Five Key Differences Between Canadian and U.S. Employment Law
1. Canadian Employment Law Is Largely a Provincial Matter, not a Federal Government Matter
In Canada, approximately 90% of the workforce is regulated by provincial governments. Each province regulates labor and employment matters in a similar, though not identical manner. The remaining 10% of the workforce is federally regulated. Unlike employers in the United States, there is no National Labor Relations Board governing the entire country’s unionized workforce. Likewise, hours of work and overtime are regulated (for 90% of the workforce) by the provincial government in the province where the employee is actually employed. The significance of this difference between Canada and the United States is that if your business has multiple locations in Canada, then each set of HR policies, employment agreements, etc. must be reviewed in regard to that jurisdiction’s particular laws. There are also nuances as to how similar governmental agencies in each different province approach the same issues (for instance, human rights tribunals may approach age discrimination claims differently, depending on whether the complaint arose in Alberta or in Ontario).
2. No At-Will Employment
In the United States, an employer may be able to terminate its employee "at-will." In Canada, unless there is a legal justification for the employee’s termination (or the employee has a written employment agreement specifying a termination package), the employer is obligated to provide reasonable notice or pay in lieu of notice. Practically speaking, it can be difficult to prove the legal justification to terminate an employee, resulting more often than not, in the Canadian employer providing a severance package to employees (whether for a plant closure, work performance issue, etc.). In certain Canadian jurisdictions, notably the federal jurisdiction, Québec and Nova Scotia, certain employees who have reached particular thresholds of years of service may not be discharged without just cause. In such jurisdictions, providing notice or pay in lieu of notice may not be
sufficient to end the employment relationship, and a qualifying employee may be able to claim a right to be reinstated in his or her employment depending on the circumstances of his or her termination.
3. Overtime-Exempt Positions
In Canada, the exemption of employees from overtime is governed by the applicable jurisdiction’s employment standards legislation. Generally speaking, unlike in the United States, the employer and employee cannot establish a policy or enter into a contract to determine whether overtime is payable. In Canada, unless the employee is employed in a supervisory/managerial capacity, or if his or her occupation is exempted (e.g., accountant or engineer) or if it falls into another exempted category, then the employer must pay overtime on all hours worked in excess of the statutory threshold.
4. Employees With Disabilities
Like in the United States, an employer is prohibited from engaging in discriminatory practices, unless it meets a stringent bona fide occupational requirement (BFOR). In Canada, the employer must accommodate a disabled employee. However, the level of accommodation is to the "point of undue hardship." This standard will vary depending upon the employee’s disability and the scope of the employer’s operations. Unlike in the United States where accommodation may have a low financial threshold before discharging this legal obligation, in Canada there are no prescribed compliance requirements. Each case is examined on its own merits. Human rights commissions will expect a large employer to examine the use of adaptive technologies or re-assignment of work duties among employees to determine if all solutions, short of undue hardship, are exhausted before exonerating an employer from its human rights obligation to accommodate a disabled employee.
5. Constructive Dismissal
In Canada, the employer constructively dismisses an employee if it changes a fundamental term of the employment relationship without the employee’s consent. A decrease in salary, reduction of hours and relocation of the employee are examples of what may be constructive dismissal. Because there is no termination-at-will in Canada, a constructive dismissal can be tantamount to actually firing an employee, and thereby triggering the obligation to provide a costly severance package.
Rachel Solyom of our Montréal office recently co-presented at the American Bar Association’s annual meeting in Chicago. Her presentation highlighted employment issues associated with buying and selling businesses.
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