Labor Law Developments in Canada

The federal and provincial governments decide the labor and employment laws in Canada. The provincial government has jurisdiction over employment laws due to historical and constitutional reasons and the federal government has authority over employment in large industries such as banks, shipping, and airways.

Each of the provinces shares similar employment laws except for Quebec. Quebec is governed by a civil law system based on the ‘civil code’ founded in France’s Napoleonic Code. Recently there have been some developments in labor and employment laws in Canada that are worth noting. Most of these amendments were introduced after the COVID-19 pandemic. They are as follows:

  1. On December 2nd 2021, the government of Ontario passed Bill 27, the Working for Worker’s Act which states:
  • According to the Employment Standards Act (ESA), all organizations with 25 or more employees have the right to disconnect from work after hours. This includes all forms of communications, including cell phones and emails they are not obligated to engage in.
  • According to the ESA, employees are no longer obligated to enter into non-compete agreements with their employers.
  1. Under the ESA, all employers with a payroll of 2.5 million dollars are required to give severance pay to dismiss employees who have served for 5 or more years.
  2. Constructive Dismissal and Infectious Disease Emergency Leave was outlined and more relevant post-COVID-19. IDEL was instrumental for employers, any layoffs more than 13 weeks or 35 weeks, in some cases, would end up in a guaranteed termination and would then generate the need for severance pay.
  3. Vaccinations for COVID-19 were made mandatory, subject to certain exceptions outlined.
  4. Pay Equity. Two essential changes were made regarding pay equity.
    • Federal pay equity act. This applies to federally regulated organizations that have at least 10 employees. Employers must ensure that men and women get equal pay for the same kind of work.
    • Ontario court of appeal. Employees here receive their salaries via the proxy method. This method must constantly be checked to monitor the male counterparts’ salary every now and then.
  5. Internet harassment offense. Those experiencing online harassment, including employers, may now receive respite for the misconduct they went through, including a permanent ban, additional orders or findings of fact, and financial compensation.
  6. The Ontario Divisional court overruled the workplace Safety and Insurance Appeals Tribunal’s decisions and stated that any employee suffering from mental stress due to a toxic work environment has the right to sue for constructive dismissal.
  7. Stock option grants to be forfeited upon termination. The Ontario Court of Appeal overturned a previous decision by the lower court, wherein an employee was awarded damages to compensate for stock options that never were vested.
  8. The Ontario Superior Court certified a class action for Uber drivers who were asking to be declared employees to that they may be eligible to receive benefits from damages upon alleged breach of contract and the ESA.
  9. Providing clarity on the law regarding common employer doctrine. According to the Ontario Court of Appeal, an organization may not be considered a common employer because it is owned, controlled and affiliated with another organization. There must be evidence proving the intent of the two parties. The court must assess the conduct of both the parties to determine whether they were willing to enter in a contract together and how involved both parties were in hiring, selecting, paying and dismissing employees.

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