Employment Law Overview Canada

Introduction

In Canada, the power to make laws is divided between the federal and provincial governments. Generally, for historic, constitutional reasons, provinces have jurisdiction over most employment matters, while the federal government has jurisdiction over employment only in respect of specific industries, such as airways, 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 based on a written “civil code” founded on France’s Napoleonic Code.

Key Points

• “Employment law” concerns the relationship between an individual and an employer, while “labour law” regulates the collective representation of employees by trade unions.
• There is no “at will” employment in Canada. Dismissed employees are entitled to notice of termination or pay in lieu of notice, unless employment was terminated “for cause”.
• Provincial employment standards legislation establishes minimum standards for wages, vacation, leaves, notice of termination and severance. However, the common law provides greater entitlements upon termination and can otherwise regulate the employment relationship.
• Employment contracts can be used to set out the terms of employment for non-union employees. Provided that the contract’s terms do not violate applicable statutory minimum requirements, the terms of the contract will displace the common law. As such, employers are encouraged to utilise written employment agreements, particularly with respect to entitlements upon termination.
• All jurisdictions have legislation prohibiting discriminatory practices and harassment in the workplace. Employers have significant positive obligations to ensure equality in the workplace.

Legal framework

Canadian labour and employment law requires an understanding of the constitutional division of power between the federal government of Canada and the governments of Canada’s ten provinces and three territories. Labour and employment matters are principally within provincial and territorial jurisdiction; however, the federal government has jurisdiction over certain industries that are thought to have a national, international, or inter-provincial character. Examples of employment falling within federal jurisdiction include navigation and shipping, air transportation, railways and other inter-provincial connections, road transportation, banks, specified products such as grain and uranium, telecommunications, federal employees, and First Nations (aboriginal) activity. As a result, most employers that operate in multiple Canadian provinces are required to comply with a range of legislation in each of these provinces. For the most part, despite some significant differences, there is reasonable consistency in the legal principles that apply to employment and labour law in all Canadian jurisdictions, including Québec.

New Developments

Many provincial governments continue to legislate increases in employee entitlements and protections. A number of the country’s provinces – including Ontario, Quebec, Manitoba, and British Columbia  have all either already increased their minimum wage rates in 2024 or are scheduled to do so late in the year.  Certain jurisdictions are legislating or announcing an intention to legislate employer obligations on a variety of fronts, including with respect to job postings (Ontario), preventing sexual violence and psychological harassment in the workplace (Quebec), and increasing statutory minimum notice periods for without-cause dismissals (federally regulated employers).

Greater awareness of social issues such as harassment (including sexual harassment) and anti-Black racism  continues to change the landscape of employment law in Canada. Although Canadian jurisdictions have long had laws pertaining to discrimination and harassment, the number of claims now being made has increased significantly. This trend has led to a number of legal proceedings, including large class action lawsuits. Further, the continued trend toward workplace harassment legislation has dramatically increased the number of claims and investigations. Given that these claims are based on relatively new, untested legislation, the standards of conduct are still being developed by the litigation process, resulting in not only meritorious claims coming forward, but also a distinct trend of employees claiming harassment over what have traditionally been seen as normal management techniques and disciplinary measures, or simply in response to any critique of their work performance.

Finally, like many other developed countries, a large portion of Canada’s workforce is reaching the age where people have traditionally chosen to retire. For a variety of reasons, many Canadians are opting to continue to work longer, creating new and complex issues for employers. These issues include structuring retirement packages, as well as terminating the employment of someone who is older, and consequently may have decades of tenure. Not only are the costs of terminating long service employees much higher, it often becomes a delicate balancing act when an employee’s age begins to affect their work, and the statutory prohibitions against age discrimination may then trigger accommodation requirements akin to those for employees with disabilities.