Organizations that operate a business or are planning to operate a business in Ontario and hire employees must know the province’s specific employment laws.
Whether you’re thinking of entering the Ontario market or expanding your business here, you need to ensure that you understand and comply with the panoply of laws about directors, managers, sales associates, technicians, labourers, independent contractors and other workers.
You will therefore not only minimise your legal risk but also maximise your profits.
Employment laws concern such matters as:
- Labour Relations
- Occupational Health and Safety
- Human Rights
- Employment Equity and Pay Equity
- Workers’ Compensation
- Employment Insurance
- Pension and Benefits Plans
- Employer Health Tax
- Employee Privacy
- Termination of Employment
- Whistleblower Protection and Employee’s Duties to Employer. Our committed team at HLF can help you understand and comply with your legal obligations in each of these areas.
After a brief comment about jurisdiction, a sequential overview of each these areas is below.
Employment in Canada is governed by statute and the common law (judge-made law). Employment may be governed by federal or provincial/territorial legislation, depending on the type of organization. Most businesses fall under provincial/territorial jurisdiction.
The federal government has jurisdiction over federal Crown corporations and specifically designated federal works and undertakings (including banks, airlines, railways, shipping companies, and television and radio stations). For the purposes of employment laws, businesses either fall under federal or provincial/territorial legislation, but not both.
The employment relationship is generally governed by the laws of the province/territory in which the employee provides services. The employer and employee, however, may agree that the laws of a specific jurisdiction will govern the employment contract.
By statute, each province has its own employment standards legislation which sets out specific employment standards. If you operate a business in Ontario, you have an obligation to comply with the minimum standards set out in the provincial Employment Standards Act (ESA).
These standards are broad and you cannot contracted out of them.They include paying a minimum wage, providing two weeks vacation each year, paying statutory holidays, and providing up to one year maternity leave.
Labour relations legislation does not apply to all employees. It only applies to unionized employees; that is, employees represented by a union. In Ontario, the applicable labour relations legislation is the Labour Relations Act, 1995. For organizations subject to federal regulation, labour relations are governed by the Canada Labour Code.
Federal and provincial labour laws permit employees to form or to join a trade union for the purpose of bargaining collectively with employers. Employers must recognize a union’s exclusive bargaining rights respecting the “bargaining unit” that it represents and to bargain in good faith with the union.
The legislation aims to protect employees and employers against unfair labour practices by employers and unions, respectively.
The changes introduced in the Labour Relations Statute Law Amendment Act, 2005 favoured unions. These amendments include the Ontario Labour Relations Board’s ability to automatically certify a union during a certification drive.
Industries that are greatly unionized are communications, manufacturing, public administration, and transportation.
A unionized employee cannot personally sue her employer for wrongful dismissal. A unionized employee who believes she has been wrongfully dismissed must bring her complaint to her union. The union will listen to the comployee’s complaint and then decide whether to bring a grievance against the employer.
Occupational Health and Safety
The purpose of occupational health and safety legislation is to prevent workplace accidents and injuries. In Ontario, the occupational health and safety legislation applicable to most workplaces is the Occupational Health and Safety Act. For organizations subject to federal regulation, occupational health and safety standards are set by the Canada Labour Code.
As an employer, you have an obligation to provide a safe and healthy workplace. The occupational health and safety lawsimpose many obligations on owners, employers, and supervisors. If these laws are broken, the fines can be steep.
Occupational health and safety laws, both federally and provincially, combine an “external” system of legislated minimum standards and duties, enforced by inspections and penalties, with an “internal” system whereby employer and employees co-operate in assuming certain responsibilities for safety in the workplace.
Externally, an employer’s duties include making employees aware of safety or health hazards in the workplace and warning about hazardous materials.
Internally, health and safety legislation requires employers (in companies exceeding a certain minimum size) to establish “joint workplace safety committees” consisting of workers and managers. These committees decide complaints, maintain records, and manage workplace safety programs.
An employee may refuse work that he reasonably believes to be unsafe. An employer may not dismiss or discipline an employee for exercising this right. Employers that violate occupational health and safety legislation can be fined if an employee is injured as a result of the violation. Health and safety inspectors can ticket workers for certain violations.
As well, employers may be criminal responsible for unsafe workplaces under the Criminal Code. You as employer have a legal duty to take reasonable steps to ensure workers’ safety. The significant penalties include a fine ranging between $25,000 and $100,000 in the case of a summary conviction offence. For more serious, indictable offences, there is no limit on the fine.
Employers must also comply with Ontario’s Occupational Health and Safety Amendment Act (Violence and Harassment in the Workplace), 2009. The principle of “workplace harassment” extends beyond the prohibited grounds under human rights legislation and includes actions such as bullying in the workplace. Employers must prepare and regularly review policies about workplace violence and harassment and develop and maintain programs to implement these policies.
HLF can help you comply with the various duties imposed by occupational health and safety laws, represent you if you face a fine for violating any of them and draft an effective health and safety plan that suits your particular organization.
Human rights legislation aims to protect individuals from certain forms of discrimination. In Ontario the Human Rights Code prohibits discrimination in all aspects of employment, including recruitment and hiring.
You as employer must ensure employees are not discriminated against because of their race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, family status and handicap.
The Human Rights Code also has specific harassment (including sexual harassment) provisions and recognizes damages for loss of dignity. A breach of the Human Rights Code can also form the basis for a claim of constructive dismissal.
The Human Rights Code is enforced by the Human Rights Tribunal of Ontario. The broad remedial powers of the Ontario Human Rights Tribunal include monetary compensation, reinstatement, and cease-and-desist orders. We can recommend steps that you can be taken to minimize the risk that an employee will file a human rights complaint with the Ontario Human Rights Tribunal.
For employees of organizations regulated by the federal government, the applicable human rights legislation is the Canadian Human Rights Act. It is enforced by the Canadian Human Rights Commission.
In addition to federal and provincial human rights statutes, the Canadian Charter of Rights and Freedoms, a constitutional bill of rights that applies to both federal and provincial governments has had a major effect on labour relations in the public sector.
The federal Employment Equity Act mandates affirmative action in employment practices for certain designated groups. They include women, aboriginal peoples, persons with disabilities and persons who are, because of their race or colour, in a “visible minority” in Canada.
Affirmative action measures include a workforce survey and analysis, reviewing employment systems, and developing, implementing, reporting and monitoring an employment equity plan.
Federal employment equity legislation applies to, among others, employers with at least 100 or more employees and certain employers that bid on certain federal government goods or services contracts.
Unlike most provinces, Ontario has no public sector employment equity legislation.
Pay equity is the policy of equalizing wage rates between mainly male and mainly female job classifications requiring similar levels of skill. The principle is that men and women should receive equal pay for performing the same or substantially the same work.
Pay equity legislation exists at the federal level (for federally regulated industries), as well as in some provinces, including Ontario.
Pay equity measures include developing a pay equity plan and retroactively adjusting compensation as required. These measures can be detailed and technical. At HLF, we can help you create measures that are both effective and compliant with the law.
As described further below, you have a duty to collect a payroll taxes like workers’ compensation premiums, employment insurance premiums, Canada Pension Plan premiums, and employer health tax premiums. We can advise you on the details of these taxes as they apply to your business and the nature of your duties.
These deductions do not apply to independent contractors you might engage. You will want to ensure your agreement with any independent contractors will withstand the scrutinity of the Canada Revenue Agency (CRA). Our committed team at HLF can advise you on appropriate terms and draft this agreement for you.
The workers’ compensation system replaces an employee’s right to sue an employer for losses arising out of a workplace accident. The injured employee may claim compensation from a statutorily-established accident fund, regardless of whose fault the accident was.
She has no other legal recourse against her employer, co-workers or any other person to whom the workers’ compensation legislation applies.
Most employers must contribute to a government fund. The contributions are based on the employer’s payroll, the type and nature of its business, and the employer’s particular accident record. Certain limited types of business are excluded from mandated workers’ compensation coverage.
Ontario’s Workplace Safety and Insurance Act, 1997 provides, in certain circumstances, for the mandatory reinstatement of injured workers and penalties if an employer terminates an employee as a result of the injury.
Ontario’s Workplace Safety and Insurance Board (WSIB) awards compensation and medical expenses for injured workers based on an injured worker’s lost earnings, and paid out of the fund. Ontario’s Workplace Safety and Insurance Appeals Tribunal (WSIAT) hears appeals from WSIB decisions. If you need representation before the WSIB or WSIAT or both, call us. We can help.
The complex legislative framework involves the Workplace Safety and Insurance Act, 1997, and three earlier Workers’ Compensation Acts.
Also applicable is a complicated web that includes:
- Tribunal caselaw
- WSIB Policy
- administrative law principles
- Board and Tribunal rules and procedures
- rules of evidence
- the common law
- medical issues and terminology.We can expertly cut through the complexities and get you the best results in your particular case.
Canada’s Employment Insurance Act (EIA) requires all employers and employees to make contributions to an Employment Insurance Fund administered by the federal government. The premium payable by employees is a small percentage of insurable earnings up to a certain amount.
The employer contributes at a rate 1.4 times the employee’s premium and remits the total to the Canada Revenue Agency (CRA). An employer’s contributions to the Employment Insurance Fund are deductible for Canadian income tax purposes as a business expense.
To be eligible for employment insurance benefits, an employee must be employed for a specified number of weeks in the preceding 52-week period. Employees are entitled to insurance benefits in the event of loss of employment due to termination without cause, layoff, maternity, or illness, as long as that they meet several eligibility criteria.
Canada Pension Plan
The Canada Pension Plan (CPP) is operated by the federal government. The CPP provides for retirement pensions for contributors, survivor benefits for widows and dependent children of contributors, and certain disability benefits.
With a few exceptions, all employers, employees and self-employed individuals must contribute. The CPP requires both the employer and the employee to make equal contribution of premiums up to a certain amount. The employer’s contribution under the CPP is deductible for Canadian income tax purposes as a business expense.
Employer Sponsored Pension and Retirement Plans
Employers may choose to provide employees with pension or other retirement savings benefits. Plans that provide for pensions for employees must be registered under and administered in accordance with the federal Income Tax Act and Pension Benefits Standards Act, 1985 (PBSA) or a similar statute in Ontario, the Pension Benefits Act (PBA).
The legislation provides for certain minimum standards for membership, benefits and funding. The federal PBSA applies to pension plans for employees employed in a federal undertaking and the provincial PBA applies to pension plans for all other employees.
Employer Sponsored Health Benefits
Health and welfare benefits vary among employers. No legislation mandates that these benefits be provided. In Ontario, the public health insurance plan (OHIP) is partly funded by an employer health tax. It must be paid by employers who have a permanent establishment here and whose Ontario payroll exceeds $400,000. The tax is at a graduated rate depending on the total annual remuneration paid to employees.
The prevalence of the internet and social media has created complex workplace privacy issues. Employers should be aware of the federal Personal Information Protection and Electronic Documents Act (PIPEDA), which is intended to address concerns about the collection of personal information.
PIPEDA applies to all information collected in the course of commercial activities, regardless of whether the undertaking is federally regulated.
PIPEDA does not apply to employee information of a provincially regulated employer. In Ontario, unlike some other provinces, there is no statutory tort of invasion of privacy. But employers and employees wishing, for instance, to monitor employee e-mail and internet use and access employee’s personal information must be aware of the new common law tort of “intrusion upon seclusion” in Ontario.
In the recent important case of Jones v. Tsige, 2012 ONCA 32, the Ontario Court of Appeal recognized for the first time this tort or wrong, opening the door to a wide-ranging tort of invasion of privacy not previously recognized in any Canadian jurisdiction.
The case pitted two bank employees, one of whom successfully sued the other for breach of privacy. Over about four years, the defendant had repeatedly accessed details about plaintiff’s personal bank accounts using the banks computer system.
The Court of Appeal set aside the trial judge’s dismissal of the action and awarded damages of $10,000 against the defendant. The Court accepted into Ontario law the first arm of the American tort of invasion of privacy, summarized in the Restatement (Second) of Torts (2010) as “intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs.
The Court specifically did so to “respond to the problem posed by the routine collection and aggregation of highly personal information that is readily accessible in electronic form”.
The Court placed several restrictions on the scope of this new tort, below.
- The defendant’s conduct must be intentional or reckless.
- The plaintiff’s private affairs or concerns must have been invaded without lawful justification.
- The invasion of privacy must be objectively regarded as highly offensive and causing distress, humiliation or anguish.
- Only intrusions into very sensitive information will be protected by this tort; examples include intrusions into financial or health records, sexual practices or orientation, employment, diary or private correspondence.
- The tort of “intrusion upon seclusion” must be balanced against competing interests, most particularly freedom of expression and freedom of the press.
We can also advise you about how to store and safeguard employees’ personal information to minimize your legal risk.
Termination of Employment
Employment contracts under provincial jurisdiction are governed by both applicable provincial legislation and the common law. In Ontario, employment standards legislation sets out the employee’s right to notice of termination (or pay in lieu). In Ontario, notice is one week per year of service to a maximum of eight weeks.
If the employer has a payroll in Ontario of at least $2.5 million, and the employee has given at least five years of service, the employee is also entitled to statutory severance pay of one week per year to a maximum of 26 weeks.
In addition to legislation, the common law (judge-made law) automatically incorporates into every employment relationship (written or not) the concept of “reasonable notice of termination.”
Unless the employee has agreed to accept less notice in an employment contract or you as employer have just cause to terminate, you must give an employee reasonable notice (or pay in lieu) of termination. You must take into account the employee’s age, years of service, position and salary.
Common law notice significantly increases the amount of statutory notice. It can be as much as 24 months for long-serving employees.
The above laws apply only to employees, and not independent contractors, who cannot sue for wrongful dismissal. An independent contractor may be able to sue for breach of contract (for example, if the employer terminates a six-month contract after only three months).
The courts consider a variety of factors in determining whether a worker is an employee or an independent contractor. We can advise you about how these factors apply to your case.
As you expand your business here, you will want to retain productive employees and contractors, and terminate those that are not working out.
At HLF, we can help you substantially reduce your termination costs by drafting a written employment agreement that contains a specific termination provision.
We will draft a clear and enforceable termination provision that includes statutory notice and severance. Then a court will enforce the precise amount of notice (or pay in lieu) in the agreement. This will limit your liability on termination as well as litigation costs.
Threatening or retaliating against an employee who blows the whistle on an employer’s conduct that the employee believes breaks a provincial or federal law is a criminal offence. Some provincial legislation, such as environmental legislation, also provides whistleblower protection.
Employee’s Duties to Employer
Employees owe their employers certain duties whether or not they have a written contract of employment. Employee duties include:
- The duty to be loyal, faithful and to advance the employer’s business interests.
- The duty of confidentiality and honesty.
- The duty to be competent and to perform work in a non-negligent manner.
- The duty to obey orders as long as they are lawful, reasonable and within the scope of employment.
- The duty not to be intoxicated or engage in sexual harassment or moral impropriety;
- The duty not to be frequently absent or late.
The experienced team of professionals at HLF can ensure you understand the many obligations imposed by the various applicable pieces of legislation and the common law. We can provide sound legal advice to help you minimise your legal risk.
We can represent you in court or before an administrative tribunal if you get into trouble. Our services include providing advice and representation regarding termination, employment contracts and severance packages. Our experienced team is committed to working with you to obtain the best possible solutions.
We are keen to help you expand your business into a flourishing enterprise and seize workforce opportunities in the dynamic Canadian market.
For more information on Employment Law in Ontario, please contact us.