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Employment in Canada

Canadian employment law appears complex and confusing when looking from outside view although in some ways there are many similarities to other countries. Other factors that complicate matters include the differences between laws at the federal and provincial level, and the requirements will vary depending on the industry.  For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Canada.

Key points on employment in Canada

There are several key areas to be aware of within Canada’s employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department. These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the Canadian laws and rules for both Canadian employees as well as foreign nationals.

Employment standards in Canada provide a set of minimum standards by law for work conditions. Both the federal and provincial governments have authority over labour and employment law in Canada. The constitution gives the federal government exclusive jurisdiction over specific industries, including banking, radio and TV broadcasting, inland and maritime navigation and shipping, inland fishing, as well as any form of transportation that crosses provincial boundaries. Other industries are governed by the laws of the province.

Foreign companies entering Canada should take note that Canadian salaries may be quite high. The average salary in Canadian dollars has risen by around 18 percent since 2007. This rise, in combination with the strengthening Canadian dollar, has pushed the average salary in Canada higher than in the UK, the USA and most of Europe.

Visit the Canadian government website for labour laws

Official sites for local employment laws are also hosted per province. For example, visit Ontario’s labour website here.

Canada has both federal and provincial levels of law, thus there may be differences per the city you are doing business in. The following information should be considered as a broad and general guideline, and legal advice is recommended should you require further help. Following is a general summary of some of the more relatively distinctive aspects of Canadian employment law.

Employee Entitlements

Information Explanation
Working on Sundays ?

An employee of a retail business who was hired before September 4, 2001 has the right to refuse to work on Sundays.

If an employee has agreed to work on Sundays, whether or not the agreement was made when he or she was hired, the employee can later decline to work on a Sunday by giving the employer at least 48 hours’ notice before the employee’s work was to begin.

An employee of a retail business who was hired on or after September 4, 2001 does not have the right to refuse to work on Sundays if he or she agreed in writing at the time of being hired to work on Sundays, unless he or she is refusing to work on Sundays because of religious belief or observance (in which case the employee must give the employer notice before the Sunday at least 48 hours before the Sunday work was to begin). Note that if a Sunday falls on a public holiday, the employee could refuse to work on the day, even if he or she had agreed at the time of hire to work on Sundays.

An employee who did not agree in writing at the time of being hired to work on Sundays may agree at some later point to work on Sundays or on a particular Sunday. In that case, the employee could subsequently decline to work the Sunday(s) by giving the employer at least 48 hours’ notice before the employee’s work was to begin.

Disclosure and Confidentiality of Personal Information ?

Employers and employees are often subject to privacy laws in Canada, one of which is the Privacy Act, which applies to employee information in federal government institutions and the Personal Information Protection and Electronic Documents Act (PIPEDA) applies to employee information in federal works, undertakings and businesses.

It is considered an employer’s responsibility to safeguard employee data. Policies and procedures, in particular, should be put in place in reference to the methods they currently use to collect, use and disclose personal information, and make the proper determinations in relation to what is reasonably required for the purpose of establishing, managing, or termination an employee relationship.

Employee Protection and Anti-discrimination Rights ?

Most employees have the right to refuse work that they feel is unsafe to themselves or another worker or believes they are endangered by workplace violence or harassment

Time Off Work ?

Almost all employees have a legislative right to unpaid or paid time off work for the following reasons:

  • Bereavement
  • Citizenship
  • Compassionate care
  • Jury duty
  • Leaves for family situations
  • Maternity (pregnancy), parental, paternal, adoption and child care l Organ donor
  • Reservist
  • Sick
  • Voting
  • Wedding
Medical Leave ?

Not all jurisdictions have legislation in place relating to sick leave. Those do not have legislation in place rely on employer sick leave policies or general/emergency leave provisions in their legislation to cover individuals who are absent due to illness.

Employment Termination

Information Explanation
Resignation / End of Service Payment ?

An employer must either give the employee a period of notice, or pay the employee wages in lieu of the notice period to an employee who has been continuously employed for 3 months (or 90 days) or more, depending on the jurisdiction.

Termination of Employment ?

All employers must complete a Record of Employment (ROE) when an employee experiences an interruption of insurable earnings. The employer must provide a copy to Service Canada, the employee and retain copy with the employee’s records.

The ROE can also be completed online either through Service Canada or through a payroll service provider where the electronic copy is automatically led with Service Canada and the employee can access their copy on Service Canada’s website.

Outsourcing Employment Through a GEO Employer of Record Service

Companies entering Canada can make a decision whether to use their own resources or to use a Global Employment Organization to handle employment and payroll responsibilities. A GEO solution is particularly beneficial when a company is looking to setup an office quickly with a manageable cost. The complexity of employment regulations in Canada makes the use of a GEO advisable to ensure full compliance with employment laws, including the drafting of local employment contracts for workers.

The company that is expanding into Canada contracts with the GEO to employ and payroll their staff on their behalf. The GEO then assumes the legal responsibility for these employees, sponsoring them on work permits if necessary, complying with local employment law and running their monthly payroll. This is especially useful to fulfill all of the specific withholding requirements for pensions and benefits, as well as documenting termination, probation periods and leave requests.



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