Employment laws are essential for all nations. Canada also has several employment laws to protect employers' and employees' rights. Most of the Canadian Labour Laws are associated with working hours, wages, pensions, workplace discipline, etc. You can refer to the employment law Canada guide to understand all employment laws and then abide by them.
Canadian Labour Laws can be both federal as well as local. Several laws exist, such as anti-discrimination laws, termination of employee contracts, etc. As an employer, you need to check if all these laws are adhered to in your organization.
The federal and provincial governments in Canada have equal power to pass laws. Provinces have jurisdiction over most employment matters for historical and constitutional reasons. In contrast, the federal government only controls employment in specialized industries like airlines, shipping, and banks.
Canada's employment law is consistent across provinces and is governed by federal and provincial legislation and common law (judge-made law). The exception to this norm is Québec, which has a civil law system based on a written "civil code" based on the Napoleonic Code of France.
Who is Covered by the Employment Act?
In Canada, the workers are classified into three types:
- ~Independent Contractors
- ~Dependent Contractors
These employees are distinguished based on their relationship with the employer organization. They are entitled to common law rights, statutory rights, and any company's entitlements, including overtime fees, leaves, etc. Even dependent contractors have common law rights, but independent contractors may not be entitled to the benefits. However, all employees are covered under the Canada Labour Laws.
Every employment comes with an employment contract which can be either a verbal agreement or a written one. It can also be a combination of both. The terms and conditions of the employment relationship are clearly outlined in an employment contract.
If there’s an oral contract, it includes the parties' oral representations. Furthermore, if an employment contract is unwritten or only partially written, several terms may be implied under the common law.
An employment contract must meet the essential components of a binding agreement at common law and must not violate any applicable legislation to be enforceable. Offer, acceptance, and consideration must all come together to establish a legally enforceable contract.
The consideration in most employment contracts is the exchange of remuneration for work. Continued employment is often not adequate consideration, according to the courts, unless there is evidence that the employer planned to fire the employee if the post-hire agreement was not followed.
In Canada, employment contracts are scrutinized closely and void if they do not meet basic employment requirements, occupational health and safety legislation, or human rights legislation.
Fixed-term & open-ended contracts
In Canada, employment contracts are primarily drafted for an indefinite period. The employer can terminate such contracts by giving a month's notice by providing a reasonable explanation for such a termination. Or, the employer can serve a month's notice period and resign from the organization.
However, parties may agree to limit the employee's termination benefits to the bare minimums set by the labor act rules in Canada. The statutory notice time is generally much shorter than the standard notice period mandated by Canada’s labor law.
For contractual employment, the duration of the contract is mentioned in the employment contract. In this case, the employee might not have the right to terminate their employment.
However, suppose an employee continues to be employed after the contract ends or continues to be employed by the same employer under consecutive fixed-term employment contracts. In that case, a court might rule that it was an indefinite employment contract. Thus, it may necessitate the provision of notice of termination. Canada’s labor law may also set maximum time limits for fixed-term work contracts.
An employment contract will not include the probationary period that several companies might follow. Suppose you are willing to hire someone on a probationary basis. In that case, you must state in writing that employees are under probation, and you will assess their abilities before hiring them full-time. If an employee serves less than three months in your organization, they are not obliged to do the notice period. However, after three months of employment, the minimum notice required for the termination will apply. Any probationary period that lasts longer than three months must include a clear statement that the employee will be paid their statutory entitlements upon termination.
In compliance with the appropriate employment standards legislation, all employees must be given notice of termination or the entitled pay on termination.
An employee is entitled to a reasonable notice period under the standard law, which sets an approximate time it would take them to find equivalent work. Generally, an adjudicator examines the nature of the employment, the employee's length of service, age, and availability of other employment while determining the notice period.
A court may order a notice period lasting two to three months to twenty-four months. In extraordinary circumstances, it may grant a notice term of more than twenty-four months.
However, the parties may agree that the minimum applicable employment standards legislation (and not the common law) will determine employment termination.
Key Provisions of the Act
The employment act lays several provisions. The employers will have to make provisions for all the conditions listed in the employment act. Some of these provisions are:
Minimum Working Conditions
Each Canadian jurisdiction's employment standards establish basic legislative standards, or a "floor of rights," in areas such as minimum wages, working hours, overtime compensation, vacations and holidays, and leave of absences. Employees and employers cannot opt out of these rights unless they agree to more favorable conditions.
Employers must pay employees at least the minimum salary applicable by Canada’s labor law. The minimum salary in Canada ranges from $11.00 to $14.00 per hour, depending on the province. Even if employees are given a figure for salary rather than charging them for hours, the employer must ensure that their compensation meets the minimum wage corresponding to the number of hours worked.
Maximum Working Week
Generally, the maximum number of hours an employee can work is usually regulated by law. Such regulation establishes daily and weekly maximums, somewhere around 40 to 48 hours per week. In certain circumstances, the maximum hours worked may exceed, for example, when overtime is paid, when employees agree, or when an emergency scenario arises. Some jurisdictions in Canada have exclusive regulations allowing firms to use "compressed" four-day work weeks or "continental shifts" with 12-hour workdays.
Overtime pay is governed by each jurisdiction's employment standards legislation when an employee works more than hours. Both monthly or salaried and hourly employees are entitled to overtime pay. However, employees like managers, supervisors, and experts are excluded from this entitlement in most jurisdictions.
Health and safety in the workplace
All employers in Canada should be concerned about the health and safety of their employees. Each jurisdiction has unique health and safety laws, but they all have extensive and comprehensive authorities to investigate and sanction employers that fail to provide a safe working environment.
Businesses that refuse to abide by Canada’s labor law are likely to encounter the following problems:
- ~Employers may find themselves in court or before an employment tribunal and pay hefty legal bills.
- ~Employers who violate labor rules may be subject to fines and compensation.
- ~Bad publicity could harm the company's reputation, resulting in reduced sales and employees.
- ~Suppliers and stakeholders may be hesitant to work with the company.
Compliance Strategies for Employers
Employers must keep themselves informed about the numerous laws promulgated by HR to comply with Canada's Federal Regulations and employment laws. Repeated manager training to stay up to date on the nitty-gritty of Canada labor law, labor rules and regulations, and HR policies can assist firms in staying on top of legal employment difficulties.
How Can Multiplier Help?
Since Canadian labor laws are complex, establishing standard contracts, offer letters, etc., can get tricky. Thus, to alleviate the stress of hiring and compliance, it is a good idea to outsource these tasks to a dependable and respected partner. Additionally, your workers may be relieved of the burden of preparing labor documentation and executing periodic compliance audits.
When you work with Multiplier, our HR professionals will use best practices when hiring workers in the United States, allowing you to focus on your business without worrying about compliance issues. We can take care of all your employment needs - from sourcing to hiring, preparing employment contracts, and salary payouts.
Frequently Asked Questions
Is there any legal requirement for companies to set up work councils?
No, there is no such requirement for companies in Canada to set up work councils.
Is a verbal contract binding in Canada?
Yes, even verbal employment contracts are binding in Canada
Do I have to serve a notice period if I resign after months?
Any employee who has been employed with the company for more than three months will have to serve a notice period.