The essential Labour Law in Canada

These are the highlights if you want to know more about Labour Law in Canada. This entry was drafted by HazloLaw Business Lawyers.

This collaboration is a brief step-by-step guidance. In no case it can be considered as legal advice. If you want -or need – legal advice, ask for a lawyer or a law firm. In that case

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Classes Or Types Of Contracts

There are two main types of employment contracts: the individual contract of employment and the collective agreement. The individual contract of employment is between an employer and an individual. It is the result of either a written agreement setting out all the terms of employment or it can stem from oral representations between the parties. The individual contract of employment is often a combination of oral and written terms.

The collective agreement is defined in the Canada Labour Code, as an agreement in writing entered into between an employer and bargaining agent acting on behalf of the employees (most commonly a union) containing provisions respecting terms and conditions of employment and related matters.

Cost Of  Dismissal And Wrongful Dimissal

An employer generally has the right to dismiss an employee at any time if it has just cause to do so. However, it must at all times respect the contract of employment and applicable legislation. In Ontario, Sections 57 and 58 of the Ontario Employment Standards Act, in particular, must be considered when determining when and how to dismiss an employee. These provisions provide minimum entitlements to employees with respect to the amount of notice of termination which they are owed. The minimum notice entitlements are based on the employee’s length of service with the employer, as an employee. For example, if an individual has been an employee for between six and seven years, an employer is required to give at least six weeks of notice before termination. It should be noted that absent a provision in the employment agreement specifically stating otherwise, these minimum notice periods do not prevent an employee from seeking a more substantial notice period at common law. Employers are able to increase the notice entitlements to their employees by contract, but will at all times be bound by the minimum standards regardless of the terms of the employment agreement.

What constitutes “reasonable notice” at common law will vary depending on the circumstances of each case. When determining whether the employee was given a reasonable notice, courts will usually be more generous than the statutory minimums, and will consider factors such as (1) the availability of similar employment; (2) the age of the employee; (3) the length of service of the employee; and (4) the experience and qualifications of the employee. For example, an older employee who occupies a high ranked position in a company is generally entitled to a longer period of notice than a young clerical worker as it is expected that more time will be required for them to find replacement employment.

In any event, an employer also has the option of paying an employee wages in lieu of notice. The amount of wages that must be paid is determined by calculating what the employee would have been paid during the notice period to which they would have been entitled. The employee, for his or her part, has a duty to mitigate his or her losses, by taking reasonable steps to find alternate employment upon being given notice of termination.

Special Regime For Employment Contracts For Directors

In Ontario directors are excluded from the protections offered by both the Labour Relations Act, which governs collective bargaining, and the Employment Standards Act which establishes minimum standards for employees in the employment relationship.

Employees¨ Representatives And Unión Representation

Historically, trade unions emerged out of unacceptable employment practices. They have been the response to the inequality in bargaining power that traditionally exists between the employer and its employees. As a result, unions have enabled workers across the country to establish acceptable work conditions and employment contracts that better reflect the values and the needs of employees. In a unionized context, the individual contract of employment is replaced by the collective agreement.

In Ontario, the Labour Relations Act defines a trade union as “an organization of employees formed for purposes that include the regulation of relations between employees and employers and includes a provincial, national, or international trade union, a certified council of trade unions and a designated or certified employee bargaining agency.”

In order for a union to represent its members’ interests, it must be certified pursuant to the Ontario Labour Relations Act. The certification process has several steps which include: (1) Delivery of an application for certification by the union; (2) Service of the application on the employer and filing with the Ontario Labour Relations Board; (3) Delivery of a response to the application by the employer; (4) Service of the employer’s response on the union and filing at the Ontario Labour Relations Board; (5) Selection of a date for a certification vote by the Ontario Labour Relations Board; (6) the certification vote; and (7) Delivery of a copy of the vote decision to the employer and the union by the Ontario Labour Relations Board. If a majority of the employees vote for union representation, the union will be certified to represent their interests.

Once certification is complete, the employer will be forced to deal with the union, as opposed to individual employees. Accordingly, the union has the responsibility of looking after the employees’ interests.

Wages

In Ontario, employees may be paid based on an hourly rate, a fixed salary, a fluctuating salary, commission, or a piecework rate basis.

The minimum wage is governed by the Employment Standards Act, which has established the general minimum wage in Ontario for October 1, 2016 to September 30, 2017 at $11.40 per hour. On October 1, 2017, the general minimum wage will increase to $11.60 per hour. However, there are other minimum wage rates that apply to certain individuals such as students under 18 years of age, an employee who serves liquor as part of his or her regular work, a hunting or fishing guide and an employee who is a homeworker.

Employers must pay their employees overtime pay equal to at least one and one half times their regular rate of pay for each overtime hour worked in excess of 44 hours each week. It is possible to set a different weekly threshold, provided the employer and employee both agree to do so. For example, if an employee agrees to work a certain amount of hours that will be averaged over a number of weeks and if the employer obtains the approval of this agreement from the Director of Employment Standards, this new threshold will be set for the duration set out in the agreement or in the approval from the Director.

Employment Regulations

In Ontario, the applicable regulations in the context of employment and labour law are the regulations under the Employment Standards Act and the Ontario Labour Relations Act. At the federal level, the applicable regulations are under the Canada Labour Code.

Social Security

The Canada Pension Plan (“CPP”) is an earnings-related insurance plan. Every Canadian over the age of 18 who earns a salary must contribute to the CPP unless they fall into one of the exceptions. There are three main types of CPP payments: (1) disability benefits; (2) retirement pension; and (3) survivor benefits.

Unemployment Insurance (“UI”) is a system that was established to provide temporary financial assistance to unemployed Canadians while they search for new employment or while they enhance their skills.

The employer’s maximum CPP contribution for 2017 is set at 4.95% of contributory wages and salaries.

The employer’s UI rate for 2017 is set at 1.63% with a maximum insurable earnings of $51,300.

The amount that an employee will contribute to his or her CPP varies depending on his or her salary. The maximum pensionable earnings for 2017 is set at $55,300 and there is a minimum level, which has been frozen to $3,500. The maximum contribution for an employee in 2017 is set at a rate of 4.95% of contributory wages and salaries. An employee’s maximum contribution to the plan in 2017 is set at $2,564.10.  Self-employed workers must also contribute to their CPP. The maximum contribution for 2017 is set at a rate of 9.9% of contributory self-employed earnings.

The employee contribution rate for 2017 is at 1.63% with a maximum insurable earnings of $51,300.

Although the rate of pay is higher when an employee works overtime, EI still applies at the employee’s regular rate of pay. Meaning, every hour of overtime worked is the equivalent of one hour of insurable employment.

Health And Safety

In Ontario, Health and Safety in the workplace is regulated under the Occupational Health and Safety Act, the Workplace Safety and Insurance Act and the regulations enacted thereunder. Employers have a general duty to take every precaution reasonable in the circumstances for the protection of their workers. This duty includes an obligation to provide a safe work environment, to educate and train workers in their workplace, and in some circumstances to provide workers with written instructions in respect of their workplace obligations. Employers must have a written occupational health and safety policy, which must be reviewed annually and be posted in the workplace in a conspicuous location. Employers must also appoint and assist health and safety representatives in the workplace and establish an occupational health service.

Employers must post a copy of the Occupational Health and Safety Act and materials explaining the Act in a conspicuous location in the workplace in English and also in the majority language of the workplace. Employers have a duty to appoint competent supervisors and a duty to employ workers of legal age, which varies from 14 to 18 depending on the industry. Lastly, employers have a duty to keep records of biological, chemical and physical agents in the workplace and the handling, storage, use and disposal of these agents.

Contracting And Outsourcing

Individuals and organizations will commonly structure their working relationship such that the individual provides services as an independent contractor, either personally or through a company, rather than as an employee. Under this arrangement both parties can realize certain benefits, however, there are risks involved in mischaracterizing an employee as a contractor and vice versa, such as liability for unremitted income tax. In order to determine whether a person is an employee or an independent contractor, the court will evaluate the parties’ relationship by considering a number of factors such as: (1) the degree or absence of control, exercised by the alleged employer; (2) the ownership of the tools; (3) the chance of profit or loss; and (4) the integration of the alleged employee’s work into the alleged employer’s business. For example, a person would be considered an employee if the employer exercises a high degree of control such as determining his or her work hours, if the employer owns the tools with which the employee accomplishes his or her work, if the employee has no chance of profit or loss and if the employee’s work is an integral part of the employer’s business such as a window installer for a windows and doors business.

Employers are able to realize certain benefits from defining relationships with their service providers as independent contractor relationships. These include exemptions from employment standards legislation and requirements related to collecting and remitting statutory deductions from employee pay. As a result, employers will often include language in their contracts which clearly specify an independent contractor relationship, and specifically reject an employer-employee relationship. However, these contractual provisions are not determinative and courts will consider every case based on all the factual circumstances.