For U.S. employers who are new to Canada – whether buying a Canadian company or establishing a new location in Canada – it may come as a surprise how different Canadian HR compliance requirements are from those in the United States. While it is true that employers’ legal obligations grow as they hire more employees, many Canadian employment law requirements are triggered as soon as an employer hires one employee.
In this article, I review 10 key Canadian HR compliance issues that American employers should keep in mind when setting up shop in Canada.
1. Federal vs Provincial Employment Laws
Like the U.S., Canada has a federal regime that allocates certain powers between federal and provincial legislatures. However, Canadian employers are either federally or provincially regulated, based on the nature of their business. Most Canadian employers are provincially regulated. Federal employment laws (e.g., the Canada Labour Code) apply to a “federal work, undertaking or business” such as shipping, airlines, railways, telecommunications, broadcasting, banking and interprovincial trucking.
So, for the most part, U.S. employers that have Canadian operations are subject to provincial employment laws. These laws vary considerably from one province to the next. Even if a U.S. employer only has operations located in one province, they may find that they are subject to laws of several jurisdictions if they have employees working remotely across Canada. This is because employees are typically governed by the legislation in the province where they work.
2. Termination of Employment
The laws related to termination of employment are quite different in Canada, as compared to the United States.
First, there is no “employment at will” in Canada. Under Canadian “common law” (or judge made law), employees have a right to “reasonable” notice or pay in lieu of notice if they are terminated without cause. Since the common law relies on prior court decisions, there are no hard and fast rules specifying how much notice will be required. However, employers may estimate that their employees will be entitled to one month of notice for each year of service. (In the past this estimate was subject to a maximum of 24 months, but some recent court decisions have exceeded this cap in certain circumstances.)
In addition to the common law, the employment standards legislation in each province sets out minimum standards respecting termination of employment, entitling employees to minimum notice or termination pay. The amount of notice varies depending on years of employment. Ontario employees may also be entitled to “severance pay” if they meet specified criteria.
Finally, most provinces have special notice requirements in place for mass terminations. The threshold, or trigger, for having to provide notice of a mass termination varies between jurisdictions, but there are three considerations in determining the applicable threshold:
- the number of employees being terminated
- the time period in which the terminations are taking place
- the location of the employees who are being terminated.
For more details on group terminations, see our earlier post: Mass Termination – 3 Special Considerations.
3. Leaves of Absence
In Canada, employees are entitled to many different leaves of absence under employment standards legislation. The eligibility period for these leaves may be shorter and the length of these leaves may be longer than is typically the case in the U.S.
Frequently, employees seeking a leave of absence simply know that they need some time off due to a pregnancy, illness, death or other personal event. So, it is important for HR professionals to understand the different types of leaves of absence, when employees are eligible, the scope of the leave, whether it is paid or unpaid, and rights during and after a leave of absence. For a review of these issues, see our Guide to Leaves of Absence in Canada.
Another thing to note is that the federal government facilitates certain leaves of absence by providing benefits through its Employment Insurance Act (EI). This includes up to 76 weeks of benefits for pregnancy and parental leave. More recently, the federal government increased EI sickness benefits from 15 to 26 weeks. This may, in turn, encourage provinces to increase the length of unpaid sick leave to which employees are entitled. Ontario has already announced consultations on this very issue.
4. Protection from Discrimination
Canadian human rights legislation protects employees (and prospective employees) from discrimination on a broad range of prohibited grounds. While prohibited grounds may vary somewhat from one province to the next, every jurisdiction includes the following:
- Race
- Colour
- Ancestry
- Nationality or national origin
- Religion
- Age
- Sex
- Sexual orientation
- Gender identity
- Marital status
- Family status
- Disability
Some jurisdictions may also include additional protections from discrimination (e.g., criminal or summary conviction, political belief, genetic characteristics). For the full list, see our earlier post.
Employees can file complaints with human rights tribunal, which have broad powers including to reinstate employees and award monetary compensation. Failing to comply with human rights legislation can lead to possible fines or complaints. For example, in many jurisdictions, it is an offence to contravene the Act and if you are guilty of an offence, you can be liable to a fine. In Ontario, for example, you can be fined up to $25,000 if you are found guilty of an offence.
5. Pay Transparency
Pay transparency is a hot topic in Canadian HR compliance, with strong public support. A recent study found that 84% of Canadians would support pay transparency laws. Governments across Canada – including Nova Scotia, Newfoundland and Labrador, Prince Edward Island and British Columbia – have responded by passing legislation in this area.
Generally, pay transparency legislation requires employers to disclose pay information in public job postings, and prohibits them from asking workers about their wage history. Some jurisdictions, like B.C., go a step further and require employers to file pay transparency reports (i.e., disclosing gender-based wage gaps) .
While Ontario appeared to be reluctant to enact pay transparency legislation passed by a previous government, it recently introduced amendments to increase the transparency of the hiring process. In addition to requiring employers to disclose expected compensation in any public job ads, they will have to indicate whether any AI tools were used to screen, assess or select applicants for a position.
Imposing new transparency obligations on employers or preventing employers from concealing certain information seems to be popular. We expect to see a continuing emphasis on pay transparency obligations in 2024. In particular, U.S. employers with Ontario-based employees should watch for new requirements.
6. Accessibility
Currently, only Ontario and Manitoba have robust accessibility laws, which apply to the private sector. British Columbia, Newfoundland and Labrador, Nova Scotia and Saskatchewan have passed similar Acts, but, so far, these provinces are focusing on the public sector.
Ontario’s Accessibility for Ontarians with Disabilities Act, 2005 (AODA) is the most detailed accessibility legislation governing the private sector in Canada. The AODA’s accessibility standards require all Ontario organizations to meet certain requirements with respect to employment, customer services, information and communications, transportation and the built environment.
For example, the Ontario accessibility standard regarding employment requires all employers with Ontario employees to:
- integrate accessibility into hiring processes
- provide employee accessibility training
- take into account employee accessibility needs and individual accommodation plans
- develop policies governing how they achieve or will achieve accessibility.
Additional obligations apply to Ontario organizations with 50 or more employees. This includes requirements to document their accessibility commitment through a multi-year accessibility plan, and regular reporting on their compliance with applicable accessibility standards.
U.S. employers should watch for expanding accessibility obligations across Canada, which may mirror Ontario.
7. Statutory Holidays
Entitlement to statutory or public holidays is an area of Canadian HR compliance, which may appear similar to the U.S. However, the list of Canadian holidays is somewhat different, as are some of the rules to consider. Generally, employees are entitled to paid time off on a statutory holiday, but there are several questions to ask when determining an employee’s entitlement.
- Which statutory holidays apply at your workplace? The legislation of the province where your employees work must recognize the statutory holiday in order for employees to be entitled to a day off with pay. See our chart summarizing which public holidays are recognized in each province.
- Is an employee eligible for holiday entitlements? Most provinces set out certain requirements that must be met by the employee in order for them to qualify for public holiday pay (e.g., working on regular work days immediately before and after the holiday). And certain occupations and industries are subject to special rules or are exempt from these rights altogether.
- Does the holiday fall on an ordinary working day? When a public holiday falls on a regular working day, employees are generally entitled to have that day off with pay. Otherwise, most provinces require employers to provide a substitute day off with pay.
8. Workplace Harassment & Violence
Protecting employees from workplace harassment and violence is an important component of Canadian HR compliance.
Generally, workplace harassment refers to objectionable comments or conduct against a worker that can be reasonably expected to be unwelcome or to cause offence, humiliation or injury. This may include bullying, sexual harassment or harassment related to a protected ground under human rights legislation.
Workplace violence tends to mean threatened, attempted or actual conduct that causes or is likely to cause physical (and in some jurisdictions, psychological) injury or harm. Certain provinces (e.g., Alberta, New Brunswick and Ontario) specify that this may include domestic violence in the workplace.
To protect employees from workplace harassment and violence, most provinces require employers to:
- conduct an assessment of the workplace
- develop policies and procedures in consultation with their health and safety committee or representative (as applicable)
- provide employee training
- warn employees about potential threats of violence
- investigate any complaint of workplace harassment or violence.
For further details, see our workplace harassment and violence guide.
9. Mandatory Employee Training
Another important aspect of Canadian HR compliance is employee training, with every jurisdiction in Canada mandating certain training requirements. Generally, such training must be provided during working hours or employees must otherwise be paid for training time.
While employee training requirements may vary from one province to the next, all jurisdictions require employers to provide certain health and safety training to employees. This may include training on harassment and violence, first aid and ergonomics. Many provinces also require special health and safety training for new or young workers, supervisors and health and safety committees.
As noted above, Ontario and Manitoba have accessibility legislation, and both provinces mandate certain training. Ontario, employers must provide training on accessibility standards and the Human Rights Code (as relates to persons with disabilities) not only to employees, but also to volunteers. Manitoba requires employers to provide accommodation training to persons who are responsible for hiring, supervising, training, promoting or terminating employees, as well as those who develop and implement the employer’s policies and practices.
For more information on employee training, see our Guide to Mandatory Employee Training.
10. Quebec Employment Laws
Even within a country where many HR laws vary from province to province, Quebec is known to have unique employment laws. However, the biggest difference is likely its French language laws, which are triggered as soon as an employer hires one employee in Quebec.
Under the Charter of the French Language (the Charter), employees working in Quebec have long had the right to work and communicate in French, but 2022 amendments expanded and bolstered many employee rights.
- Employee communications (e.g., offers of employment/transfers/promotions, employment contracts (except where agreed otherwise), application forms, and training documents) must be provided to Quebec workers in French.
- Employers cannot make knowledge of a language other than French a job requirement, except where the nature of the job’s duties requires knowledge of another language. The 2022 amendments made it more difficult for employers to use this exception.
- Employees who only speak French or require a French language law to be respected are protected from discrimination and harassment.
- Employers cannot take any reprisals (e.g., dismissal, demotion, transfer) against an employee in response to a French language entitlement under the Charter.
For more information on French language laws, including a review of additional requirements applicable to employers with a group of Quebec employees, see our earlier article.
How can U.S. employers simplify Canadian HR compliance?
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