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Employment relationship

State-specific laws

What state-specific laws govern the employment relationship?

The major Ontario employment-related statute is the Employment Standards Act 2000. Other important statutes affecting private employers include:

  • the Accessibility for Ontarians with Disabilities Act 2005;
  • the Agricultural Employees Protection Act 2002;
  • the Employers and Employees Act;
  • the Employment Protection for Foreign Nationals Act (Live-In Care Givers and Others) 2009;
  • 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

A number of other laws affect public sector and broader public sector employers in Ontario.

For federally regulated employers, the main statute is the Canada Labour Code, although other federal legislation also governs the workplace (e.g. the Canadian Human Rights Act and the Personal Information and Protection of Electronic Documents Act).

Who do these cover, including categories of worker?

Generally, the laws cover 'employees'; however, because the laws governing the employment relationship are public welfare laws, the courts have held that the term 'employee' must be broadly and liberally interpreted. Therefore, depending on the circumstances, the definition of 'employee' may include persons whom the employer has treated as independent contractors, consultants, interns, employees of affiliated employers or employees of temporary help agencies. The Labour Relations Act 1995 also expressly includes 'dependent contractors' in the definition of 'employees', granting an express right for certain non-employees to form a union and collectively bargain. In addition, health and safety law has been interpreted to include self-employed individuals and independent contractors as workers. 


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

Yes – the rules or approaches may differ between a variety of agencies (e.g. tax, health and safety), depending on the purpose of the specific legislation. A recognised category of 'dependent' contractors are also owed reasonable notice of contract termination under common law.

In Ontario, if there is a question as to whether a worker is an employee or independent contractor, then, for the purposes of the Employment Standards Act 2000, a ‘reverse onus’ is triggered such that the burden is on the employer to prove that the worker is an independent contractor and not an employee. The legislation was recently amended to provide that if a worker is misclassified, meaning that the employer treats a worker as an independent contractor but he or she is really an employee, the Ministry of Labour may commence a prosecution against the employer.


Must an employment contract be in writing?

Contracts need not be in writing. All employees have a contract by operation of law. In many cases contracts are part oral, part written (e.g. offer letters or vacation policies) and part implied by the common law (e.g. the employee’s duty of loyalty and the employer’s duty to provide reasonable notice of termination, except for just cause). Nevertheless, ensuring that all employees in Ontario have a comprehensive written employment contract is the most prudent course of action. However, the format of the written contract can be as simple as a letter offering employment, which is 'signed back' confirming acceptance of employment on the terms set out in the letter. In almost all cases, employment contracts should be signed before the employee actually performs any work. 

Are any terms implied into employment contracts?

Yes – the major implied terms are the employee’s duty of loyalty and the employer’s obligation to provide reasonable notice of termination, except for just cause. 

Are mandatory arbitration agreements enforceable?

Yes – although arbitration clauses should be drafted carefully and in accordance with the Ontario Arbitration Act 1991 to ensure that the objectives behind agreements are achieved.

How can employers make changes to existing employment agreements?

If a material change to an employment agreement is made without the employee’s consent, he or she may be able to quit and sue for constructive dismissal or claim damages for breach of contract. Any agreed upon changes should be supported by an exchange of consideration, such as a raise. Changes can be made unilaterally as long as notice under the contract or reasonable notice is provided. Written agreements may also contain provisions which specifically address amendments. 

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