Is your business considering expanding from the U.S. to Canada? If so, there are some key employment law difference to be aware of. Check out Aird & Berlis LLP ‘s five need-to-know employment law differences between Canada and the U.S.
At Will Employment
Many employees in the United States are employed “at will”, meaning that they can be terminated at any time without notice or pay in lieu of notice, even if there is no just cause for termination. In Canada, there is no at-will employment. Where there is no cause or resignation, employees are entitled to some type of notice or pay in lieu of notice upon termination. A good employment contract can limit the amount of notice or severance pay to applicable statutory minimums (within each provincial jurisdiction), but Canadian courts have largely interpreted employment agreements strictly against the employer. Employers seeking to limit termination payments in Canada must use very precise language in the employment agreement. Employees in Canada can be terminated without notice if there is just cause. However, just cause can be difficult to establish. Usually, there will have to be ongoing problems and written warnings to the employee before termination without notice is allowed, or the employee will have to have committed an egregious act. In some cases, employers will offer a termination or severance package to reduce the risk of litigation.
In Canada, labour and employment regulation is primarily handled by the provincial governments. Each province has its own set of regulations relating to employment law, labour relations, occupational health and safety, and human rights. Each province has expert regulatory boards and tribunals which hear disputes related to labour and employment. The federal government only has jurisdiction over certain industries, such as banking and shipping, and has its own boards and tribunals to deal with disputes within its jurisdiction.
In Canada, whether an employee is eligible for overtime is determined by the relevant employment standards legislation. Most employees are eligible, with exceptions for management and certain high-skill employees such as engineers and lawyers. There is some variation between the provinces on what types of employees are exempt from overtime.
Unlike in many states, employment agreements in Canada cannot restrict who is eligible for overtime, and there is usually no distinction afforded based upon whether the employee is compensated by a salary or through an hourly wage.
How overtime is calculated varies from province to province, but generally, employees are entitled to 1.5 times their normal pay for all hours worked beyond the regular work week. The regular work week is usually 40-44 hours. In some provinces, such as British Columbia, employees are entitled to overtime after 8 hours worked in a day. Many provinces allow for averaging agreements, and there are exemptions for certain industries such as agriculture. Employees paid by salary and hourly wages are entitled to overtime pay.