Canada: The International Comparative Legal Guide To: Employment & Labour Law 2015 - Canada

1 Terms and Conditions of Employment

1.1 What are the main sources of employment law?

Several sources of employment law exist in Canada; firstly, there are a host of federal and provincial statutes specifically designed to deal with employment issues including employment standards, workers' compensation and workplace discrimination. There is also the common law in each province (the Civil Code in the province of Québec) as well as jurisprudence by Canadian courts. In Québec, various texts by legal scholars, called "doctrine", can also inspire employment law and finally, the contract of employment between the parties can be a source of law between them.

1.2 What types of worker are protected by employment law? How are different types of worker distinguished?

Only workers who are considered "employees" are protected by employment law. Workers are distinguished on the basis of whether they are employees or independent contractors. Most employment laws will have specific definitions of who constitutes an employee within the meaning of that law. In general, an employee will be a person who works for remuneration according to the instructions and under the supervision or control of another person. Many protective measures benefit employees including, for example, the right not to be dismissed without just and sufficient cause if an employee has more than two years of continuous service (Québec), protection against reprisals for employees who are pregnant, or who are required to be absent for the purposes of child or family care, etc. All employees are protected against the right to be dismissed with a prior reasonable notice if there is no cause for dismissal.

Employees can also be distinguished on the basis of whether they are ordinary employees or management personnel. Employees are distinguished from managers on a number of factors, including hours of work, mode of remuneration and whether they have the ability to hire and dismiss other workers in the course of exercising their work. The distinction is relevant as certain legal treatments may differ for employees, managers as well as for senior managers.

1.3 Do contracts of employment have to be in writing? If not, do employees have to be provided with specific information in writing?

No. The employment contract is not subject to any particular formality in Canada. Even a verbal agreement can constitute an employment contract, assuming it can be proven. In practice, the great majority of employment contracts in Canada are not made in writing. Nor is there any requirement that employees be provided with any specific information in writing at the time of hiring. As such, it is common for employees to have either a simple verbal agreement or an informal letter of hire when they are employed. More senior executives may have a more formal written agreement which will contain detailed terms and conditions of employment.

1.4 Are any terms implied into contracts of employment?

Yes. Regardless of what form the employment contract takes, all employment relationships implicitly include the employer's obligation to provide work, to pay for the work and to provide a safe working environment for its employees. As for the employee, every contract of employment implies that the employee will carry out the work and be loyal to his employer, not only during employment but also for a reasonable period of time after termination of employment.

1.5 Are any minimum employment terms and conditions set down by law that employers have to observe?

Yes. Minimum terms and conditions of employment are contained in the various employment standards and legislation of each Canadian province and in the Canada Labour Code for federally regulated businesses. Thus, for example, there are minimum standards established for wages, vacation pay, overtime pay, statutory holidays, hours of work, leaves of absence, and termination of employment.

1.6 To what extent are terms and conditions of employment agreed through collective bargaining? Does bargaining usually take place at company or industry level?

The freedom to associate and to bargain collectively is a fundamental freedom under Canadian law. Approximately 30 per cent of the workforce, including public sector employees, have their terms and conditions of employment agreed through collective bargaining. This rate rises to close to 40 per cent in Québec and British Columbia. Collective bargaining can take place either at company level or, in certain circumstances (e.g., construction industry), at industry level.

2 Employee Representation and Industrial Relations

2.1 What are the rules relating to trade union recognition?

In all jurisdictions, employees have the right and freedom to join or form a union of their choice. In order to be recognised or certified as the bargaining agent for a group of employees, a union must secure the support of a majority of the workers who form the bargaining unit. A "majority" is defined as 50 per cent of the workers plus one. Typically, employees will be approached to sign union membership cards; these cards will be compiled. Once a sufficient number of cards have been obtained, a petition will be filed before the appropriate labour board who will certify the union as bargaining agent for the group of employees targeted. In certain circumstances, if the union obtains support of less than 50 per cent plus one but more than 35 per cent (or 40 per cent in certain provinces), a vote can be ordered by the labour board to determine whether the union will be recognised. If the employer does not agree with the bargaining unit as defined by the union, there is a procedure for contestation, and a hearing before the labour board will be held prior to certifying the union until such time as the bargaining unit has been properly defined.

2.2 What rights do trade unions have?

Canadians believe that it is in the public interest to resolve industrial disputes quickly and efficiently. The primary rights of a trade union are firstly to bargain collectively with an employer. Certification gives a union the exclusive authority to bargain collectively with an employer on behalf of all employees in the bargaining unit. Both parties have the legal duty to bargain in good faith. In the event that the parties are unable to reach an agreement, the employees, through their union, have the right to strike, and employers have the right to lock out employees. In Québec, there exists legislation which expressly prohibits the use of replacement workers during a strike or lockout.

A union also has the right to have disputes or grievances arising during the life of a collective agreement decided by arbitration. All disputes between a union and an employer concerning the interpretation, application, administration or alleged violation of a collective agreement must be settled by arbitration. Also, the union can, at any time during the collective bargaining process, request the intervention of a Government-appointed conciliator to facilitate the bargaining process. In the case of a first collective agreement, either party can also ask for binding arbitration if the collective bargaining or conciliation process is unsuccessful.

2.3 Are there any rules governing a trade union's right to take industrial action?

Yes. A union's right to take industrial actions such as a strike or picketing is regulated by law; strikes can be conducted lawfully once majority support by the employees in the bargaining unit has been secured. Picketing actions (including secondary picketing) are permitted as a form of free expression but must be conducted in such a way as not to interfere with the flow of business on the employer's premises.

2.4 Are employers required to set up works councils? If so, what are the main rights and responsibilities of such bodies? How are works council representatives chosen/appointed?

No. There are no requirements to set up works councils in Canada. Unions are the form through which employee representation occurs.

2.5 In what circumstances will a works council have codetermination rights, so that an employer is unable to proceed until it has obtained works council agreement to proposals?

This is not applicable. (See question 2.4 above.)

2.6 How do the rights of trade unions and works councils interact?

This is not applicable. (See question 2.4 above.)

2.7 Are employees entitled to representation at board level?

No, they are not.

3 Discrimination

3.1 Are employees protected against discrimination? If so, on what grounds is discrimination prohibited?

Yes. All jurisdictions in Canada have legislation designed to protect employees from unlawful discrimination. Several categories of employees are protected such as pregnant workers, disabled workers and those that are the subject of retaliation for having exercised their legal rights. All jurisdictions in Canada prohibit discrimination based on race, national, ethnic or place of origin, colour, creed, marital status, physical or mental disability or sex. Certain jurisdictions also prohibit discrimination on the basis of ancestry, criminal conviction and political beliefs. All jurisdictions prohibit discrimination on the basis of age, although the definition of age differs in each jurisdiction. In most jurisdictions, mandatory retirement has been abolished and an employee cannot be dismissed purely by virtue of the fact that he or she has reached the normal age of retirement.

3.2 What types of discrimination are unlawful and in what circumstances?

Employers are prohibited from discriminating in respect of hiring, apprenticeship, duration of probationary period, vocational training, promotion, transfer, displacement, layoff, suspension, dismissal or conditions of employment of an employee or the establishment of categories or classes of employment. Similarly, an employer cannot require a person to give information on a job application regarding any of the prohibited grounds of discrimination mentioned in question 3.1 above.

3.3 Are there any defences to a discrimination claim?

Yes. The principal defence raised against a charge of discrimination in employment is that the adverse action was taken for a legitimate, non-discriminatory reason. There are also defences on the basis that discrimination on a prohibited ground is a bona fide occupational requirement. Thus, for example, if a certain level of physical fitness is an absolute requirement for a particular job, it may be permissible to refuse the position to a person who is handicapped and unable to meet the physical requirements of the job. However, no practice will be considered to be a bona fide occupational requirement unless it has first been established that the employer has tried to accommodate the needs of the employee affected, up to the point of undue hardship, taking into account health, safety and cost. In order to determine whether accommodating for the employee has reached the point of undue hardship, courts will look at various factors including the context of the situation, such as whether prior steps to accommodate the employee were taken, the impact on the organisational structure, any applicable collective agreement, provisions in force and any adverse impact on other employees in addition to the cost to the company. A workplace does not have to be entirely reorganised and employers are not expected to have to bear excessive financial costs or expose other workers or members of the public (or even the disabled employee himself) to unacceptable levels of risk to health safety and general well-being.

In order to establish a bona fide occupational requirement, the employer must show three things:

3.4 How do employees enforce their discrimination rights? Can employers settle claims before or after they are initiated?

All Canadian jurisdictions have human rights commissions whose purpose is to promote the understanding, acceptance and compliance with legislation designed to prevent discrimination in the workplace. If an employee has reasonable grounds to believe that he has been the victim of a discriminatory practice, he may file a complaint with the appropriate human rights commission. Once a complaint is filed, the commission will typically designate a person to investigate the complaint. During the investigation, both parties are invited to provide their versions of events. At the conclusion of the investigation, the investigator submits a report of his findings to the commission. Upon receipt of the report, the commission decides whether to dismiss the complaint or refer the matter for a hearing before the human rights tribunal.

Employers are able to settle claims after they have been initiated by participating in a mediation exercise. At any time after a complaint has been filed, the human rights commission may appoint a conciliator to facilitate mediation between the parties. If the matter goes to a hearing, all parties are given the opportunity to appear in person or through legal counsel and to present evidence and make representations. These hearings are public unless confidentiality is essential to protect public security, the fairness of the hearing, undue hardship to the persons involved or the life, liberty or security of a person. In Ontario, claimants are able to address the human rights tribunal directly rather than having complaints first assessed and then forwarded by the commission.

3.5 What remedies are available to employees in successful discrimination claims?

The human rights tribunal has the power to order a person to cease any discriminatory practice and to take measures to prevent similar practices from happening again. The tribunal can also restore such rights, opportunity or privileges to the victim as were denied to him as a result of the discriminatory practice and to compensate the victim for any lost wages and expenses and other damages incurred as a result of the discriminatory practice including moral and exemplary (punitive) damages where appropriate.

3.6 Do "atypical" workers (such as those working parttime, on a fixed-term contract or as a temporary agency worker) have any additional protection?

No. So-called atypical workers (i.e., part-time, fixed-term, contract or temporary agency workers) do not have additional protection but they do benefit from the same protections which prohibit discrimination in employment as are applicable to other categories of workers.

4 Maternity and Family Leave Rights

4.1 How long does maternity leave last?

The length of maternity leave can vary from one province to another as well as under federal jurisdiction. Each jurisdiction will generally state that a pregnant employee who has worked for the same employer for a specified period of time is entitled to unpaid maternity leave of approximately 16 or 18 weeks, depending on the jurisdiction.

4.2 What rights, including rights to pay and benefits, does a woman have during maternity leave?

A woman on maternity leave is entitled to obtain employment insurance (EI) maternity benefits. In order to be eligible for these payments, an employee must have accumulated at least 600 hours of insurable employment during the qualifying period prior to the maternity leave. These benefits are payable during the period that commences eight weeks prior to the week in which delivery is expected or the week in which delivery occurs, whichever is the earlier. The maximum number of weeks for which benefits may be obtained during the maternity leave period is 15 (17 weeks minus a mandatory two-week waiting period).

As a general rule, the basic rate for calculating employment benefits is 55 per cent of the employee's average insurable weekly earnings, up to a maximum amount. Since 1 January 2012, the maximum yearly insurable earnings amount is $45,900 which means that regardless of an employee's income, the maximum that a pregnant worker can receive from EI benefits during maternity leave is $485 per week.

It is not uncommon for employees to "top up" these amounts through a group plan.

4.3 What rights does a woman have upon her return to work from maternity leave?

While on maternity leave, a woman continues to be an employee. At the end of her leave, the employer is required to reinstate her to the position that she held prior to the leave, or to an alternative position of comparable nature. Also, the employer may have to continue making payments to any applicable group benefit or insurance plans, or provide the employee with an option to maintain these benefits at her own expense. Finally, some jurisdictions prohibit any loss of seniority in respect of an employee who was on maternity leave.

4.4 Do fathers have the right to take paternity leave?

Yes. All jurisdictions provide for parental leave in their employment standards legislation. This means that leave is available for fathers as well as mothers. Parents are entitled to an unpaid parental leave of between 35 and 52 weeks, depending on the jurisdiction. Parental leave may be taken by both parents in some jurisdictions and must be shared between the parents in other jurisdictions.

4.5 Are there any other parental leave rights that employers have to observe?

The rights of adoptive parents are usually the same as those provided for natural parents. Moreover, all parents are protected against any form of discrimination or reprisal as a result of having taken a maternity or parental leave.

4.6 Are employees entitled to work flexibly if they have responsibility for caring for dependants?

No. Employees are not entitled to work flexibly if they have dependant care responsibilities. However, an employee is entitled to unpaid leave ranging between three and ten days, depending on the jurisdiction, in any given year in order to meet the responsibilities related to the health, care or education of a family member. We are not aware of any law that would impose a general duty on employers to accommodate employees with respect to any responsibilities that they might have caring for dependants.

5 Business Sales

5.1 On a business sale (either a share sale or asset transfer) do employees automatically transfer to the buyer?

Upon the sale of shares by a vendor, the identity of the employer does not change but merely that of the shareholders. The employment contracts and collective agreements that are in force between the employer and its employees remain in full force and effect and the employer simply retains all of its obligations and liabilities towards its employees.

In a sale of assets, the unionised employees are automatically transferred to the purchaser by operation of law. In all Canadian provinces other than Québec, the non-unionised employees are not automatically transferred to the purchaser upon the sale of a business. The purchaser has the option to employ or not to employ the seller's employees. The vendor retains liability relating to all employees who do not receive or who do not accept offers of employment from the purchaser.

In the province of Québec, all non-unionised employees are automatically transferred to the purchaser upon the sale of a business, on the same terms and conditions of employment as those which apply immediately prior to the closing of the sale.

5.2 What employee rights transfer on a business sale? How does a business sale affect collective agreements?

The successor employer is bound by the collective agreement entered into between the union and the vendor. The purchaser steps into the shoes of the seller and assumes all rights, powers, duties and liabilities in connection with the collective agreement and becomes a party to any proceeding relating to the said collective agreement. In all Canadian provinces other than Québec, the purchaser who chooses to offer employment to non-unionised employees can determine the terms and conditions of employment that it offers to the employees of the vendor. However, the purchaser who employs the seller's employees has to recognise the past service of these employees with the seller for certain purposes set forth in employment standards legislation such as vacation entitlements and statutory notice of termination of employment. The purchaser is not obliged to assume the past years of service of the employees with the seller for the purposes of calculating the reasonable notice of termination of employment at common law. In practice though, it is common for a purchaser to recognise the past years of service of the employees so as not to demotivate the employees from joining the purchaser's organisation.

In the province of Québec, the purchaser must recognise the employee's previous years of service for all purposes.

5.3 Are there any information and consultation rights on a business sale? How long does the process typically take and what are the sanctions for failing to inform and consult?

There are no mandatory consultation rights on a business sale. However, collective agreements may contain provisions requiring the employer to inform the union in advance of a transaction affecting the business.

If the sale of a business results in a mass lay-off, the employer will typically need to inform the Minister of Employment of the province in advance of the effective date of the collective dismissal.

5.4 Can employees be dismissed in connection with a business sale?

In Canadian provinces other than Québec, the purchaser has the option to employ or not to employ the seller's non-unionised employees. Employees who do not receive or do not accept an offer of employment from the purchaser will be terminated as a result of the business sale. All obligations and liabilities towards the employees remain with the seller, including responsibility for notice, severance or other termination entitlements.

In the province of Québec, all employees have a right to be transferred to the purchaser's business. If a purchaser fails to continue to employ one non-unionised employee after the sale of the business, such employee, if he accumulated two years of service or more, has the right to challenge the termination of his employment and may seek to be reinstated in the purchaser's business if his dismissal is deemed to have been made without just and sufficient cause.

5.5 Are employers free to change terms and conditions of employment in connection with a business sale?

In all Canadian provinces other than Québec, the purchaser who chooses to offer employment to employees of the seller can determine the terms and conditions of employment that will apply effective as of the closing of the sale. In the province of Québec, the employment agreements of non-unionised employees are automatically transferred to, and binding on, the purchaser of the business. This means that the employees have a right to continue to be employed on the same terms and conditions of employment as those that applied immediately prior to the sale of the business. In practice, in all Canadian provinces, it is customary for the purchaser to offer the seller's employees terms and conditions of employment substantially similar to those that applied immediately prior to the sale of the business.

To continue reading this article, please click here.

Previously published in The International Comparative Legal Guide to: Employment & Labour Law 2015.

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.