In the US, jurisdiction over employment matters is shared between local, state and federal governments. Canadian employment law places jurisdiction over employment matters with their provincial governments, unless the industry is within federal jurisdiction. Canadian employment law tends to adopt a more protective attitude towards the security of employees’ livelihoods, including rights to accommodations for disabilities, restrictive agreements like non-competes and employee terminations. Agreements with independent contractors must be structured carefully to avoid creating employment relationships.
A major difference between Canadian and US employment law is that at-will employment does not exist in Canada. If you are dismissing an employee without cause, employers have to provide reasonable notice of termination or pay before termination. Minimum notice periods are approximately one to two weeks of notice per previous year of service. An employee can be dismissed with cause, but employers usually have an obligation to engage in progressive discipline before resorting to termination.
Canadian employers are required to keep payroll records for six years. Similar to the US, Canadian employers and employees share the cost of funding contributions to: 1) the Canada Revenue Agency (like our IRS payroll taxes) and 2) the Canada Pension Plan (like our Social Security).
In many provinces, employers must also make contributions to the province’s universal health care system. Because all Canadian provinces provide universal health care, employers do not need to bear the responsibility of providing basic health insurance to their employees. However, many Canadian employers choose to offer supplemental insurance to their employees.
Canadian minimum vacation entitlements can vary in each province, but they are often similar. Public holidays do not count towards an employee’s vacation time. Most employees are entitled to take these days off and receive public holiday pay.
Canadian laws protect an employee’s ability to take leaves of absence in certain personal circumstances. These personal leaves are generally unpaid job protected leaves, like maternity leave, parental care leave, serious illness, or exceptional personal and/or family circumstances.
Canadian employers have a larger duty of accommodation than US Employers. In Canada, employers are obligated to accommodate employees’ protected characteristics—including addictions and disabilities—to the point of undue hardship. Canadian employers also have to accommodate a higher expectation of privacy from their employees. While employers have the right to monitor employees’ activities on company computers or phones for legitimate business-related purposes, they do not have a right to engage in widespread workplace surveillance. Random workplace drug and alcohol testing is almost always illegal in Canada, unless the employer can demonstrate that the practice is a Bona Fide Occupational Requirement.
Before beginning operations in Canada, US employers need to modify their workplace policies to reflect these important differences in their respective employment laws. The differences identified in this article may seem minor, but those differences can have major legal implications.
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