Canada: Doing Business In Canada - Part 3

This article is part of a series: Click Doing Busines In Canada - Part 2 for the previous article.

To read Part 2 of this article please click here


Employment in Canada is a heavily regulated area, governed by either federal or provincial legislation. The majority of employers are covered by provincial legislation. The federal legislation in this area applies only to "federal works or undertakings." These include businesses involved in banking, shipping, railways, airlines and airports, inter-provincial transportation, broadcasting and telecommunications.

Minimum Standards

All jurisdictions in Canada have enacted legislation governing minimum employment standards. Generally, Employment Standards Acts (ESAs) are broad and cover all employment contracts, whether oral or written. The standards defined in the ESAs are minimum standards only, and employers are prohibited from contracting out of or otherwise circumventing the minimum standards set out in the legislation. These laws spell out which classes of employees are covered by each minimum standard, and which are excluded. Although standards vary across jurisdictions, many of the areas covered are common to all ESAs. These include minimum wages, maximum hours of work, overtime hours and wages, rest and meal periods, statutory holidays, vacation periods and vacation pay, termination and severance pay, and leaves of absence, including sick leave, bereavement leave, maternity/parental/adoption leave and compassionate care/family medical leave.

Termination of Employees

Unlike employers in the United States, Canadian employers cannot terminate employees ‘at will.’ Employers must adhere to notice requirements unless they have sufficient cause to terminate an employee. The length of the required notice period varies between jurisdictions, but generally increases with the employee’s length of service. In Ontario, for example, employees are statutorily entitled to one to eight weeks of notice of termination, with the maximum notice period applying to employees with eight or more years of service. Notice or pay in lieu of notice is not required where an employee is terminated for wilful misconduct or disobedience or where the employee is being temporarily laid off. As well, certain classes of employment, including construction workers, employees on a temporary lay-off and employees terminated during or as a result of a strike or lock-out, may be exempted from the termination notice provisions of the legislation. In most jurisdictions, special provisions apply where a large number of employees are terminated within a short period of time.

Some jurisdictions provide severance pay as an additional benefit to employees. For example, under the federal scheme, all employees who have been employed for 12 consecutive months are entitled to severance pay in the amount of five days of regular pay or two days of regular pay for each completed year of service, whichever is greater. In Ontario, an employee with five or more years of service may be entitled to severance pay if his or her employer, as a result of the discontinuation of all or part of the employer’s business, terminates 50 or more employees in a six-month period, or if his or her employer has a payroll of $2.5 million or more. Severance pay is calculated on the basis of an employee’s length of service, and may reach a maximum of 26 weeks of regular pay. As with pay in lieu of notice of termination, employees may be disqualified from receiving severance pay if they have engaged in wilful misconduct or disobedience, or if they fall within other exceptions specified in the legislation.

In addition to minimum statutory termination pay and severance pay entitlements, a non-union employee whose employment has been terminated, may be entitled by common law to further reasonable notice of the termination or pay in lieu of notice. This right may be enforced in the courts. The amount of notice will depend on the employee’s individual circumstances, including length of service and age.

Labour Relations Legislation

Canada and each of the provinces have each enacted legislation governing the formation and selection of unions and their collective bargaining procedures. In general, where a majority of workers in an appropriate bargaining unit is in favour of a union, it will be certified as the representative of that unit of employees. An employer must negotiate in good faith with a certified union to reach a collective agreement. The failure to do so may lead to the imposition of penalties. Most workers are entitled to strike if collective bargaining negotiations between the union and the employer do not result in an agreement. However, workers may not strike during the term of a collective agreement.

Pensions and Other Benefits

The Canada Pension Plan is a federally-created plan that provides pensions for employees and survivors’ benefits for dependent children and for the widows and widowers of deceased employees. All employees and employers, other than in the Province of Québec, must contribute to the plan. The employer’s contribution is deductible by the employer for the purpose of calculating income for tax purposes. Québec has a similar pension plan that requires contributions by employers and employees within Québec.

In addition to the Canada Pension Plan, employees and employers must both contribute to the federal Employment Insurance Plan, which provides benefits to insured employees upon their ceasing to be employed, when they take a parental leave and in certain other circumstances. Both the employer and employee must pay premium contributions to this plan. The employer’s contribution is deductible for income tax purposes.

All provinces provide comprehensive schemes for health insurance. These plans provide for necessary medical treatment, including the cost of physicians and hospital stays. They do not replace private disability or life insurance coverage. The provincial health insurance plans vary as to how the revenues are collected. In some provinces, employers are required to pay premiums or health insurance taxes, in others, individuals pay premiums. In some provinces, the entire cost of health insurance is paid out of general tax revenues. Employers can also provide extended health insurance benefits through private insurance plans to cover health benefits not covered by the public health insurance plan.

Other laws deal with such subjects as private pensions and private benefit plans. For example, most Canadian jurisdictions have pension standards legislation which establishes minimum requirements for private pension plans.

Human Rights

The Canadian Charter of Rights and Freedoms (Charter) is a constitutional charter that governs the content of legislation and other government actions. It contains anti-discrimination provisions which may be enforced by the courts. In addition, all Canadian jurisdictions have enacted Human Rights Codes or Acts, which specifically prohibit various kinds of discrimination in employment. While the Charter applies only to government actions, human rights legislation applies more broadly to non-governmental actors, such as employers of virtually every description. Human rights legislation states that persons have a right to equal treatment with respect to employment without discrimination. The prohibited grounds of discrimination vary somewhat from one jurisdiction to another, but generally include race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, gender (including pregnancy), sexual orientation, age, marital status, family status, or disability, among others. The law prohibits both direct discrimination on such grounds and constructive or systemic discrimination whereby a policy that is neutral on its face has the effect of discriminating against a protected group. However, employers may maintain qualifications and requirements for jobs which are bona fide and reasonable in the circumstances.

Occupational Health & Safety

All federal and provincial jurisdictions have also enacted laws designed to ensure worker health and safety as well as compensation in cases of industrial accident or disease. Employers must set up and monitor appropriate health and safety programs.

Privacy Laws

All businesses in Canada are subject to legislation that regulates the collection, use and disclosure of personal information. "Personal information" generally means information about an identifiable individual. The collection, use and disclosure of personal information by private sector organizations and entities within the provinces of British Columbia, Alberta and Québec is regulated by legislation enacted by each of those provinces. The federal Personal Information Protection and Electronic Documents Act (PIPEDA) governs the collection, use and disclosure of personal information in other provinces and in the territories, as well as the collection, use and disclosure of personal information in the course of inter-provincial and international commercial activities.

In addition to general private sector privacy laws, some provinces in Canada have also enacted specific health privacy legislation directed to the protection of personal health information.

Regardless of whether the applicable privacy regime is PIPEDA or similar provincial legislation, immediate priorities for most organizations establishing a business in Canada should include:

  • option of a privacy compliance strategy that identifies the organization’s compliance with the applicable regulatory regimes and set a time-frame for implementation;
  • appointment of an individual who is responsible for administration and oversight of the organization’s personal information management practices and who is prepared to implement any changes that are required by applicable legislation;
  • review of the current personal information practices of the organization outside Canada, including determining what personal information is collected and from where it is collected; what consents are obtained and what purposes are identified when collecting personal information; where personal information is stored; how personal information is used and when and to whom personal information is disclosed; and how that needs to be changed for use in Canada;
  • review of the organization’s data management infrastructure to ensure that the infrastructure is adequately flexible and robust to facilitate implementation of the organization’s privacy policies and data management practices;
  • implementation of consent language in contracts, forms (including web forms) and other documents that are utilized when collecting personal information from individuals (including customers and employees); and
  • in respect of contracts with third parties to whom personal information will be disclosed (or where the third party is granted access to the personal information), requiring that the third party agree to appropriate contractual terms, including that the third party will use the personal information only for the purposes for which it was disclosed to the third party, will cease using (and return or destroy) the personal information if requested by the organization and will indemnify the organization for any breach of such terms.

Implementation of such initial steps may require several months depending on the size and maturity of the organization.

When contemplating the purchase of a business in Canada, particularly an asset purchase, it is essential that a review of the privacy policies and practices of the target form part of the due diligence process. If personal information of employees or customers has to be disclosed to the purchaser during the due diligence process, it is also essential that an appropriate confidentiality regime be established for the process.

Failure to comply with privacy laws can result in complaints to the relevant Privacy Commissioner, orders and fines.

In light of the complexity of privacy laws and the differences between the various laws that may apply to an organization or to a particular business unit, ensuring privacy compliance across an organization’s departments can be difficult, particularly for organizations that operate globally.

Environmental Regulation

Environmental regulation in Canada is an area of shared responsibility between the federal government and the provincial governments, which have in turn delegated certain matters to municipal governments.

Legislation, regulations, policies and guidelines that affect industry on environmental matters such as pollution or contamination of the air, land and water, toxic substances, hazardous wastes, transportation of dangerous goods and spills have been enacted by both the federal and provincial governments. In addition, there are requirements for approvals and environmental impact assessments in many areas affecting both the public and private sectors.

Environmental regulators have broad monitoring and inspection powers and use a wide range of enforcement mechanisms extending not only to the businesses involved but also to corporate directors, officers, employees and agents. For example, the Canadian Environmental Protection Act includes provisions for warnings, significant fines, imprisonment, injunctions and compliance orders. Canadian courts are also now holding companies as well as their officers and directors and employees liable for environmental offences.

Liability for contaminated sites is also an important issue in Canada. The law in this area places liability on those persons that cause the pollution and, depending on the particular situation, on those persons who own, occupy, manage or control contaminated sites or who owned or occupied such sites in the past. Such liability now extends to past owners and occupiers. Consequently, a ‘buyer beware’ philosophy prevails, making it critical in business and real estate transactions that the buyer or lender know about all of the past and potential environmental problems associated with a particular business or property.

Stringent environmental legislation and a vigorous approach by the regulatory bodies to investigate and prosecute environmental concerns has led prudent businesses to seek proper advice concerning environmental due diligence.

Dispute Resolution

Canada’s Court System

Under the Canadian Constitution, the judiciary is separate from and independent of the executive and legislative branches of government. Judicial independence is a cornerstone of the Canadian judicial system — judges will make decisions free of influence and based solely on fact and law.

Judges are appointed by the federal or provincial and territorial governments, depending on the level of the court. Canada has provincial trial courts, provincial superior courts, provincial courts of appeal, a federal court and a supreme court.

Each province and territory (with the exception of Nunavut) has a provincial court. These courts deal primarily with criminal offences, family law matters (except divorce), traffic violations, and provincial or territorial regulatory offences. Private disputes involving limited sums of money may also be dealt with at this level in small claims court.

The superior courts of each province and territory try the most serious criminal and civil cases and cases that involve large amounts of money. Although superior courts are administered by the provinces and territories, the judges of these courts are appointed and paid by the federal government.

In the Toronto region of the Province of Ontario, the Superior Court of Justice maintains a Commercial List. The Commercial List was established in 1991 for the hearing of certain actions, applications and motions in the Toronto region. It has operated as a specialized commercial court to hear matters involving a wide range of business disputes. Matters on the Commercial List are subject to special case management and other procedures which have had the effect of expediting the hearing and determination of these matters. Another important advantage to the Commercial List is that its judges are experienced in commercial and insolvency matters and many judges remain on the Commercial List for years. With the exception of bankruptcy matters, which must be heard on the Commercial List, the Commercial List is voluntary. Among the matters eligible for the Commercial List are matters involving shareholder disputes, securities litigation, corporate restructuring, receiverships and similar commercial disputes.

Each province and territory has a court of appeal that hears appeals from decisions of the superior courts and the provincial and territorial courts.

The Federal Court is a trial level court, and appeals from it are heard by the Federal Court of Appeal. The Federal Court’s jurisdiction includes inter-provincial and federal provincial disputes, intellectual property proceedings, citizenships appeals, Competition Act cases, and cases involving Crown corporations or departments or the government of Canada. The federal courts deal with matters specified in federal statues.

The Supreme Court of Canada is the final court of appeal from all other Canadian courts. It has jurisdiction over disputes in all areas of the law, including constitutional law, administrative law, criminal law and civil law.

Class Actions

Most Canadian provinces have class proceedings legislation. Class proceedings are procedural mechanisms designed to facilitate and regulate the assertion of group claims. The Canadian class action statutory regime is modelled on United States Rule 23 of the United States Federal Court Rules of Civil Procedure. Rule 23 and its state law counterparts govern class action litigation in the United States.

Unlike ordinary actions, a proceeding commenced on behalf of a class may be litigated as a class action only if it is judicially approved or ‘certified.’ Generally, certification in Canada is easier than in the United States. Historically in Canada, targets of class actions have been product manufacturers, insurers, employers, the investment and financial industries and government. Class actions suits have alleged product defects, misrepresentations, breaches of consumer and employment laws, securities fraud and breaches of public law.

Class actions in Canada will likely become an increasingly prominent aspect of business litigation in Canada. In comparison to the United States, businesses may benefit from the fact that individual damage awards tend to be lower in Canada and the availability of punitive damages is limited.

Alternative Dispute Resolution

Alternative Dispute Resolution (ADR) refers to the various methods by which disputes are resolved outside the courtroom. These include mediation, where an independent third party is brought in to mediate a dispute, and arbitration, where both sides agree to refer the dispute to the third party for judgment.

In Ontario, the Rules of Civil Procedure mandate and regulate mediation in case managed actions. Mediation remains common in those parts of Ontario where there is no case management and parties to a dispute will often agree to a non-binding mediation using a mediator chosen by them.

Arbitration leads to binding and enforceable rulings. Arbitration may be pursued on an ad hoc basis under a structure provided for in the local jurisdiction and under local statutory provisions or it may be held under the administrative and supervisory powers of one of the recognized international arbitration institutes such as the International Court of Arbitration of the International Chamber of Commerce in Paris, the London Court of International Arbitration or the American Arbitration Association. These bodies do not themselves render arbitration awards, but provide an international recognized system of rules and stability of process, as well as neutrality.

Among the advantages of arbitration compared to domestic court procedure are the confidentiality of arbitration proceedings. The arbitration process is normally private. The hearings are not public and the written proceedings are not generally available. In addition, the arbitration process is generally faster than the court system and there is no appeal from an arbitration award. This often leads to the quicker resolution of disputes.

Bankruptcy And Restructuring

Under Canadian constitutional law, the federal government has exclusive legislative control over bankruptcy and insolvency matters. Insolvency proceedings in Canada may take a variety of different forms. When a corporation becomes insolvent, generally two options are available: (i) liquidate the corporation’s assets for the benefit of its creditors; or (ii) restructure the affairs of the corporation.

Although there are several different legislative regimes available to effect either a liquidation or a restructuring of a corporation, the two most common federal statutes that are employed for these purposes are the Bankruptcy and Insolvency Act (BIA) and the Companies’ Creditors Arrangement Act (CCAA). The BIA provides for both restructurings (via BIA Proposals) and liquidations (via bankruptcies) of insolvent businesses whereas the CCAA is directed primarily at the restructuring of corporate businesses.

Since June 2005, there has been pending legislation in Canada that would make significant amendments to both the BIA and the CCAA in a number of areas.

BIA Bankruptcy

The term "bankruptcy" refers to a formal procedure under the BIA to effect the liquidation of a debtor’s assets by a trustee in bankruptcy. A bankruptcy can either be voluntary or involuntary and can be brought in respect of any corporation that has an office, assets or carries on business in Canada, with the exception of banks, insurance companies, trust or loan companies, and railways.

A voluntary bankruptcy under the BIA commences when a debtor files an assignment in bankruptcy with the Office of the Superintendent of Bankruptcy.

An involuntary bankruptcy under the BIA commences when a creditor with a claim of at least $1,000 files an application for a bankruptcy order with the court. This proceeding is brought on behalf of all creditors, although it is not necessary for more than one creditor to join in the application. In order to obtain the bankruptcy order, the creditor must establish that the debtor has committed an "act of bankruptcy" within six months preceding the commencement of the bankruptcy proceedings. The most common "act of bankruptcy" is failing to meet liabilities generally as they become due. In addition to a creditor initiating the process, a debtor can also be placed into bankruptcy under the BIA if its proposal (discussed below) is rejected by its unsecured creditors or is not approved by the court.

The practical effect of a bankruptcy is the same whether it is commenced voluntarily or involuntarily; namely, most of the debtor’s assets vest in its trustee in bankruptcy, subject to the rights of the debtor’s secured creditors. The trustee in bankruptcy is a licensed insolvency professional or firm that is appointed by the bankrupt or the bankrupt’s creditors.

There is an automatic stay of proceedings by unsecured creditors of the debtor upon the commencement of the debtor’s bankruptcy proceedings, but the stay does not affect secured creditors who are generally free to enforce their security outside of the bankruptcy process.

The bankruptcy trustee has many duties, the most important being to liquidate all of the assets of the debtor for the benefit of its creditors. In addition, the trustee in bankruptcy is responsible for the administration of claims made against the bankrupt estate in accordance with the relevant provisions of the BIA. If appropriate, the bankruptcy trustee may also investigate the affairs of the debtor to determine whether any fraudulent conveyances or preferences were effected by the debtor prior to the bankruptcy.

At a meeting of creditors, which takes place shortly after the debtor becomes bankrupt, the creditors will generally appoint a group of up to five individuals known as "inspectors" to work with and supervise the trustee in bankruptcy. With the approval of the inspectors, the trustee in bankruptcy may sell the assets of the bankrupt estate.

BIA Proposals

Generally speaking, the restructuring provisions under the BIA are most commonly used for smaller, less complicated restructurings, which also means BIA restructurings are generally utilized by small and medium sized corporations. A restructuring under the BIA is typically commenced by a debtor either filing a proposal (i.e. its restructuring plan) or by filing a Notice of Intention to file a proposal (NOI). A copy of the written consent of a licensed trustee in bankruptcy, consenting to act as the proposal trustee in the proposal proceedings, must be attached to the NOI. Where an NOI is filed, the debtor must file cash flow statements for its business within 10 days and must file its proposal within 30 days. The court can extend the time for filing a proposal for up to a maximum of five additional months, although the court can only grant extensions for up to 45 days at a time.

The debtor normally carries on its business in the normal course subject to review by its proposal trustee and the supervision of the court. Upon the filing of an NOI or the filing of the proposal itself, the BIA imposes a stay of proceedings against the exercise of remedies by creditors against the debtor’s property or the continuation of legal proceedings to recover claims provable in bankruptcy. Provisions in security agreements providing that the debtor ceases to have rights to use or deal with the collateral upon: (i) insolvency, (ii) default or (iii) the filing of a notice of intention to make a proposal under the BIA, have no force or effect. The BIA also provides that, upon the filing of an NOI or the filing of a proposal, no person may terminate or amend any agreement with the insolvent person or claim an accelerated payment under any agreement with the insolvent person by reason only that the person is insolvent or has filed an NOI or a proposal. The court can lift a stay in a BIA restructuring if the creditor is able to demonstrate that it will be "materially prejudiced" by the stay or if it is equitable on other grounds that the stay be lifted.

Ultimately, the debtor may table a proposal to its creditors. The BIA requires a proposal to contain certain terms, including: (i) the payment of preferred claims (such as certain types of employee claims) in priority to claims of ordinary creditors; (ii) the payment of all proper fees and expenses of the proposal trustee on and incidental to the proceedings; (iii) the payment of tax remittances, such as employee source deductions, within six months of the approval of the proposal; and (iv) the payment of all consideration to be paid out under the proposal to the proposal trustee for distribution to creditors.

A proposal must be made to the unsecured creditors generally, either providing for all unsecured creditors to be placed into one class or providing for separate classes of unsecured creditors. In addition, a proposal may also be made to secured creditors in respect of any class or classes of secured claims.

A proposal is deemed to be accepted by the creditors if all classes of unsecured creditors vote for the acceptance of the proposal by a majority in number and two thirds in value of the unsecured creditors of each class. In practice, there is usually only one class of creditor to which a proposal is directed — the unsecured creditors. Secured creditors are usually dealt with by individual negotiation under the BIA, since there are seldom groupings of secured creditors capable of being grouped together as a class due to a requirement that there be a commonality of interest within each secured creditor class.

If a BIA proposal is not approved by the requisite ‘double majority’ of unsecured creditors, the debtor is automatically placed into bankruptcy. A BIA proposal will also fail if the court refuses to approve it. Finally, if after receiving court approval of the proposal the debtor defaults in its performance of the proposal, the court may annul the proposal, which then leads to an automatic assignment of the debtor into bankruptcy.


Generally speaking, the restructuring provisions under the CCAA are most commonly used for larger, more complicated restructurings, which also means CCAA restructurings are generally utilized by larger sized corporations. To qualify to use the CCAA, a company must be insolvent and must have outstanding liabilities of $5 million or more. To initiate the proceedings, the corporation brings an initial application to court for an order (referred to as the Initial Order), primarily to seek protection from proceedings by the corporation’s creditors. If relief under the CCAA is granted, the court appoints a Monitor, acting as an independent court officer, to (i) supervise the restructuring process; and (ii) report to creditors and the court on the state of the debtor company’s business and financial affairs.

Typically, the Initial Order does the following things:

(a) authorizes the company to prepare a plan of arrangement to put to its creditors;

(b) authorizes the company to stay in possession of its assets and to carry on business in a manner consistent with the preservation of its assets and business;

(c) prohibits the company from making payments in respect of past debts (other than specific exceptions, such as amounts owing to employees) and imposes a stay of proceedings (i) preventing creditors and suppliers from taking action in respect of debts and payables owing as at the filing date, and (ii) prohibiting the termination of contracts by counterparties;

(d) authorizes the company, if necessary, to obtain additional financing to ensure that it can fund its operations during the proceedings, including setting limits on the aggregate funding and the priority of the security; and

(e) authorizes the company to terminate unfavourable contracts, leases and other arrangements, and to shut down facilities, and to make provision for the consequences (i.e. damage claims) in the plan of arrangement.

The CCAA provides that an Initial Order may only impose a stay of proceedings for a period not exceeding 30 days. Once the Initial Order has been made, the company may apply for a further order or orders extending the stay of proceedings. The intention is to have the stay of proceedings continue until the company’s plan of arrangement has been approved by the creditors, sanctioned by the court and implemented. The court may terminate the proceedings under the CCAA upon application of an interested party if it believes that it is unlikely that a consensual arrangement will be achieved and the continuation of the proceedings is otherwise not appropriate.

During CCAA proceedings, the debtor company typically continues to carry on business in the normal course. Significant transactions that are out of the ordinary course of the debtor’s business are usually submitted to the court for approval. The role of the CCAA Monitor is generally limited to monitoring and reporting to creditors and to the court regarding the debtor’s business and operations. During a restructuring, counter-parties to contracts with the debtor are usually prohibited from terminating those agreements; however, those counter-parties may require that the debtor pay for post-filing goods and services in cash.

Ultimately, the debtor company may table a plan of arrangement and/or compromise to its creditors. When a CCAA plan is developed, it will ordinarily divide the creditors into classes and will set out the proposed treatment of each class (which can be substantially different between classes). In this regard, the CCAA does not provide any specific rules for the nature of the compromise that may be proposed or for determining the classes of creditors, so it is left to the debtor company to propose the treatment and classification of creditors under the plan. A plan may be proposed to all creditors of the debtor company or may only affect certain creditors, in either case divided into one or more classes.

For a plan of arrangement and/or compromise to be approved by the affected creditors, a majority in number of the creditors representing two-thirds in value of the claims of each class must vote in favour of the plan. If the plan is approved by the affected creditors, it must then be sanctioned by the court. In doing so, the court must determine that the plan is "fair and reasonable." Upon approval by the creditors and sanction by the court, the CCAA plan is binding on all of the creditors of each class affected by the plan. If a class of creditors does not approve the plan, the plan is not binding on the creditors within that class.

If a CCAA plan is not approved by the requisite ‘double majority’ of creditors, there is no automatic assignment of the debtor company into bankruptcy. Typically, what will lead to an unsuccessful restructuring is the court’s refusal to extend or otherwise terminate the stay of proceedings by creditors against the debtor company, thereby allowing those creditors to exercise their lawful remedies against the debtor.

Government Relations

Canada’s Constitution provides for a division of powers between the federal and provincial governments. In Canada’s parliamentary system, the party with the most members elected to the federal parliament or to the provincial legislative assembly forms the government. Government relations in such a system are directed toward the majority party and to the permanently appointed bureaucracy. Very little lobbying or other government relations work is directed at opposition parties.

Both levels of government have extensive and sophisticated licensing and regulatory regimes, which normally operate in a quasi-judicial fashion. Submissions to these bodies are normally made in writing, with some limited opportunity for oral submissions. Decisions of these bodies are subject to a well developed body of administrative law, based upon the legitimate expectations of applicants and regulated businesses. The individuals or bodies making these decisions are not normally subject to lobbying efforts, and take their quasi-judicial role very seriously.

Government relations work is generally focused upon senior bureaucrats and elected members of the government, and especially the elected ministers who form the executive council, or cabinet, in each province and federally. A great deal of government relations work is focused upon the efforts of utilities, energy companies, manufacturers and transportation companies which need to maintain a good relationship with government so that they will be remembered and viewed favourably in the development of policies and regulations related to taxation, land use policy, transportation and the overall business environment. Given the relatively large role of the two levels of government in the Canadian economy, most large enterprises view it as essential to maintain cordial and open relationships with policy-makers in government.

Government relations work becomes more focused on specific issues when an enterprise seeks to initiate, support or oppose legislation, seek a change in regulations, or seek changes in tax policy. In the most frequent scenario, a number of government ministries will be involved and the enterprise will seek out meetings with senior bureaucrats and ministers in the relevant ministries. For example, where inter-provincial trucking is concerned, provincial and federal ministries of transportation, industry and commerce, and labour may be part of the regulatory environment. Another example would be private development of hydro-electric power, which may involve provincial ministries of energy, lands and environment, as well as the federal ministries of fisheries and oceans, and environment.

Two areas of notable interest are the relationship with aboriginal peoples, and the Canadian system of environmental assessment required for major project approval. In the case of aboriginal peoples, known as First Nations, the First Nations themselves will likely need to be consulted as they may retain some claim to aboriginal title or traditional aboriginal rights to the land. These rights vary across Canada depending on historical developments, and where First Nation interests are involved both the federal and provincial governments will also have to be advised and consulted.

In the area of environmental assessment (EA), Canada requires comprehensive environmental assessments when projects involving land use reach a certain threshold of invested capital or where certain types of projects are involved. If the project is under federal jurisdiction (such as inter-provincial pipelines) the federal EA system will be invoked. If the project is strictly within a single province and federal jurisdiction is not involved, generally only the provincial EA process will be invoked. In some cases, both federal and provincial EA are invoked, and generally this means that the two processes will be coordinated. There are dramatic differences in the efficiency and timeline between the EA processes in various provinces and that of the federal process. As such, most enterprises seeking to make investments above the EA threshold will seek to develop an early and positive relationship with the appropriate levels of government so that their eventual EA application does not come as a surprise or become controversial.

Canada also has some other peculiarities for investors seeking a relationship with government. For example, delivery of hospital-based acute health care is almost entirely in public hands. Investors should seek advice on the attitudes of government surrounding investments in fields such as health, electricity and infrastructure before proceeding, as a healthy relationship with government on these issues will lead to much more effective and efficient decision making for investors.

Relationships and interaction with governments in Canada has recently come under increased scrutiny, with progressive increases in the degree of regulation during the past couple of years. This regulation has two prongs: first, the regulation of the public officials themselves through codes of conduct (some of which have been legislated); and second, the regulation of those who interact with public officials.

While codes of conduct for public officials generally regulate the public officials and not those interacting with them, it is important to be aware of these provisions, so as not to inadvertently place public officials in a conflict of interest position, which could impede their involvement with a given issue.

Businesses and their employees must also comply with any applicable lobbyist legislation. Since the federal government first enacted lobbying legislation in 1989, several amendments have been made; significantly in June 2005, and most recently in December 2006, with the Federal Accountability Act. Several provinces have also enacted their own lobbyists legislation, including British Columbia, Ontario, Québec, Nova Scotia and Newfoundland and Labrador.

Lobbyist legislation in Canada and the provinces generally distinguishes between three types of lobbyists: consultant lobbyists, in-house corporate lobbyists and in-house organization lobbyists, although some jurisdictions conflate in-house lobbyists for corporations and organizations. Generally, there is a more significant distinction between in-house lobbyists and consultant lobbyists, affecting, inter alia, the timing and content of the public disclosure.

These laws recognize the legitimacy of lobbying, however, they require that the lobbyist (employee or consultant) or the senior officer of the organization or corporation file a public registration with the appropriate jurisdiction to promote transparency. The registration requires disclosure of the lobbying activities and specific information about the lobbyist and the entity on whose behalf the lobbying is undertaken, that is, the client for consultant lobbyists, or the organization or corporation for in-house lobbyists.

The types of communication which may require registration vary in each jurisdiction, but broadly speaking they include communications with public officials (which includes not only politicians, but also members of the public service) in respect of the development of legislative proposals; the introduction, passage, defeat or amendment of legislation; the making or amending of any regulation; the development or amendment of any policy or program and the awarding of any grant, contribution or other financial benefit; and in some cases, the awarding of contracts and the arrangement of meetings with public officials.

As referenced above, there have been significant changes to the federal lobbyist regime. The Federal Accountability Act was passed in December 2006. It amends the federal Lobbyists Registration Act to impose much more detailed disclosure requirements when communicating with a "designated public office holder;" more onerous filing requirements, the elimination of ‘success fees’ or ‘contingency fees’ and the strengthening of enforcement measures.

Relations with governments in Canada can be productive and professional, and this is the goal of both federal and provincial legislation related to lobbying. If an enterprise knows the rules and follows them, Canadian governments will generally do their best to be responsive, transparent and effective in addressing the needs of investors.


This general review of the legal aspects of acquiring or establishing and doing business in Canada has been prepared to assist foreign business concerns in achieving a general understanding of the legal environment that affects their proposed investment in Canada. If we can assist you by providing a detailed analysis of the issues relevant to your specific proposed investment, please contact any of the lawyers in our firm.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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This article is part of a series: Click Doing Busines In Canada - Part 2 for the previous article.
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You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.