Canada: The Basic Concepts of Canadian Employment Law

Last Updated: December 19 2014
Practice Guide by Blaney McMurtry LLP
  1. Unionized Employees v. Non-Unionized Employees

Unionized employees have different rights and obligations in Canada which are created and enforced by operation of statute. These rights and obligations are defined pursuant to various acts of Parliament and Provincial Legislation in each of the 11 jurisdictions in Canada. A detailed examination of the Labour Relations Acts or Codes, and the case law with respect to them in each of the provinces, and federally, is required in order to properly understand the specifics in any jurisdiction.

Non-Unionized employees are engaged by a contract or agreement directly between the employee and the employer. Employment contracts are subject to contract law principles and certain statutory minimum requirements as dictated in each of the respective provincial and federal jurisdictions.

  1. Statutory Jurisdiction

Federal legislation covers employees who work for ‘Federal Works or Undertakings’. Generally speaking, Federal Works or Undertakings are those jurisdictions specifically given to the Federal Government in the Canadian Constitution and include banks, telecommunications and broadcasting, interprovincial transportation, and other matters of ‘national importance’. If the nature of the undertakings does not fall under Federal jurisdiction, the governing law of the employment relationship is generally the law of the province in which the work is performed.

The Common Law employment rights referred to below do not apply to unionized workers. Unionized workers’ rights are replaced by the right to collectively bargain which is created and protected by statute, and whatever rights have been included in any collective agreement that has application to a particular workplace.

  1. Statutory Minimum Requirements

There are statutory minimum provisions in each of the eleven jurisdictions which are set out in the Employment Standards Acts or Codes of those jurisdictions. These provisions are typically universally applicable and parties are not legally permitted to contract out of these employee protections. The protections include, but are not limited to: hours of work; minimum wages; overtime; payment for work; sale of business; public holidays; vacation with pay; termination of employment; leaves of absence; reprisals; employment records; liability; and, enforcement.

Under the various provincial and federal Human Rights Statutes, an employee cannot be discriminated against on the basis of any of the grounds as set out in the respective Codes or Acts. These include race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, records of offences, marital status, family status or handicap. In addition to being treated equally, employers must ensure that disadvantaged employees are given an equal opportunity to employment, which includes being given “accommodation” or special dispensation to the point of “undue hardship” to the employer in order to permit the employee to continue gainful employment. Accommodation takes many forms and is specific to the particular circumstances.

There are, of course, other issues that arise as a result of legislation, including but not limited to employee privacy, equal pay for equal work and employment equity.

  1. The Common Law in Canada

Common law employment rights are the contractual rights and obligations of both employees and employers that form part of their express or implied contracts of employment. These do not apply to unionized workers.

In addition to the mandatory rights provisions under the various Employment Standards and Human Rights Acts, employees and employers are subject to rights and obligations at common law (or under the Civil Code in the Province of Quebec). These rights and obligations are defined by the parties in an agreement or alternatively, in the absence of any such express agreement between the parties, they are implied by law and imposed by Courts. For example, at common law, employees owe an implied duty of loyalty to their employers, the nature of which is further defined by the employees’ role, responsibilities and circumstances. These concepts are articulated in judicial precedents.

Another key example of an implied common law right is the employee’s right to reasonable notice of termination or payment in lieu thereof when there is no just cause for termination. This is very different from the fundamental principle of some jurisdictions which consider the employment relationship to be “at will”. The “at will” concept simply has no application in Canada and is prima facie unlawful.

There is no simple formula to determine the period of “reasonable notice” to which an employee is entitled. A Court looks at all of the relevant factors and comes to a determination by applying these factors to the individual case. Normally, a Court does not give any indication as to how the calculation was made. Sometimes the Court will indicate the importance of one factor or another in its overall determination, but the more usual course is an examination of all of the facts and then the simple statement that “In my view, the appropriate period of notice is X.” By looking at recent cases, one can get a feel for the appropriate range for a given employee, but this is by no means a scientific process.

Extensive reasonable notice periods of one year or more are often awarded to employees with long service. Historically, a two-year reasonable notice period is the normal maximum a Court will award, absent special considerations or a demonstration of bad faith on the part of the employer.

Some of the more important factors to be considered in determining the reasonable notice period are:

1. Length of service;

2. Age;

3. Level of responsibility, for example, how many employees report to the individual, who does he or she report to, and any other relevant indicia of level of responsibility;

4. Qualifications--professional or otherwise, either required for the position or held by the individual;

5. Ability to mitigate by finding replacement employment;

6. How the employee was hired, that is, whether or not the employee was induced away from other secure employment;

7. Reason for termination;

8. Remuneration - in general, courts consider the level of remuneration to be a measure of the importance of the position.

9. Any other especially relevant criteria such as, “Did the employee relocate in order to take the position?”

Recommendation

In order to remove uncertainty and ambiguity regarding their rights and obligations, implied or otherwise, employees and employees should when possible:

  1. Determine what legal jurisdiction applies to the employment relationship;
  1. Be aware of the minimum and universal statutory requirements of that jurisdiction;
  1. Expressly define and agree in writing to the terms and conditions of the employment relationship to avoid implied terms from being judicially imposed upon the relationship.
This document is not intended to create an attorney-client relationship. You should not act or rely on any information in this document without first seeking legal advice. This material is intended for general information purposes only and does not constitute legal advice. If you have any specific questions on any legal matter, you should consult a professional legal services provider.

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Employment standards are essentially the foundation for creating productive workplaces, help protect the rights of workers and and provide the necessary conditions for a productive economy.
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If you are an employee legally entitled to work in Canada, you have certain protections under the Wage Earner Protection Program Act concerning payment of your wages, vacation, severance and termination pay if your employer becomes bankrupt or subject to a receivership under the Bankruptcy and Insolvency Act.
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