Canada: Employment Litigation/ Tribunals

Canadian employment law faces evolving challenges as courts navigate cross-border contractor disputes, bad faith termination damages, and the potential prohibition of non-compete clauses under proposed federal legislation. Recent judicial decisions highlight critical distinctions between employee rights and contractual obligations, while examining the interplay between asset purchase agreements and employment contracts in business transactions.

A recent Workers’ Compensation Appeal Tribunal (WCAT) decision provides useful guidance on the due diligence defence available to employers facing occupational health and safety administrative penalties.

Few areas of labour and employment law require employers to navigate as many competing obligations as workplace drug and alcohol testing. While employers have a duty to maintain a safe workplace, courts and labour arbitrators have consistently held that testing must be justified by the circumstances and cannot be imposed without limits.

A financial planner's wrongful dismissal case against RBC resulted in over $2.5 million in damages after the bank filed an inaccurate termination notice that destroyed her career prospects. The Ontario Superior Court found the bank's conduct vindictive and its allegations of cause unproven, raising critical questions about employer obligations when reporting terminations in the investment industry.

Employment agreements are often treated as risk management tools. Employers rely on them to set workplace expectations and limit liability on termination. But an agreement only serves that purpose if it actually survives judicial scrutiny, and for the past few years, termination clause litigation in Ontario has increasingly turned on whether a court can find some theoretical reading of a clause that would violate the Employment Standards Act, 2000 ("ESA"), even where that plainly is not what the parties meant.

In Haynes v Alberta (Human Rights Commission and Tribunal), 2026 ABKB 575 [Haynes] the Court of King’s Bench took a closer look at the discretion held by the Director of the Commission and the Chief of the Commission and Tribunals, and it provided further clarity on a complainant’s ability to proceed before the Tribunal when they have other more appropriate forums available for resolution.

The Ontario Court of Appeal has resolved a critical split in employment law jurisprudence regarding termination provisions containing "at any time" or "for any reason" language. In two consolidated appeals, the Court clarified when such provisions comply with the Employment Standards Act and under what circumstances employers can enforce contractual limitations on termination entitlements.

Le 29 mai 2026, la Cour suprême du Canada a rendu les décisions R. c. Vrbanic (« Vrbanic ») et R. c. Jacques-Taylor (« Jacques-Taylor »), qui clarifient la manière dont le délai sera évalué en vertu de l’alinéa 11b) de la Charte.

British Columbia employers do not need to provide reasons when terminating employment without cause, and in most cases should refrain from doing so. A recent Supreme Court of British Columbia decision confirms that failing to provide reasons for a without cause termination does not breach the duty of good faith in the manner of dismissal.