by Stuart E. Rudner
I am an HR Lawyer in Canada, but have worked with many clients that are U.S.-based. Because our two countries are similar in so many ways, many employers assume that the HR laws are also similar. Unfortunately, that is not the case. U.S. employers that adopt the same HR policies and practices in Canada expose themselves to significant liability.
Below I have set out some of the key differences in Canadian employment law. Almost every point could be the subject of a full article, but I am hopeful that it will be helpful in alerting readers.
1. There is no employment at will. Unless there is just cause for dismissal, employees are entitled to notice of dismissal or pay in lieu thereof (sometimes referred to as severance).
2. Just cause can be shown to exist, but it must be based upon egregious conduct. Whether or not summary dismissal is appropriate will be assessed not only on the misconduct in question, but on all relevant circumstances; this includes the length of employment, prior misconduct and disciplinary history, any mitigating circumstances, and anything else that is relevant. The issue can be quite complex.
3. Because of this contextual approach, it is entirely possible that two employees can engage in the same misconduct but have different discipline imposed. For example: two employees are caught leaving ten minutes before their shift ends. One has been employed for 30 years without incident or discipline, and the other is a recent hire that has already been in trouble repeatedly. The long-service employee admits what he did and profusely apologizes, while the new employee tries to cover it up. It would not be surprising for a Court to find that the new employee should be summarily dismissed but that his colleague is entitled to a second chance.
4. Employment standards legislation sets out the minimum amount of notice of dismissal in the absence of just cause.
5. Unless there is a clearly-worded, enforceable contract that says otherwise, all employees are entitled to “reasonable notice” of dismissal without cause.
6. There are no hard and fast rules for calculating reasonable notice; the core factors are the employee’s length of service, age, and position, though factors such as inducement from previous employment, availability of alternate employment, and anything else the Court deems relevant can be considered.
7. The rule of thumb of “one month of notice for every year of service” is a myth and should not be followed.
8. By default, all forms of compensation are to continue during the notice period. This includes base pay, variable pay, commissions, bonuses, car allowances, medical and dental benefits, insurance, and any other form of compensation.
9. Employers are entitled to provide working notice of dismissal, salary and benefit continuance, a lump sum payment, or any combination thereof. Employees are not entitled to a “package”.
10. Using employment contracts for all employees can dramatically reduce an employer’s obligations, eliminate uncertainty over issues such as how much notice to provide in the event of dismissal without cause, and provide an employer with greater rights and flexibility.
Because it is not as easy to terminate an employment relationship in Canada, and because many of our HR laws are more restrictive, it is crucial that employers develop an HR strategy and then implement policies and procedures to achieve it. Otherwise, time, opportunities, and money will be wasted on HR issues that could have been avoided.
Stuart Rudner is a leading HR Lawyer and a partner in the Labour & Employment Law Group of Miller Thomson LLP, a national law firm. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at 416.595.8672 or firstname.lastname@example.org. You can also follow him on Twitter @CanadianHRLaw and join his Canadian HR Law Group on LinkedIn.