Canada: Demystifying Canadian Employment And Labor Law

Last Updated: August 22 2016
Article by Anneli LeGault

Introduction

Because Canada is a confederation of provinces and territories, each with the power to pass employment and labor laws, determining the applicable law in a particular situation can be perplexing to a newcomer to the nation's employment scene. In this article, we hope to clear up some of the confusion.

Legislation

Under the Constitution of Canada, employment and labor law are local, provincial matters. As a result, all ten provinces, as well as the nation's three territories, have passed legislation that applies locally addressing basic employment standards, occupational health and safety, discrimination and labor relations. Core employment standards include minimum wage, overtime pay, termination pay, mandatory leaves of absence, vacation and holiday entitlements. Consequently, a company with employees located in three provinces, for example, must ensure that it does not pay less than the minimum wage and overtime pay applicable to the respective locations. Typically, Canadian employers harmonize most of their human resources practices across the country to comply with the highest common denominator.

The legislation is enforced in each province by the local provincial or territorial Ministry of Labour or its equivalent. Employee disputes are heard by the provincial tribunals and courts.

The federal sphere

To muddy the waters, the federal government has legislative authority over certain industries regardless of where their employees are located. These are typically national industries or ones that have been determined to be for the good of Canada. They include the airline; interprovincial trucking, interprovincial railways and shipping; telecommunications; radio and television broadcasting; and banking sectors, as well as certain industries, such as grain elevators and uranium mining. For example, employees of Air Canada or Royal Bank of Canada are governed by the same federal legislation whether located in British Columbia, Alberta or Quebec.

The federal employment laws are codified in the Canada Labour Code, the Canadian Human Rights Act and the Employment Equity Act. About 10 percent of the total Canadian work force falls within the federal sphere. A common mistake made by foreign-based employers (non-federally regulated) is to look to the Canada Labour Code on matters where the provincial law is silent. However, this is not the applicable law.

Common law and civil law

In addition to statutory law, the common law jurisdictions (which comprise all of Canada with the exception of the province of Quebec) have followed the British tradition of judge-made common law that evolves over the years. The most significant common law developments for an employer are (i) the requirement to provide "reasonable notice" of termination and (ii) the concept of "constructive dismissal." What constitutes reasonable notice of termination depends on the individual employee's age, length of service, pay, position and other factors affecting his/her re-employability, such as education. Constructive dismissal refers to the right of an employee to consider his or her employment terminated as the result of some type of unilateral employer action to which the employee has not consented, such as a demotion, a material drop in pay or benefits, or even bullying and harassment in the workplace.

Quebec is a civil law jurisdiction with labor standards and labor relations legislation similar to that of the other provinces, but also governed by the Civil Code of Quebec. Fortunately, its employment law has evolved in a manner similar to that of the rest of Canada. However, employers must be aware that the Charter of the French Language declares French to be the language of the workplace. As a result, in this jurisdiction, employers should seek legal advice before issuing documents to its employees in English.

Federal legislation that applies countrywide

While the legislated terms and conditions of employment are local in nature, there are a few basic federal programs that apply everywhere in Canada.

The Income Tax Act applies to all employees and requires employers to deduct and remit income tax on a regular basis. The Canada Pension Plan is a social security plan that requires employers and employees to contribute from pay and provides a pension upon retirement. The Employment Insurance system is also funded through employee and employer premiums and provides benefits to employees upon lay-off, dismissal and during leaves of absence, such as maternity or parental leave, and sickness benefits in certain situations.

Health benefits

Payment for the government-run medical system is provincial. However, some provinces fund their programs through payroll taxes, while others charge premiums. The government-run medical systems typically pay for doctor's visits (not medical specialists), hospitalization, births, diagnostic tests like MRIs, CT scans and X-rays, and medically necessary surgery. Employers will generally use private insurers to purchase other group benefits such as drug plans, dental plans, vision care, long-term disability and life insurance. None of these are mandatory and they are driven by market conditions and competitive imperatives.

Benefits for time off and medical costs resulting from workplace injuries are not paid through private insurance. Instead, each province has a workers' compensation system funded by employers and administered by the local government.

Privacy and data protection

Only three provinces have passed legislation governing employee personal data protection in the private sector: Alberta, British Columbia and Quebec.

Federally regulated private sector employee data is governed by the Personal Information Protection and Electronic Documents Act (PIPEDA). PIPEDA has been declared through a Data Directive of the European Union to provide an adequate level of protection, allowing European Community Member States to transfer personal data to Canada without additional guarantees.

In all provinces, except the three listed above, non-employee personal data is governed by PIPEDA in commercial situations, such as involving client and customer data.

However, the courts have been slowly and incrementally recognizing a limited common law right to privacy. Since 2012, Ontario at least has recognized the tort of intrusion upon seclusion. Simply put, an individual may be awarded damages for an intentional intrusion upon his or her seclusion or his or her private affairs where there is no lawful justification, and the invasion of privacy would reasonably be regarded as highly offensive.

Conclusion

As you can see from the above, the basic principle of Canadian employment law is that there is no underlying countrywide law. Instead, each province and territory regulates workplaces within its borders, with the exception of a limited number of federally regulated industry sectors.

We hope this article helps multinational employers better understand the Canadian HR legal landscape.

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Dentons is the world's first polycentric global law firm. A top 20 firm on the Acritas 2015 Global Elite Brand Index, the Firm is committed to challenging the status quo in delivering consistent and uncompromising quality and value in new and inventive ways. Driven to provide clients a competitive edge, and connected to the communities where its clients want to do business, Dentons knows that understanding local cultures is crucial to successfully completing a deal, resolving a dispute or solving a business challenge. Now the world's largest law firm, Dentons' global team builds agile, tailored solutions to meet the local, national and global needs of private and public clients of any size in more than 125 locations serving 50-plus countries. www.dentons.com

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