I Introduction

Canada is a federal state consisting of 10 provinces2 and three territories.3 The form of government is a constitutional monarchy derived from the United Kingdom. The division of powers between the federal and the provincial governments under the Canadian Constitution4 is premised on having every possible subject matter fall under either exclusive federal or exclusive provincial jurisdiction.

The nature of the business carried on by an employer determines whether its relationships with its employees (whether unionised or non-unionised) are regulated by federal or provincial law. Most employers in Canada are provincially regulated. There is a relatively small number of industries that are federally regulated, including banking, navigation and shipping, railways, inter-provincial transport, air transport, communications and broadcasting.

Canada has two legal systems in civil matters. In Quebec, the Civil Code of Quebec (CCQ)5 governs the contract of employment between an employee and an employer. In all other provinces and territories, the common law governs the employment relationship between the parties. The differences between common law and civil law systems in Canada relate primarily to the creation and termination of individual employment relationships, as well as the enforceability of post-employment restrictive covenants.

In the federal jurisdiction, the Canada Labour Code6 (CLC) applies to federally regulated employers and sets forth minimum standards of employment. The Canadian Human Rights Act7 and the Employment Equity Act8 prohibit workplace discrimination and promote employment practices that benefit historically under-represented groups. Employment litigation in the federal jurisdiction may, depending on the circumstances and issues at stake, take place before the federal or provincial courts. However, complaints filed under the CLC will proceed before specialist labour adjudicators. Employees who are eligible to file complaints under the CLC may request reinstatement of their employment, among other remedies.

At the provincial level, each province has mandatory employment standards legislation that will apply to provincially regulated employers operating within its jurisdiction. Generally, employment standards that are regulated by provincial statutes will include, among others, wages, annual vacation, statutory holidays, termination notice requirements and hours of work provisions. Occupational health and safety legislation exists in all provinces, as do workers' compensation regimes that provide for assistance to workers who are injured while at work.

Employment litigation at the provincial level is usually conducted before the civil courts of each province, specialist labour tribunals or human rights tribunals.

Unionised employees at either the federal or provincial levels will generally be regulated by collective agreements that are subject, depending on the activities and operations of the employer, to federal or provincial labour laws. Grievances filed under collective agreements in Canada will generally be heard by specialist labour arbitrators, who usually have exclusive jurisdiction to decide on matters that are arbitrable under the collective agreement.

II Year in Review

Canadian employers were faced with many significant changes in 2019.

Important changes were introduced to the CLC, with the introduction of Bill C-65, which proposed amendments regarding workplace violence and harassment (including psychological and sexual harassment) in federally regulated workplaces.9 It is expected that the amendments set forth under Bill C-65 will come into force in 2020.

Additional changes will also affect the CLC as a result of the coming into force of two significant pieces of legislation: Bill C-63,10 which received royal assent in December 2017, and Bill C-86,11 which received royal assent in December 2018. These Bills result in several amendments to Part III of the CLC, setting out minimum labour standards for employees of federally regulated employers. Many of these amendments came into force on 1 September 2019, such that the entitlements of federal jurisdiction employees are now generally in line with the entitlements of provincial jurisdiction employees across Canada. In particular, these amendments include the following:

  1. federally regulated employers are now required to give their employees 96 hours' prior notice before the start of a new work schedule;
  2. expansion of entitlements to overtime pay;
  3. expansion of entitlements to break periods;
  4. employees with six consecutive months of continuous employment have a right to request a flexible work schedule relating to the number of hours, work schedule or work location;
  5. increases in vacation entitlements;
  6. increases in medical leave; and
  7. new categories of leave:
    • for personal reasons;
    • for reasons associated with family violence; or
    • to accommodate traditional aboriginal practices.

Provincial employment legislation was also the subject of important changes in 2019, including in the provinces of Alberta, Quebec and British Columbia.

Alberta's new Employment Standards Code was updated, effective 22 January 2019.12 The changes introduced were aimed at protecting workers under the age of 18. Under the new legislation, a director of employment may now issue permits for adolescents and children under 12 to be employed for artistic endeavours. The director may now also impose certain conditions on the employment of an individual under 18 years of age if the director deems it necessary to do so.

In Quebec, Bill 176 came into force on 12 June 2018,13 amending Quebec's Act Respecting Labour Standards.14 Several of the amendments set forth under Bill 176 came into force in 2019. Notably, since 1 January 2019, employees are entitled to three weeks of paid vacation after three years of continuous service with their employer (prior to this change, the requirement was five years of continuous service). Moreover, since 1 January 2019, employers in Quebec are now mandated by law to have psychological harassment policies in place for their personnel.

On 30 May 2019, Bill 8, the Employment Standards Amendment Act, was passed and brought forth several changes to the existing labour standards in place in British Columbia. Notably, collective agreements are now required to meet or exceed the entitlements under the Employment Standards Amendment Act, which include, but are not limited to, hours of work, overtime, statutory holidays and vacation time and pay. Bill 8 also enacted new unpaid leave of absence relating to the death of an immediate family member. It also modified certain provisions regarding the termination of employment during a resignation period.15 This legislation also increased wage recovery periods for employees, and now explicitly prohibits employers from withholding gratuities from their employees. Provincially regulated employers in British Columbia are also required to extend their record-keeping obligations by retaining certain employment records for four years.16

III Significant Cases

i Kativik School Board v. Association of Northern Quebec Employees17

This decision by the Quebec Court of Appeal examined the applicable criteria for managing employees with serious performance deficiencies, who were deemed incompetent. The Court of Appeal's involvement in the matter followed an arbitration ruling between the parties and a review by the Superior Court of Quebec, the latter in 2017, which cast doubt on the state of the law for dismissing incompetent employees.

Prior to the Superior Court's ruling, the applicable criteria for dismissing incompetent workers in Quebec were those stated in the Quebec Court of Appeal's 2005 decision in Costco Wholesale Canada Ltd v. Laplante (Costco).18 These criteria were composed of the following:

  1. The employee must be made aware of the company's policies and expectations in his or her regard.
  2. The employee's performance deficiencies must have been addressed with him or her.
  3. The employee must have received the necessary support to correct those deficiencies and achieve the required performance goals.
  4. The employee must have benefited from a reasonable period of time to meet the required performance goals.
  5. The employee must have been advised that dismissal was a possible outcome, should there be no improvement on his or her part.

The facts in the Kativik School Board case were as follows. At first instance, an arbitrator overturned the dismissal of an employee for incompetence, because the employer had failed to fulfil its obligation to reassign the employee to a less demanding position within the employer's organisation. The employer filed to contest this decision, arguing that the obligation to make reasonable efforts to reassign employees before terminating their employment was not part of the criteria established by the Court of Appeal in Costco. The arbitrator found that, under the circumstances, the employer had not fulfilled its duty to consider other possible outcomes, rather than termination of employment.

The Superior Court, after being seised on judicial review, took this one step further by stating that the employer had an obligation to find an alternative position for the incompetent employee. The employer appealed the Superior Court's decision.

The Quebec Court of Appeal dismissed the employer's appeal. The Court determined that in reaching its decision, the arbitrator had not sought to impose any systematic obligations on the employer to reassign the employee to an alternative position before terminating employment for administrative reasons. The Court added that the decision to dismiss an employee for incompetence is dependent on the applicable circumstances of the employment relationship. In this case, the Court found that it was not necessarily improper for a grievance arbitrator to rule that such a termination was unjustified where the employer had failed to identify any other available alternative positions.

The Court of Appeal thus clarified that the criteria established in Costco remained unchanged. Depending on the facts of the case, an employer may be required to make additional efforts, such as taking reasonable measures to find an employee a more suitable position within the organisation, prior to the termination of the employment relationship.

ii Heller v. Uber Technologies Inc19

In this decision, the Ontario Court of Appeal examined the validity of an arbitration clause within Uber's driver service agreement.

The plaintiff, a UberEATS driver, intended to file a class-action lawsuit against Uber for violating the provisions of the Ontario Employment Standards Act 2000 (ESA). Uber submitted that the class action was not receivable in Ontario because the arbitration clause in the driver service agreement signed by the plaintiff required that all disputes be submitted to mediation proceedings under the International Chamber of Commerce (ICC) Mediation Rules and this, pursuant to the laws of the Netherlands. The plaintiff argued that the arbitration clause was an attempt by the employer to contract out of the applicable standards imposed by the ESA and was therefore unlawful.

Uber was successful in having the proceedings stayed before the Ontario courts, until such time as the matter was dealt with through arbitration, in the manner set forth under the driver service agreement.

On 2 January 2019, the Ontario Court of Appeal granted the plaintiff's appeal and found that the arbitration clause was invalid for two reasons. First, the Court determined that the arbitration clause unlawfully deprived the plaintiff of the protection afforded by Section 5(1) of the ESA, which states that no employer shall contract out or waive an employment standard and that any such contracting out is void. Second, the Court ruled that the arbitration clause was unconscionable. In reaching this decision, the Court referenced the four criteria established in the Titus case,20 citing that the clause was unconscionable for the following reasons:

  1. The arbitration clause represented a substantially unfair bargain, requiring an individual with a small claim to pay significant fees to file an arbitration with the ICC.
  2. There was no evidence that the appellant had any legal advice prior to entering into the service agreement.
  3. There was a significant inequality in bargaining power between the plaintiff and Uber.
  4. Uber chose this arbitration clause to enhance its position to the detriment of its drivers.

On 23 May 2019, the Supreme Court of Canada granted Uber leave to appeal the decision of the Ontario Court of Appeal. It is expected that the Supreme Court's decision on the matter will be issued at some point in 2020.

iii Modern Cleaning Concept Inc v. Comité paritaire de l'entretien d'édifices publics de la région de Québec21

In this decision, the Supreme Court of Canada was asked to determine whether a franchisee performed services as an employee or as an independent contractor in accordance with the Quebec Act Respecting Collective Agreement Decrees (the Act).

The franchisor in question, Modern Cleaning Concept, operated a building maintenance services business that generally serviced public commercial or industrial buildings. Modern assigned building maintenance services contracts to its various franchisees, who were then responsible for performing the required cleaning and janitorial services.

As mandated by the Act, a parity committee had been established to ensure that the provisions of the Act were followed and to ensure compliance with certain labour standards relating to salary, work hours, vacation and overtime pay, among others. The parity committee was also tasked with representing building maintenance employees for claims against their employers.

In 2014, the parity committee filed legal proceedings against the franchisor, Modern, claiming more than C$9,000 in unpaid salary and other benefits on behalf of the franchisee. In defence, Modern submitted that the franchisee was an independent contractor and not a salaried employee. It took the position that the Act did not apply to independent contractors, who were exempt. The trial judge agreed with this position.

The Quebec Court of Appeal overturned the trial judge's decision. On appeal, the Supreme Court of Canada agreed with the Court of Appeal's position and determined that the relationship between the parties was in fact that of employer-employee. Judge Abella, speaking for the majority of the Supreme Court, stated in her decision that the presence of a franchise contract cannot be used to mask the true nature of the employment relationship. In this case, the Supreme Court ruled that the franchisee did not assume any risks relating to the franchisor's enterprise, that the franchisee was under the de facto control of the franchisor and that the franchisee was not given an opportunity to realise any profits, as his salary was limited to the value of the assigned service contract. The Supreme Court therefore determined that the franchisee was actually employed by the franchisor and thus subject to the provisions of the Act and the applicable labour standards arising thereunder.

In this decision, the Supreme Court restated the principle that determining the existence of an employment relationship rests heavily on the factual circumstances at play. The Court further expanded the possibility of employment relationships existing outside non-traditional settings, such as, in this specific case, that of a franchisor-franchisee relationship.

IV Basics of Entering INTO an Employment Relationship

i Employment relationship

There is extensive regulation of individual contracts of employment by both provincial and federal statutes that govern minimum standards of employment, which may not be contracted out of by the parties to the employment relationship.

Individual contracts of employment are often not in writing. That being said, it is generally recommended that they are in writing, particularly if the employer wishes to assert a right arising from the agreement (e.g., a termination clause or a restrictive covenant). Fixed-term employment agreements are permissible. Absent a sufficiently detailed fixed-term provision, employees will be considered to be employed for an indefinite period of time.

ii Probationary periods

Probationary periods are a common feature of most Canadian employment agreements. They may be determined by contract and generally range from three to six months in duration, although shorter or longer periods may exist. Most collective agreements in Canada will also include probationary periods. In the event that an employee is dismissed during the probationary period, and provided he or she is exempt from qualifying for statutory notice requirements, an employer will be able to terminate the employment relationship during the probationary period without financial consequences.

iii Establishing a presence

Foreign employers will generally be able to hire Canadian personnel, even if they are not registered to do business in Canada. In such a case, the employee's employment will be governed by the laws of the Canadian jurisdiction in which their work and duties are performed, notwithstanding the employer's lack of registration in Canada. The employee's compensation will be subject to applicable provincial and federal source deductions, which the employer will be required to remit.

V Restrictive covenants

Generally, it is implied that, during their employment, employees have a duty of loyalty and honesty towards their employer. Employees are also obliged to comply with the lawful directions of their employer within the scope of their employment, and to perform their employment with diligence and with an appropriate standard of skill and competency.

It is generally accepted that, absent a restrictive covenant, post-employment competition and solicitation by an employee is permissible. However, employers may protect their interests by resorting to written contracts of employment restricting certain post-employment activities. There are three general types of restrictive covenants used in Canadian employment contracts: non-solicitation covenants, which restrict departing employees from soliciting clients, customers, suppliers or other employees; non-competition covenants, which restrict departing employees from commencing employment with competitors or from setting up competing businesses; and non-disclosure covenants, which restrict departing employees from disclosing confidential information. In the absence of a non-disclosure covenant, employees still have a legal duty (whether under common law or civil law) not to disclose confidential information or trade secrets.

Restrictive covenants are viewed as a restraint of trade and will be approached by the courts with great scrutiny.22 The enforceability of non-competition covenants depends largely on their duration and geographical scope, the wording of the contract, the nature of the business and the legitimacy of the interests that the employer is seeking to protect. The law is clear in maintaining that a non-competition covenant must go no further than is reasonably necessary to protect the employer's legitimate proprietary interests. Should a non-competition covenant be viewed as excessive or overreaching, Canadian courts will be likely to strike the covenant in its entirety, rather than reduce or rewrite it to a lesser version.

VI Wages

i Working time

The employment standards legislation that exists in each Canadian jurisdiction sets forth rules governing working hours for employees. Certain jurisdictions provide for limits on the number of hours that can be worked per week or per day. In the federal jurisdiction and in Ontario, the weekly maximum for most employees is 48 hours of work per week and eight hours per day.23 Saskatchewan establishes a maximum of 44 hours of work per week.24 In Alberta, a daily maximum of 12 work hours is applicable.25

Meal and break periods are usually required after a specified duration of work. Generally, these break periods are without pay, although employees may be required to be compensated if they are not allowed to leave their work station. This is the case in Quebec, for example.26

ii Overtime

All Canadian jurisdictions have established thresholds for overtime pay eligibility. Although this legislation differs in detail from jurisdiction to jurisdiction, the standards that exist are generally similar.

Where permissible, employees may be required to work in excess of the statutory maximums but must be paid overtime, usually at one-and-a-half times their regular hourly rate.27 Not all employees are eligible for overtime. Managerial employees are almost always excluded,28 and certain jurisdictions exclude professional employees from overtime eligibility.29 In Quebec, employees may contractually agree to be exempt from overtime entitlement, provided they are paid an annual salary that is more than the minimum wage, do not record their hours of work and do not have an established hourly wage. In such a case, an appropriately detailed employment agreement is required to substantiate the employee's exclusion from overtime pay.

Certain Canadian jurisdictions allow for averaging agreements to be implemented, to avoid the triggering of overtime and hours of work thresholds under employment standards legislation.30 All jurisdictions have provisions in their employment standards or day-of-rest statutes requiring that employees be allowed at least one day off per week.31 In practice, a 40-hour, Monday-to-Friday working week is virtually universal in offices.

VII Foreign Workers

As a general rule, all persons who are not Canadian citizens or permanent residents require a work permit to work in Canada. The duration of work permits assigned to foreign workers will vary. A work permit is normally granted only if there is no qualified Canadian available to fill the position in question. This is usually done by way of a Labour Market Impact Assessment, which must demonstrate that the hiring of a foreign worker will not have a negative impact on the Canadian labour market.

However, there are several situations in which a work permit is unnecessary, or is much easier to obtain. For example, business visitors may enter Canada without the need for a work permit. In addition, certain international trade agreements32 to which Canada is a party facilitate the temporary entry of certain categories of workers who are nationals of one of the other Member States. Intra-company transferees who serve in senior executive, managerial or specialised positions, who are employed by a branch, subsidiary or parent of a company located outside Canada, may also be considered for temporary employment in Canada for a related Canadian company.

Generally, foreign workers who are able to lawfully work in Canada will be protected by applicable labour and employment laws.

VIII Global Policies

Comprehensive policies governing employment and labour relations are generally adopted by Canadian employers, particularly those with a large workforce. Employment policies are usually distributed in paper or electronic format, or are posted online or on company intranets. These policies are generally unilaterally imposed by employers, and Canadian employment laws usually do not require employee consultation or approval, except for unionised workplaces that are governed by collective agreements.

Internal discipline rules that are adopted in employment policies generally follow the progressive discipline approach, that is, to mandate a series of disciplinary measures leading to an eventual termination of employment (e.g., verbal or written warnings, suspensions or other forms of corrective action). Employment policies frequently include prohibitions against harassment, discrimination and workplace violence, and, in certain cases, respond to legislative requirements to have written policies and procedures relating to these types of workplace issues. Canadian employers are not usually required to file employment policies with government authorities.

IX PARENTAL LEAVE

Employees across all Canadian jurisdictions have entitlements that apply for maternity and parental leaves, which typically provide for time off work for birth parents and adoptive parents of a newborn child. The duration of these leaves differ between the jurisdictions. For example, in Ontario, pregnant employees may take up to 17 weeks of maternity (pregnancy) leave, followed by up to 61 weeks of parental leave. Employees in Ontario who have given birth but who have not taken maternity leave may receive up to 63 weeks of parental leave. In Quebec, 18 weeks of maternity leave is offered, with an additional 52 weeks of parental leave. Employees may be eligible for extended maternity or parental leave, in circumstances in which the medical condition of the child or the birth parent is compromised. Paternity leave for a period of five consecutive weeks is offered to the birth parent of a newborn child in Quebec.

Maternity, parental and paternity leaves are generally unpaid. However, employees in Quebec may qualify for government-provided benefits from the Quebec Parental Insurance Plan. Employees in other Canadian jurisdictions may qualify for benefits provided by the federal government.

X Translation

Canada has two official languages, English and French. Quebec, which is predominantly French-speaking, recognises French as the official language of the state. The Province of Quebec's Charter of the French Language33 contains provisions that require Quebec-based employers to make written communications to their staff, and to provide offers of employment or promotion, in French.34 Collective agreements for unionised employees in Quebec must be drafted in French.35 However, employment agreements and collective agreements may be translated into a language other than French, provided that the parties to these agreements both agree. This is important as employers in Quebec are generally prohibited from imposing English-language employment agreements without the employee's consent.

The Charter also requires employers in Quebec to implement the use of French in the workplace (francisation). Depending on the size of the workforce, Quebec-based employers may be subject to francisation requirements, which are aimed at promoting the widespread use of French in the workplace. Francisation requirements under the Charter generally commence once the employer has reached the 50-employee threshold.36 The Charter also affords protection to workers, notably by prohibiting employers from demanding language skills other than French for employment, unless the duties of the position require knowledge of a second language.37

XI Employee Representation

All Canadian jurisdictions recognise by statute the right of trade unions to organise and represent employees, and to engage in collective bargaining. Collective bargaining consists of negotiations between an employer and a group of employees regarding the terms and conditions of employment. The result of collective bargaining is a collective agreement.

Provincial and federal labour legislation includes provisions that grant exclusive bargaining rights to certified trade unions that postpone the right to strike or lockout until after the expiry of a collective agreement, prohibit unfair labour practices, recognise and enforce collective agreements, and provide for the resolution of disputes through arbitration.38 While the precise nature of these provisions varies from jurisdiction to jurisdiction, these features are common to all Canadian jurisdictions.

Employees have the right to belong to a trade union of their choice, free of any coercion or interference by the employer. Employers have a duty to recognise and bargain in good faith with the trade union chosen by their employees.39 Labour relations tribunals supervise the organisation of employees and, to some extent, the collective bargaining process.

Employers and employees have different rights and obligations under a collective agreement than under individual contracts of employment, where there is no trade union. The right to notice under the common law (or the CCQ) prior to termination does not exist for unionised employees. However, statutory requirements under employment standards legislation are usually required.

Union certification procedures vary widely across Canadian jurisdictions. Certain jurisdictions certify trade unions on the basis of signed membership cards, while others require secret ballot votes prior to certification.40 In the event a secret ballot vote is required, Canadian jurisdictions have varied thresholds for unionisation to occur. Certification votes are generally supervised by a labour relations board, and usually take place within a relatively short period (varying from several days to more than a week). Remedial certification (e.g., in the event of an unfair labour practice) is possible in some, but not all, jurisdictions.41

XII Data Protection

i Requirements for registration

Canadian law provides for privacy legislation in both the private sector and the public sector. Depending on the jurisdiction in which they operate, private sector employers in Canada are subject to either federal or provincial legislation governing the collection, use and disclosure of personal information.

The federal Personal Information Protection and Electronic Documents Act42 (PIPEDA) applies to federally regulated employers, as well as provincially regulated employers that operate in provinces and have not adopted substantially similar privacy legislation. To date, Quebec, Alberta and British Columbia have enacted personal information legislation, which has been recognised as substantially similar to PIPEDA.43 In 2013, Manitoba passed private sector privacy legislation that is not yet in force.44 It has not yet been determined whether this legislation is substantially similar to PIPEDA.

In addition to PIPEDA and provincial legislation dealing specifically with the collection, use and disclosure of personal information in the private sector, employers may have additional statutory privacy obligations. For example, several provinces have enacted legislation, such as the British Columbia Privacy Act,45 which makes it an actionable wrong for one person, wilfully and without claim of right, to violate another's privacy. In Quebec, the CCQ and the Quebec Charter of Human Rights and Freedoms46 provide for additional privacy obligations.

ii Cross-border data transfers

Canadian privacy legislation addresses the notion of cross-border data transfers. In this regard, the transfer of personal information outside Canada must be disclosed in an employer's privacy policy, to meet the openness and safeguarding principles that apply to PIPEDA and similar privacy legislation. Further, employees whose personal information is collected must be informed of the transfer to any foreign entities and must be provided with appropriate contact information for obtaining details on the privacy obligations of those entities. While this has been held to exist as an implicit requirement in privacy legislation across Canada, it is made explicit in Alberta's Personal Information Protection Act, which also differs from other Canadian privacy law in that it imposes specific breach notification obligations on organisations.

iii Sensitive data

Under all Canadian privacy legislation, personal information is broadly defined as 'information about an identifiable individual', with certain exclusions. Sensitive data that would generally fall under the ambit of 'personal information' in Canadian privacy legislation would include, in particular, financial information, medical information, educational history, union membership or information relating to an employee's family background.

iv Background checks

The validity of background checks varies greatly across Canadian jurisdictions. Generally, employers may perform a background check on prospective employees; however, certain jurisdictions limit criminal or credit checks. Human rights legislation and privacy legislation across the jurisdictions will limit the use of criminal or credit background check results, even if these types of background checks are permitted. Employee consent to background checks is almost always preferred, if not required in most Canadian jurisdictions.

XIII Discontinuing Employment

i Dismissal

In the absence of an express agreement regarding the consequences of termination, the law holds that employees who are dismissed without cause (without 'serious reason' in Quebec) are entitled to reasonable notice of termination of employment, and may recover damages if no such notice is given. In providing reasonable notice, an employer may require the employee to continue to work through the notice period (working notice) or may provide pay in lieu of working notice. All employment standards statutes contain minimum periods for notices of termination and, if applicable, severance pay. Employers will generally be required to provide employees with both statutory notice of termination and notice of termination under the common law or the CCQ. The duration of common law or CCQ notice that is reasonable is determined by the circumstances of each case (reasonable notice). The courts will usually take into account the employee's age, position, length of service, overall compensation and the availability of similar employment, among other factors.

Written employment contracts may also contain an express provision that specifies the amount of notice that will apply to a termination without cause. However, these provisions may not always be enforceable before the courts, depending on the jurisdiction, drafting and content of the clause.47 In particular, such a provision will not be enforceable where the notice period is less than that to which the employee would have been entitled under the applicable employment standards legislation, where the clause otherwise fails to provide an employee with minimum statutory entitlements, or where it is too vague or ambiguous. If a termination provision in an employment contract is unenforceable, the reasonable notice entitlement under the common law or the CCQ will apply and the employee will be entitled to reasonable notice based on the factors described above.

Only where just cause for termination exists can an employee be summarily dismissed without notice. The Supreme Court has recently confirmed that federally regulated employers are not permitted to terminate employment of non-managerial employees under the CLC, unless there is just cause, with certain exceptions.48

What constitutes just cause varies greatly, although theft, gross misconduct and insubordination would generally qualify. It is advisable for an employment contract to provide a non-exhaustive list of examples of what would constitute just cause. In addition, Canadian law recognises the notion of constructive dismissal, in such cases where an employer has made one or more substantial changes to the essential terms of an employee's employment. Examples of constructive dismissal may include, in particular, significant changes to an employee's compensation, a significant reduction in the employee's duties or responsibilities, a demotion to a more junior position or a significant change to the employee's hours of work. In such a case, an employee may assert a claim of constructive dismissal and allege that the changes are tantamount to an outright dismissal by the employer.

A dismissed employee who is not unionised may bring an action before the civil courts alleging an unjust dismissal. In the federal jurisdiction, Quebec and Nova Scotia, employment standards legislation allows certain employees with a specified length of service to have their dismissals adjudicated by an arbitrator. In those cases, reinstatement is generally an available remedy.49

A unionised employee can generally request that the union bring a grievance contesting the dismissal under the collective agreement. This grievance will be heard by an arbitrator or a board of arbitration. If the dismissal is found not to be made for just cause, then the employee will be reinstated, normally with full back pay. Should the arbitrator find that a period of suspension was warranted, the amount of back pay will be adjusted accordingly.

Upon termination of employment, whether for cause or without cause, employers are required to report the employee's interruption in earnings to the federal government. If eligible, employees may receive employment insurance benefits following a termination of employment. Generally, dismissals for just cause will disentitle an employee for such benefits.

It is common across Canadian jurisdictions for employers to enter into settlement agreements with employees following a termination of employment, particularly in the case of a without-cause termination. In such a case, the terms of the settlement agreements are usually kept confidential between the parties, except where disclosure is permitted by law or for some other specific reason agreed to by the parties.

ii Redundancies

Terminations made for economic reasons (i.e., redundancies) are permissible across Canadian jurisdictions. In these circumstances, the termination of employment is considered to have been made on a without-cause basis and the employee will be entitled to the notice requirements specified in Section XIII.i. When a mass termination has been triggered, the employer may be required to provide longer periods of statutory notice, and there may be an obligation to report the mass termination to a government entity. The criteria applicable to a mass termination will vary depending on the jurisdiction.

Temporary lay-offs (without severing the employment relationship) are used by many Canadian employers, particularly where the employer's activities are seasonal in nature or there is a lack of work. Statutory notice requirements that apply to temporary lay-offs will vary from jurisdiction to jurisdiction.

XIV Transfer of Business

Canadian jurisdictions have all adopted successor-rights provisions that make a union certification and a collective agreement binding on the purchaser. The tendency among Canadian labour relations boards has been to require the transfer or sale of all or part of a going concern, as opposed to a sale or transfer of assets. Labour boards have emphasised that what constitutes a going concern will vary from industry to industry and that each case will be determined by its specific facts.

Successor rights concepts applied in the labour relations context have only limited relevance for individual employment. Where a business is sold or otherwise disposed of, employment standards legislation typically deems employment to be uninterrupted for the purposes of applying minimum employment standards that depend on length of service. This employment standards legislation has been broadly interpreted, so that rights acquired by employees cannot readily be circumvented by the new employer.

XV Outlook

Canadian employers will be monitoring various legislative changes that are expected to move into force during 2020. These include, for example, amendments to the CLC that apply to workplace harassment and violence rules, modifications to existing procedures for unjust dismissal complaints, restrictions that apply to temporary employment agencies and changes to the mass (group) termination provisions under the CLC. In addition, Canadian employers will be reviewing the federal government's introduction of pay transparency rules that will require federally regulated employers in the private sector to list salary rates for designated employees. Finally, it is expected that the federal Pay Equity Act (which was passed in December 2018) will be proclaimed in force at some point in 2020. Under that Act, federally regulated employers with more than 10 employees will be subject to pay equity requirements, which will include, in particular, putting a pay equity plan in place.


Footnotes

1 Robert Bonhomme and Michael D Grodinsky are partners at Borden Ladner Gervais LLP. The authors acknowledge the valuable contributions of Vanessa Lapointe, associate at Borden Ladner Gervais LLP, in the preparation of this chapter.

2 British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador.

3 Nunavut, Yukon and the Northwest Territories.

4 Constitution Act, 1867, 30 & 31 Vict, C 3, Sections 91 to 92.

5 1991, c. 64.

6 RSC, 1985, c. L-2.

7 RSC, 1985, c. H-6.

8 SC, 1995, c. 44.

9 An Act to amend the Canada Labour Code (harassment and violence), the Parliamentary Employment and Staff Relations Act and the Budget Implementation Act 2017.

10 Budget Implementation Act, 2017, No. 2.

11 Budget Implementation Act, 2018, No. 2.

12 RSA, 2000 c. E-9.

13 An Act to Amend the Act Respecting Labour Standards and Other Legislative Provisions Mainly to Facilitate Family-Work Balance.

14 Act respecting Labour Standards (Quebec), RSQ, c. N-1.1.

15 Under the new legislation, an employee is entitled to the lesser of the wages the employee would have earned during the resignation notice they provided, or the pay in lieu of the notice termination the employee is entitled to under the Employment Standards Amendment Act.

16 These records include payroll records, averaging agreements as well as agreements regarding special workplace clothing and statutory holidays.

17 Commission Scolaire Kativik v. Association des employés du Nord québécois 2019 QCCA 961.

18 2005 QCCA 788.

19 2019 ONCA 1.

20 Titus v. William F. Cooke Enterprises Inc., 2007 ONCA 573.

21 2019 SCC 28.

22 Courts in certain jurisdictions, such as Ontario, have greatly limited the use of non-competition covenants. Other jurisdictions, such as Quebec, have recognised the validity of non-competition covenants, provided the covenants meet the applicable criterion (Civil Code of Quebec [CCQ], Article 2089) and are not used where an employee has voluntarily resigned or employment has been terminated without serious reason (CCQ, Article 2095).

23 Section 17 of the Ontario Employment Standards Act 2000, SO 2000, c. 41, and Section 169 of the Canada Labour Code [CLC].

24 Section 2-12 of the Saskatchewan Employment Act, SS 2013, Section S-15.1.

25 Section 16 of the Alberta Employment Standards Code, RSA c. E-9.

26 Section 79 of the Act respecting Labour Standards (Quebec).

27 See, for example, Section 55 of the Act respecting Labour Standards (Quebec).

28 See, for example, CLC, Section 167.

29 See, for example, Section 2 of the Nova Scotia General Labour Standards Code Regulations, RSNS 1989, c. 246.

30 See, for example, Section 53 of the Act respecting Labour Standards (Quebec).

31 See, for example, Section 18 of the Ontario Employment Standards Act 2000.

32 For example, the North American Free Trade Agreement or the Canada European Union Comprehensive Economic and Trade Agreement.

33 RSQ, c. C-11.

34 id., at Section 41.

35 id., at Sections 43, 44 and 50.

36 id., at Section 135 et seq.

37 id., at Sections 45 and 46.

38 See, for example, the Quebec Labour Code, c. C-27, or the Labour Relations Act (of Manitoba), CCSM c. L10.

39 See, for example, Section 17 of the Ontario Labour Relations Act 1995, SO 1995, c. 1, Sched. A.

40 British Columbia, Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario and Saskatchewan all require secret ballot votes before a trade union can be certified. Alberta, Quebec, New Brunswick, Prince Edward Island and the federal jurisdiction all permit union certification on the basis of signed membership cards.

41 See, for example, Section 11 of the Ontario Labour Relations Act 1995, SO 1995, c. 1, Sched. A.

42 SC 2000, c. 5.

43 The Personal Information Protection Act (British Columbia), SBC 2003, c. 63, the Personal Information Protection Act (Alberta), SA 2003, c. P-6.5, and the Act respecting the Protection of Personal Information in the Private Sector (Quebec), RSQ c. P-39.1.

44 The Manitoba Personal Information Protection and Identity Theft Prevention Act, CCSM c. P33.7.

45 RSBC, 1996, c. 373.

46 RSQ, c. C-12.

47 See, for example: Wood v. Fred Deeley, 2017 ONCA 158; Roden v. Toronto Humane Society, O.J. No. 3995 (Ontario Court of Appeal). In Quebec, Article 2092 of the CCQ states: 'The employee may not renounce his right to obtain an indemnity for any injury he suffers where insufficient notice of termination is given or where the manner of resiliation is abusive.'

48 Wilson v. Atomic Energy of Canada Inc, 2016 SCC 29.

49 Section 124 of the Act respecting Labour Standards (Quebec), Section 240, CLC and Section 71 of the Nova Scotia Labour Standards Code, RSNS, 1989, c. 246.