer of those employees; and the framework to govern collective bargaining.
Collective bargaining provisions typically deal with both process and substance. Process provisions include work stoppages (strikes and lockouts) and the grievance and arbitration process, whereas substantive provisions include mandatory and permissive terms and conditions for the collective agreement. Labour statutes also place a duty of fair representation on unions with respect to the employees within a bargaining unit. Disputes between parties are submitted to arbitrators or to specialised administrative tribunals located in each jurisdiction.
Individuals who are lawful residents in Canada (citizens and landed immigrants) have significant health care coverage (generally covered by public funds), unemployment insurance coverage, and limited pensions for retirement, or in some cases, long-term disability.
Issues arising on termination of the employment relationship
Employers cannot defeat legitimate bargaining rights either by organising their affairs in an attempt to change their legal identity or by selling the affected business to a third party (whether or not that third party has any relationship with the vendor). Labour boards take a wide, remedial approach in these circumstances insofar as their primary objective is to preserve acquired bargaining rights. As such, two or more legally distinguishable entities may be considered to be one employer for labour relations purposes, and bind a third party to a pre-existing collective bargaining relationship.
Also, a purchaser may be bound to the collective bargaining relationship of the vendor. The term "sale" and related terms are given an expansive interpretation, so that various kinds of commercial transactions that transfer control of the core of a business as a going concern may be captured in such a way that bargaining rights continue to attach to the transferred business.
Similar considerations apply under provincial employment standards legislation, which generally contain a "deemed continuity" provision. Therefore, where a purchaser retains or hires the employees of a vendor company, the service of those employees may be deemed to be continuous for the purpose of calculating notice and severance, as well as other benefits linked to length of service under the applicable legislation.
With some exceptions, employment in Canada is "at will", so the employer may terminate the relationship at its discretion (provided it is not for an illegal reason). However, unlike the U.S.A., while the basis for the termination is "at will", dismissed employees are entitled to notice of termination or pay in lieu of notice unless they are dismissed for "just cause". "Just cause" is very difficult to establish, and this threshold will typically only be met if the employee committed an unlawful act in the course of their duties, showed wilful misconduct of a significant nature, or was consistently insubordinate despite warnings. As a result, in most employer initiated dismissals, a severance package is negotiated, or is part of an originating written employment contract.
The employment standards legislation sets out minimum notice periods or pay in lieu of notice and, in some cases, statutory severance pay. Typically, these minimum statutory notice periods range from one to eight weeks' notice (or pay in lieu of notice) depending on the employee's length of service. The statutory minimums apply unless a particular exception applies. Most jurisdictions also have rules providing for enhanced notice for mass dismissals, such as a plant closure. These additional "mass" dismissal requirements are generally triggered where 10, 25 or 50 employees are affected, depending on the applicable law. Enhanced obligations apply with larger numbers of dismissed employees, often where 100, 200 or 300 employees are affected.
Statutory severance pay (which is separate and distinct from notice of termination or pay in lieu of notice) is particularly notable for medium sized to large employers operating in Ontario, where a lump sum payment is calculated as one week per year of service to a maximum of 26 weeks' pay for employees with five years' service or more. Federally regulated employers are also subject to statutory severance obligations.
In addition to the statutory notice period and any severance pay, non-union employees in Canada's common law jurisdictions (i.e. where the legal system is based on case law) are also entitled to "reasonable notice" of termination, often much longer than statutory notice. It is important to note that any statutorily mandated payments would be incorporated into a common law award, and a dismissed employee must mitigate their common law losses by actively seeking reasonable alternative employment.
Depending on an employee's position, age, and length of service, up to 24 months' notice may be awarded, and longer notice periods have been awarded in some exceptional cases. Employers are also responsible for paying benefits and entrenched bonuses during the common law notice period. However, unlike statutory notice entitlements, employees and employers can contract out of common law notice periods (preferably in writing) provided the contract states that the employee will receive at least their minimum statutory entitlements, and is otherwise enforceable. Finally, some Canadian jurisdictions have legislation that allows dismissed employees to contest their dismissal and seek reinstatement.
All jurisdictions have legislation and administrative agencies to deal with human rights complaints concerning harassment and discriminatory practices in the workplace. The list of the defined criteria or prohibited grounds of discrimination and harassment varies with each jurisdiction, but generally includes: race related grounds; creed/religion; gender; sexual orientation; age; family or marital status; and disability. In general, employers in Canada have an obligation to offer employment without discrimination, and to guard against harassment, based on prohibited grounds. Increasingly, antiharassment and anti-violence measures are also a matter of health and safety law. Most jurisdictions in Canada have equal pay and/or pay equity laws to promote wage parity between male and female workers at the same employer doing the same or (in some jurisdictions) equivalent work. Pay equity measures go beyond equal pay requirements and are intended to redress systemic discrimination.
Published in collaboration with L&E Global: an alliance of employers’ counsel worldwide
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