Understanding Employment Law

Employment law in Canada is an area of law that applies to all federal and provincial workplaces, it’s in place to ensure employers act legally whilst operating. Depending on the jurisdiction, your workplace will be governed by different legislation.

This guide will briefly go over the different types of employment law in Canada, common questions in employment law, and why employment law will make your workplace a better place.

What is Employment Law?

Canadian employment laws generally refer to the laws that govern the relationship between an employer and an employee. This includes the rights and responsibilities of the employer and employee within the ‘employment relationship, the responsibilities of health & safety, and creating a healthy and inclusive workplace, free from discrimination.

In Canadian employment law, the government has established legislation – written laws – that govern employment relationships. Both the federal and provincial governments have established written laws. The courts have also established what is referred to as common law – judge made law.

Labour and employment law are sometimes used synonymously, however, they refer to different types of employment relationships. While BrightHR does not advise on situations of what happens when employers violate labour law, labour law refers to unionized employees in which the employment relationship is governed by a collective bargaining agreement. whereas employment law refers to the general law that oversees employment relationship for non-unionized workers.

Federal Employment Law

The federal government has established numerous employment laws that govern employment relationships. The most notable piece of legislation is the Canada Labour Code (“CLC”). The CLC defines the rights and responsibilities of workers and employers in federally regulated workplaces. Some examples of federally regulated workplaces are:

  • Bank Institutes.
  • Transport companies, for examples railways.
  • Television companies.
  • Broadcasting companies.

The CLC establishes the minimum standards in all federal, non-unionized employment relationships such as:

Hours of work. • Payment of wages. • Overtime rules. • Vacation. • General holidays. • Job protected leaves.

The CLC applies if there is an employment relationship. The CLC provides protection for full-time employees, part-time employees, and casual employees. However, the CLC does not provide protection for independent contractors.

Another notable piece of federal employment legislation is the Canadian Human Rights Act (“CHRA”). The CHRA protects individuals against harassment and discrimination when based on one or more protected grounds, such as race, age, ethnicity, and sexual orientation.

The CHRA protects employees in federally regulated workplaces.

All federally regulated employers have a responsibility to promote a healthy and inclusive workplace, free from discrimination. The employer may be in violation of human rights legislation, whether directly or indirectly, if the employer authorizes, condones, or adopts discriminatory behaviour.

Provincial Employment Law

Provinces have established their own employment legislation that governs the employment relationships between provincially regulated employers and their employees. The CLC and CHRA do not apply to provincially regulated workplaces.

In Ontario, the provincial government has established the Employment Standards Act (“ESA”) that defines the rights and responsibilities of workers and employers in provincially regulated workplaces.

The ESA establishes the minimum standards such as hours of work, vacation pay, termination pay, and job protected leaves. Just like Ontario, other provinces have established their own employment standards legislation which are as follows:

British Columbia’s Employment Standards Act. • Alberta’s Employment Standards Code. • The Saskatchewan Employment Act. • Manitoba’s Employment Standards Code.

Many of the provinces have similar minimum standards for employment relationships. For example, Ontario and British Columbia have the same temporary layoff minimum standards.

However, some standards may differ from province to province. For example, employees in Alberta may be entitled to overtime pay after exceeding 44 hours of work in a week, whereas employees in Saskatchewan may be entitled to overtime pay after 40 hours.

Other important employment laws include health & safety legislation, workers compensation legislation for employees who get injured in the workplace, and human rights legislation.

All provinces have these pieces of legislation in place. In Ontario specifically, these laws include:

Workplace Safety & Insurance Act8. • Occupational Health & Safety Act. • Human Rights Code. • Pay Equity Act*.

It is important for you to check your provincial employment standards legislation to ensure you are meeting your obligations in all aspects of employment law.

Common Law

Common law is a type of employment law created by judges through decision of court cases, specifically regarding employment relationships. For example, an employer will provide the employee with reasonable notice in the event of a termination, or an employee will perform their duties with reasonable skill and diligence.

10 Common Questions about Employment Law

Below is a list of common questions employers generally have regarding employment law.

Do I need an employment contract?

Employment standards legislation does not require employers to have a formal written contract with employees. However, they provide legal protection for both employer and employee should the employment relationship break down such as confidentiality non-compete clauses

Do employers need to have an employee handbook?

Employment standards legislation does not require employers to have an employee handbook, however, certain legislations require employers to have certain policies in place.

For example, employers in Ontario must have a written workplace safety policy as per Ontario’s Occupational Health & Safety Act.

Are employers obligated to investigate reports of workplace harassment?

Employers are required to have a workplace harassment policy and investigation procedure that sets out how incidents or complaints of workplace harassment will be investigated and addressed.

Failure to investigate may lead to fines and, in some cases, human rights claims.

What is the difference between “notice” and “pay in lieu of notice”?

When an employee is terminated without cause, the employee is entitled to notice of termination across various employment standards legislation. For example, in B.C. employment law, an employer must provide one week’s notice for an employee who has been continuously employed for greater than three months, but less than one year.

If the employer wishes to terminate the employee immediately, the employer may pay the employee the amount equal to what they would have earned during their working notice period. This is called pay in lieu of notice.

What is the difference between “termination pay” and “severance pay”?

Termination pay and severance pay are often used synonymously. Termination pay refers to the notice or pay in lieu of notice upon termination without cause. Employees who are terminated without cause in Ontario may also be entitled to severance pay.

According to Ontario’s ESA, an employee is entitled to severance pay if they have continuously been employed for 5 years or more and:

  • The employer severed the employment relationship of 50 or greater employees during a six-month period, or
  • The employer has a global payroll of over $2.5 million.

Can an employee on medical leave be fired?

Yes, however, employers should be very careful about dismissing employees on medical leave as it may result in human rights claims for discrimination and, in some cases, fines under employment standards legislation.

What is constructive dismissal?

A constructive dismissal – commonly known as forced resignation – may occur when an employer unilaterally breaches or changes a fundamental term of the employment contract.

If there is a breach or fundamental change in the employment contract, the employee may have no choice but to resign. The employee must prove that such breach or change is fundamental to the contract in order to be entitled to termination pay.

What happens if an employee gets hurt at work?

In Ontario, if an employee gets hurt at work or gets hurt as a result of work, the employee may be able to claim benefits under the Workplace Safety & Insurance Act. The benefits range from coverage of medical & rehabilitation benefits, income replacement, and return to work assistance.

Do I have to accommodate employees who have a disability?

Yes. Employment is a social area covered in human rights legislation. According to human rights legislation, employers must accommodate employees with disabilities to the point of undue hardship.

If an employer fails to meet this requirement, the employee may file a claim against the employer for discrimination.

Do I have to discipline my employees for misconduct?

You are not required to discipline employees for misconduct. However, employers should maintain records of misconduct such as repetitive and wilful lateness.

Disciplinary measures and penalties for being late to work may include progressive discipline or placing the employee on a performance improvement plan. Employers should try to work with employees who are displaying misconduct prior to contemplating termination.

Why is Employment Law Important?

It is important for you as an employer to understand the general concepts of employment law. This will assist you with minimizing legal situations with employees and potential situations with governing bodies that enforce employment legislation. Some of the benefits of employment law include:

  • Increasing your knowledge of human rights legislation and the importance of an inclusive workplace for strong employee morale.
  • Retaining employees.
  • Maintaining a strong company brand and public reputation.
  • Reducing workplace conflict and streamlining a process of how to investigate conflict if it arises.
  • Creating a sense of fairness to help boost productivity.

Get Advice about Employment Law with BrightHR

Employment law is a large area of law that can be difficult to navigate and evolves every day with new cases and new changes to employment standards legislation.

As an employer should keep records of all employees as easily accessible as possible. With BrightHR, you can record all employee absences (leaves, medical appointments, lateness) in a secure, unlimited cloud-based storage space.

If you require further assistance about employment law, our BrightAdvice service allows you to receive quality advice on any employment issues you may have.

Contact us on 18882204924 or book a demo today.


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