Opening a location or engaging workers in a different country can bring growth and opportunity for a business. However, a different country means different employment and labour laws to follow, often regardless of the laws in a company’s headquarter jurisdiction. The USA and Canada share many similarities, but the legal guidelines under which employers must operate can vary widely.
American companies and organizations planning to operate and hire in Canada should know that Canadian employment law, both statutory and case law, largely recognizes an imbalance in the employment relationship in favour of the employer. As a result, legislators, courts, and other decision-makers tend to protect employees’ interests and will generally find in favour of employees whenever possible.
Here are five key Canadian legal areas whereby employees are favoured and protected .
Termination of employment
One of the biggest employment law differences between the U.S. and Canada is how employees can be fired. In much of the U.S., employment relationships have traditionally been “at-will,” meaning that employers can fire employees at any time for any reason, except for reasons that contravene certain laws such as those that are discriminatory under human rights law.
In Canada, things are very different. If employees are terminated “without cause,” employment standards legislation in each jurisdiction requires a minimum notice period or payment in lieu as well as benefits before the employee can be fired. In addition, if there is no legally-enforceable employment contract with a termination clause limiting the notice period to statutory notice, then an employer could also find itself liable for common law notice, which is the reasonable notice of dismissal established in wrongful dismissal court decisions. In Ontario, factoring an employee’s age, length of service, position and compensation, and common law reasonable notice period can be significantly longer than statutory notice.
It is possible to fire an employee without notice with just cause, but the standard carries a very high bar. The employer must provide proof that meets a legal test for cause for dismissal and it is not easy. It must be a reason that makes the employment relationship no longer viable, such as serious misconduct.
Restrictive covenants
American employers who are accustomed to having non-competition clauses in their employment agreements may have to re-examine how they approach their agreements with Canadian employees. Such clauses are permitted only for certain executive roles and even then, are scrutinized by Canadian courts. If they are challenged, employers should be ready to prove that they are essential to protecting their business. If a restrictive covenant is overly broad and could affect an employee’s ability to work in their profession or in their geographic area after leaving employment, it may not be enforceable.
Leaves of absence
Every Canadian jurisdiction has employment standards legislation that includes unpaid job-protected leaves of absence for employees. There are different types of leave for reasons like family caregiving, serious illness, or emergency circumstances. One of the biggest differences from the U.S. is parental leave. Most employees who give birth are entitled to around 17 to 19 weeks of maternity leave, but employees are also entitled to as many as 65 weeks of parental leave that can be split between parents. The exact length of parental leave entitlement depends on the jurisdiction, so employers need to be sure of the rules where they employ Canadians.
Human rights and accommodation
Both the U.S. and Canada have legislation protecting human rights, and employers cannot discriminate against employees or job candidates based on any grounds protected under such statutes. However, Canadian employers also have a significant “duty to accommodate” employees who are disadvantaged because of a disability. This duty means that employers must examine all accommodation options to the point of undue hardship which is not just a reasonable standard. Undue hardship is the point at which accommodation is not possible because the cost or health and safety risk is so great that it would harm the employer.
The accommodation process in Canada is generally considered a collaborative process, so prudent employers involve the employee in the assessment of accommodation options, while employees must also do their part to co-operate.
Drug and alcohol testing
In Canada, the issue of workplace drug and alcohol testing has been somewhat of a legal battlefield, with various courts at different levels of the legal system weighing in, sometimes at odds with each other. However, the dust has somewhat settled and, for the most part, random workplace testing is not legal. One exception for random testing is for employees in safety-sensitive positions where the employer is able to show that there is a serious drug or alcohol abuse problem in its workplace. However, courts have diverged on the standard of what constitutes a serious problem.
Drug and alcohol testing may be permitted if it is not random and in response to a workplace incident or management identifying signs of potential intoxication, but such standards must be objectively reasonable to justify the infringement on employee privacy that testing can involve.