Canada: Employment Law – Doing Business In Canada – Focus On Ontario Part II – Key Points Of Employment Relationship

Last Updated: June 7 2016
Article by Christine Jonathan

Legislation Governing the Employment Relationship

The Canadian workforce is heavily regulated. As previously discussed, depending on the industry and type of business, an employer may be regulated federally, provincially or a mix of both. The following are the main types of legislation that exist in virtually every jurisdiction.

Employment Standards

All jurisdictions provide standards with respect to the minimum terms of employment, including the notice and severance terms discussed. Typically, employees are not permitted to contract out of the minimum protections afforded by the statute. The specific provisions vary by jurisdiction, and should be verified before hiring personnel in the province in which the employer intends to operate.

Employment standards can be quite complex and the legislation can often be varied by obscure regulations that apply to specific industries. Certain exemptions apply to certain types of employees, such as managers or professionals, regardless of industry. There are often methods to obtain special permits to obtain exemptions to the minimum requirements by applying to the appropriate ministry or department.

Each province has a minimum wage rate as well as overtime pay requirements. The provincial legislation also places limitations on the amount of hours that can be worked in a week. For example, Ontario's Employment Standards Act, 2000 (the "ESA") requires an employer to pay overtime wages at 1.5 times the employee's regular wage rate after an employee has worked more than 44 hours in a week. It is important to note that salaried employees are not automatically exempt from overtime entitlements. All employees are entitled to overtime, unless their role is managerial or they fall within certain regulated exemptions based on their profession. For example, accountants, information technology professionals and lawyers are all precluded from claiming overtime. Unpaid overtime has been a popular basis for attempted class actions in Canada, so it is wise to pay special attention to compliance with applicable regulations.

In addition to overtime entitlements, there are limits on the number of hours employees can work in any given day or week. Employees are also entitled to have a certain amount of rest between scheduled shifts. The maximum number of daily and weekly hours of work varies from province to province. In Ontario, it is eight hours a day and 48 hours per week. Exemptions are available to employees who fall within certain prescribed classes or where the employer has applied to the Ministry of Labour for permission to have its employees work extended hours

Public or Statutory Holidays

Canadians generally enjoy at least eight public holidays: New Year's Day, Good Friday, Victoria Day (last Monday before May 25), Canada Day (July 1), Labour Day (first Monday in September), Thanksgiving Day (second Monday in October), Christmas Day and Boxing Day (December 26).

The first Monday in August is often observed as an additional holiday in many provinces. In certain parts of Canada, the third Monday in February is observed as an additional holiday. Remembrance Day (November 11) is a holiday that is observed by all provinces except Ontario, Québec and Manitoba. In Québec, according to the National Holiday Act, employees are also entitled to payment on St. Jean Baptiste Day (officially known as Fête Nationale du Québec), which is June 24. Some provinces permit employers to direct employees to work on statutory holidays but others do not. It should also be noted that employees who work on a statutory holiday will typically be entitled to both holiday pay and premium pay, resulting in a wage rate of 2.5 times their normal rate of pay.


Employment standards laws generally prescribe minimum vacation entitlements. Vacation entitlements are broken into two constituent elements: vacation time and vacation pay. The minimum vacation time entitlement is typically two weeks per year. Some provinces, such as British Columbia, provide additional weeks of vacation after the employee has achieved a certain seniority. The employer may determine when employees take vacation.

Vacation pay is expressed as a percentage of the employee's wages. In Ontario, an employee is entitled to two weeks annual vacation, or 4% of regular wages. In other provinces, it may increase to three weeks of vacation or 6% of regular wages. A key compliance issue for employers is what kinds of compensation are included in "wages." The term does not just refer to base salary but often includes such things as commission, overtime pay and non-discretionary bonuses.

Protected Leaves of Absence

All provinces in Canada provide employees with certain job-protected leaves of absence, including pregnancy and parental leave. Ontario's ESA provides 17 weeks of unpaid pregnancy leave to employees who have 13 weeks of service or more, as well as 35 weeks of unpaid parental leave for both men and women.

At the end of the pregnancy and/or parental leave, an employee is entitled to be reinstated. The rules regarding the nature of reinstatement differ slightly across jurisdictions. In Ontario, the requirement is to reinstate to the same job if it still exists, or to a comparable job if it no longer exists. In Québec, if the employee has taken a parental leave longer than 12 weeks, the reinstatement obligation is to the same or comparable position. If the parental leave is shorter, the employee must be reinstated to the same position as before.

Other leaves of absence vary by province but include personal emergency leaves of between 8 and 12 weeks for reasons such as death or illness of a family member, illness of the employee, accidents, a household crisis or unexpected interruptions in child-care plans, jury duty, organ donor procedures and reservist duties. All of these leaves are unpaid but the employee may be eligible to apply for benefits from the government Employment Insurance Fund, depending upon the circumstances.

Time spent on leave is considered to be active employment for the purposes of assessing all seniority-based rights. Employers are prohibited from reprisals against employees for making use of these statutory leaves. Reprisal can take many forms, but most commonly includes dismissal during or immediately following the leave of absence, or a failure to return the employee to his or her former role. Employees who believe that they have been reprised against have the option of making a complaint to the applicable Ministry of Labour. In Ontario, employees who can demonstrate that they have suffered reprisal at the hands of their employers are entitled to claim reinstatement to their former position. Employers must tread very carefully when making any changes to the terms and conditions of employment for an employee on leave.

Equal Pay for Equal Work

Canadian employers are prohibited from differentiating between male and female employees who perform substantially the same kind of work in the same establishment, requiring substantially the same skill, effort and responsibility. Pay equity provisions under the ESA and Ontario's Pay Equity Act apply to all employers in the private sector in Ontario with 10 or more employees, and to all employers in the public sector. Different rates of pay are prohibited, except where differences are attributable to a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a differential based on any factor other than sex. The courts and tribunals have established that titles are not determinative and that careful regard should be paid to the actual duties.

The legislation is an effort to redress the gender gap in compensation. In essence, it seeks to ensure that there is equal pay for work of equal value. It requires employers to analyze jobs across their organization and review them for value (based on a number of statutory criteria) and examine whether there are compensation disparities between male-dominated and female-dominated jobs within the organization. Where female jobs are underpaid, the legislation prescribes a schedule for pay increments that have to be implemented to redress the balance. Although other jurisdictions have similar legislation, the scope is limited to the public sector.

Employment Equity

The federal Employment Equity Act provides for employment equity for women, Aboriginal peoples, disabled people and visible minorities. It is designed to remove inequality in the workplace by eliminating systemic barriers facing historically disadvantaged groups. The Act applies to all federally regulated employers who employ 100 or more people. Employers must identify and remove offending policies and practices, and, in place of these policies, employers must institute positive policies and practices to achieve a proportionate representation of people from historically disadvantaged groups in the employer's workforce.

Such employers must also file annual reports concerning the number of persons they employ and the number of persons they employ in designated groups, with a breakdown by occupational groups and salary ranges.

(Note: this is the second installment of a five part series on Employment Law. View the full article)

About Mackrell International - Canada - MacDonald Sager Manis LLP is a full service business law firm in Toronto, Ontario and a member of Mackrell International. Mackrell International - Canada is comprised of four independent law firms in Alberta, British Columbia, Ontario and Quebec. Each firm is regionally based and well-connected in our communities, an advantage shared with our clients. With close relations amongst our Canadian member firms, we are committed to working with clients who have legal needs in multiple jurisdictions within Canada.

This article is intended to be an overview and is for informational purposes only.

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