Canada Employment Law and Labour Relations

An employer in Canada will be governed by either federal or provincial employment and labour laws depending on the nature of its business.

The term “employment and labour laws” includes such things as employment or labour standards, human rights, labour relations, occupational health and safety, pay equity and workers compensation or workplace safety insurance laws.

Federally regulated employers include those involved in the following key areas: aeronautics, airlines, shipping and navigation, railways, banks, inter-provincial bus, trucking and transportation companies, telecommunications and atomic energy. in addition to these specific areas, if the work of employees is vital, essential or integral to a core federal undertaking, the employer will be federally regulated for employment and labour purposes. if the employer is federally regulated, the two primary employment and labour laws which will apply are the Canada Labour Code and the Federal Human Rights Act.

All other employers are provincially regulated for employment and labour law purposes and will be governed by the employment or labour laws of the provinces in which they operate. For example, if it has operations in Ontario and british Columbia, Ontario law will govern vis-à-vis those employees located in Ontario and british Columbia law will govern in respect of those employees located in british Columbia.

The Ontario Employment Standards Act in Ontario, the Employment Standards Act (the “ESA”) operates in conjunction with, but not in replacement of, the law of contract. the EsA applies to most employees in Ontario, although the regulations exempt certain categories of employees from specific provisions of the EsA (for example, hours of work, minimum wages, overtime pay, public holidays and vacation pay).

EsA standards include minimum requirements for notice and/ or certain payments upon termination of employment, payment of wages, work hours, paid vacation, public holidays, overtime pay, pregnancy and parental leave, family medical leave, organ donor leave, personal emergency leave and reservist leave. the EsA also provides for an internal mechanism for the enforcement of the prescribed standards. Non-unionized employees who feel that they have been denied any of the prescribed employment standards may pursue their statutory rights at little or no cost to themselves.

a) Public holidays and Vacation

The EsA outlines the specifics regarding employees’ entitlement to paid public holidays. Employees are entitled to public holiday pay so long as they have worked all of the regularly scheduled workdays preceding and following a public holiday (this is subject to the employer having “reasonable cause” not to pay). there is no minimum period of employment required in order to qualify for this entitlement and the employee need not have earned wages prior to the public holiday in order to benefit from this provision. in Ontario, the following days are public holidays: New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, labour Day, thanksgiving Day, Christmas Day and boxing Day (December 26). Employees are entitled to receive two weeks of vacation per year. Employees are also entitled to receive vacation pay in an amount equal to 4% of their annual wages. Annual wages include such things as non-discretionary bonuses, commissions and overtime pay, but would typically not include payments that are dependent on the discretion of the employer and that are not related to hours, production or efficiency.

b) Pregnancy, Parental, Family Medical, Organ Donor, Personal Emergency and reservist leaves

the EsA provides for seven types of unpaid statutory leaves. Pregnancy leave, Parental leave, Family Medical leave, Organ Donor leave, Personal Emergency leave, Declared Emergency leave and reservist leave are briefly described below.

Female employees who have been employed by their current employer for at least 13 weeks prior to the estimated date of birth of the child are entitled to an unpaid Pregnancy leave of up to 17 weeks duration.

In addition to Pregnancy leave, under certain conditions both parents are entitled to take unpaid Parental leave. unpaid Parental leave is available for employees who have been employed for at least 13 weeks prior to the birth (or in the case of adoptions, obtaining custody of the child). the employee is entitled to begin the leave no later than 52 weeks after the birth (or initial custody). Natural mothers who have taken Pregnancy leave must commence their Parental leave directly after their Pregnancy leave and are entitled to 35 weeks of Parental leave. Combined Pregnancy and Parental leave would therefore be for a maximum period of 52 weeks. Persons who have not taken Pregnancy leave (typically the father) are entitled to 37 weeks of Parental leave.

Any employee who obtains a certificate from a qualified health practitioner stating that a family member has a serious medical condition with a significant risk of death within the next 26 weeks, and who wishes to take a leave to provide care or support to that family member, will be entitled to unpaid Family Medical leave of up to eight weeks per incident.

An employee who has been employed for at least 13 weeks and undergoes surgery for the purpose of organ donation is entitled to up to 13 weeks of unpaid Organ Donor leave. An employee is entitled to extend the leave for a specified time if a legally qualified medical practitioner issues a certificate stating that the employee is not yet able to perform the duties of his or her position because of the organ donation and will not be able to do so for the specified time. the leave can be extended more than once, but the total period of extension must not be more than 13 weeks.

Employers who regularly employ 50 or more employees in Ontario must allow their employees to take up to 10 unpaid days per year as Personal Emergency leave if it is required. Personal Emergency leave can be taken for one of three categories of reasons:

  • a personal illness, injury or medical emergency;
  • the death, illness, injury or medical emergency of a family
    member or
  • an urgent matter concerning a family member

During any of the above mentioned statutory leaves, employees may be entitled to Employment insurance payments from the Federal Government. Furthermore, any employee who is on any of the seven above-mentioned leaves is also entitled to the following basic protections:

  • continued participation in most benefit plans (e.g., pension, life insurance, accidental death, extended health and dental plans) unless he or she elects not to continue in writing;
  • inclusion of the leave for the purpose of calculating length of employment, length of service and seniority under any contract of employment and
  • reinstatement to the position that the employee most recently had after the expiry of the leave, subject to a limited exception when employment ends solely for reasons unrelated to the leave (e.g., plant closure, true elimination of the position, etc.). in the event that the former position no longer exists, a comparable job with at least the same wages as the former job must be provided.

Minimum Wage

The EsA sets the minimum wage for most Ontario employees at $10.25 per hour as of March 31, 2010. there are numerous exemptions from the minimum wage requirements and several classes of employees have different prescribed minimum wage entitlements.

Hours of Work and Overtime

The EsA sets limits on the hours of work and provides for overtime pay entitlements. As with the other employment standards, there are certain exemptions from these provisions.

For the majority of Ontario employees, employers are not permitted to allow employees to work more than 48 hours in a work week, or more than eight hours in a workday (unless the employer has established a regular workday of more than eight hours). Generally, employees will be entitled to receive overtime of at least one and one-half times the employee’s regular rate for every hour worked in a week over 44 hours.

There are also legal rules which permit employees to enter into overtime averaging agreements with their employer as well as rules that allow an employer to apply to the government for excess hour approvals.

EsA-termination of Employment

The EsA prescribes minimum notice periods that apply to all employees in Ontario who have had more than three months of service with an employer. these are minimum requirements only, and, as noted below, the courts have a broad discretion to award damages for wrongful dismissal that will exceed the statutory minimums standards. the minimum length of notice required for an individual termination is determined by an employee’s length of service as follows:

Length of service Notice requirement

3 months but less than 1 year ……………….. 1 week
1 year but less than 3 years  ………………….. 2 weeks
3 years but less than 4 years …………………..3 weeks
4 years but less than 5 years …………………..4 weeks
5 years but less than 6 years …………………..5 weeks
6 years but less than 7 years …………………..6 weeks
7 years but less than 8 years …………………..7 weeks
8 years or more …………………………………….8 weeks

Although notice or pay in lieu of notice is not required where the termination is for cause (e.g., if the employee has been guilty of wilful misconduct or neglect of duty which has not been condoned by the employer), it is very difficult for an employer to successfully establish that the employee’s conduct was such as to preclude them from the statutory minimums.

The law on “mass” or “collective” termination applies to termination of 50 or more employees in Ontario in the same four-week period. Once this threshold is reached, the employer has additional obligations, such as giving special notice to the Ministry of labour as well as additional notice to the employees who will be terminated. in such circumstances, all employees, regardless of their length of service, are entitled to expanded notice, as follows:

Number of employees terminated Notice

50 – 199 8 weeks
200 – 499 12 weeks
500 or more 16 weeks

All employment benefits provided by the employer must be maintained during the applicable notice period. in addition to statutory notice, there are statutory requirements for the payment of severance pay to employees in circumstances where 1. 50 or more employees have their employment terminated by an employer in a period of six months or less and the terminations are caused by the permanent discontinuance of all or part of the business of the employer at an establishment; or 2. one or more employees have their employment terminated by an employer with a “payroll” in Ontario of $2.5 million or more.