Employment Law in Canada Is Employee-Friendly

BOSTON—When it comes to employee rights, Canada is a sunny place to be.

Mothers can take up to a year for paid maternity leave under the employment insurance regime, which pays up to 55 percent of their salary, said William Hlibchuk, an attorney with Norton Rose Fulbright in Montreal, to attendees of the Association of Corporate Counsel Annual Meeting on Oct. 20.

Additionally, employment is not at will.

In the province of Quebec, discrimination is prohibited based not only on race, color, sex, age, national origin, religion and disability, but also sexual orientation, civil status, political convictions, language, social condition (such as whether someone is poor) and family status, he added. Employees must be accommodated, as long as the accommodation does not pose an undue hardship to the employer, on each of these grounds. While employment law for most employers in Canada is based on provincial law, he said this provision was typical across Canada.

Provincial law predominates in Canada. Federal law only applies to interprovincial services, such as planes, trains, shipping and telecommunications, as well as radio, television broadcasting and banks, he noted.

Most provinces have laws setting human rights standards, labor relations rules, and occupational health and safety laws.

However, one way in which United States laws may be more stringent than Canada’s is that cities and localities do not enact employment ordinances in Canada, Hlibchuk observed.

Health care is not an issue for Canadian employers because the government provides it, noted Kim Madigan, vice president of human resources with Montreal-based Canadian National Railway Company, which offers the following integrated transportation services: rail, intermodal, trucking, freight forwarding, warehousing and distribution.

Termination

One of the primary differences between employment law in the United States and Canada is how terminations are handled.

A change in compensation or commission structures can be considered to be a termination in Canada, cautioned Alison Burton, assistant general counsel with Royal Bank of Canada in Toronto, which is the largest bank in Canada.

After a constructive discharge in Canada, employees can resign and sue, stay and accept the new terms, or they can keep working and sue. If they keep working and sue, the employer may pay these employees something additional to get them to accept the new terms.

Burton said that much litigation that would typically be resolved by a settlement agreement in the United States instead goes to court in Canada, as the costs of litigation aren’t as prohibitive in Canada as in the United States.

Also, Burton noted that she sees the same plaintiffs’ counsel over and over again. So if she settled too often, the plaintiffs’ bar would treat the defendant as having deep pockets, she remarked.

When an employer intends to dismiss a Canadian without cause, the employee is entitled to notice, Burton noted. The length of the notice is based on such factors as the employee’s age, compensation, length of service, the market conditions and whether the individual was induced to come work for the company. Basically, the notice time that must be given is connected to the expected amount of time it will take for the employee to land another job.

An employer may make a payment to the employee in lieu of providing this notice. The payment required can be steep, though, as much as two to four weeks of salary per year of service in Ontario as an example, Hlibchuk said.

Of course, there may be termination for cause as well, which may include discharge for:

• Absenteeism and delays.
• Insubordination.
• Theft, fraud or vandalism.
• Violence.
• Disloyalty.
• Willful misconduct.
• Disobedience.
• Willful neglect of duty.

Noncompete agreements are unenforceable in Canada, except in Quebec, Burton pointed out. Nonsolicit agreements, however, pass muster, as long as they are limited in time, place and the type of work.

In either case, these agreements should be like “a tailor-made suit,” Hlibchuk remarked.

Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.