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A Complete Guide to Labor & Employment Law in Canada

Key Takeaways

1. In Canada, there are different federal and provincial laws that are applicable depending on the areas in which companies operate.

2. Canada labor law (also known as ‘Canada employment law’) outlines what an employer is required to do for its employees by law. It covers the minimum requirements that employers must meet in order to comply with employment legislation.

3. Canada employment law does not make a written employment contract a statutory requirement, but it is recommended due to the clarity it provides both employers and employees in the workplace.

4. Employers are required to apply minimum standards so that there is uniformity across the workforce and to maintain certain standards of work practice. This includes having a minimum wage, minimum annual holidays, minimum working hours etc. The minimum wage tends to increase yearly, therefore employers should be aware of changes.

5. Employees are entitled to receive mandatory benefits which are required by law, these include things like a certain number of days of annual vacation, sick leave, critical illness leave, maternity, and paternity leave. Canadian Pension Plan contributions and employment insurance contributions should also be made.

In order to allow fair employment practices and standards, Canadian labor law outlines everything that is required of employers in Canada. It must be noted that when doing business in Canada there are different federal and provincial legislation. Each province’s labor laws include its own requirements which makes it somewhat tricky to ensure compliance for companies that employ people from different areas.

When hiring employees in Canada, employers need to ensure they are providing their employees with at least the minimum requirements, including the required working hours, at least the minimum pay level, the mandatory employee benefits, and holidays. It is also crucial that employers ensure that they comply with Canada anti-discrimination laws. 

Canada labor law and employment contracts

Under Canadian law, a written employment contract is not a statutory requirement, but it is recommended. Contracts are always useful as they outline the explicit agreement between the employer and employee including the terms, benefits, salary, vacation entitlement, and working hours. It is a reliable reference for both parties. In Canada, both English and French languages are used, but English is expected to be included in contracts, apart from in Quebec where the first language is French.

The Canada Labour code outlines how an employer should go about terminating a contract between themselves and their employees. Employers must do this correctly according to the code, otherwise they could risk ‘unjustly dismissing’ an individual which could lead to a complaint being made by the employee. 

Generally, an employee must give 2 weeks’ notice in writing before voluntarily leaving employment. 

Minimum employment rights under Canada Labor Law

1. Working hours

Under Canada labor law, employees are required to work a five-day week (Monday-Friday), however, provincial legislation is in place to establish specific rules around working hours across Canada. It is therefore important for employers to understand the different applicable laws. For instance, in some provinces such as Ontario, the maximum working hours per week are 48, but generally, most provinces expect employees to work 40 hours weekly.

2. Right to disconnect

Employers in Ontario that employ 25 employees or more must have a written policy on disconnecting from work. The “right to disconnect” is in place to alleviate employees of the expectation to have to engage in business activity out of work hours such as answering emails or other communications. In order to increase productivity and avoid burnout by allowing time away from the desk and screen, this right has been incorporated into Canadian labor law to benefit employees and promote a better work/ life balance.

The policy on disconnecting from work may include internal rules such as putting an ‘out of office’ on, ensuring employees don’t answer calls or emails outside of work hours, and having communication “cut off” points at the end of the day.

3. Benefits

There are certain statutory employee benefits in Canada that all employers must provide under Canada labor law. They include things like making contributions to a pension plan and employment insurance, providing statutory sick leave, and other paid time off like maternity, paternity, and parental leave.

In addition to the mandatory benefits that employers must provide by law, employers can provide supplementary benefits too. Supplementary benefits include things like memberships, discounts, reward schemes, and extra health benefits. Employers may offer these to attract and retain employees.

Benefits can differ provincially. For example, Ontario has implemented the Ontario Covid-19 Worker Income Benefit which came into effect on April 29, 2021 which requires employers to give employees up to three days of paid infectious disease emergency leave as a result of Covid-related absences. This benefit is due to continue until July 31, 2022.

4. Pay

Canada labor law mandates that employers pay a salary or wage of at least the statutory minimum wage. The minimum wage is in place so that employees are not underpaid and to ensure working standards are maintained.

Certain deductions are required to be made by the employer through the employee’s salary such as specific taxes and insurances. Other deductions such as savings plan contributions, medical and dental premiums, life insurance, and pension plan contributions can be made too.

Within Canada employment law, the government has, as of 1 January 2021 sought to implement new pay transparency measures in federally regulated private-sector workplaces. This is put in place to tackle the wage gap experienced by women, indigenous people, persons with disabilities, and members of visible minorities. The Canadian government is expected to release further information on wage gap transparency by 2023.

5. Holidays and vacation

Most federal employees are entitled to a minimum of two weeks of annual vacation, with many provinces applying a minimum of three weeks. However, most employers will offer more annual vacation days than the minimum. Usually, employees are able to transfer over a certain number of days’ leave that they have not used in an annual period. In addition, employees have statutory public holidays which are celebrated across the country (more on these below).

6. Sick leave

According to the Canada Labour Code, employees have a minimum of five days’ sick leave.

Minimum wage across Canada

“Minimum wage” is the lowest amount that an employer can pay an employee. The minimum wage varies depending on the province, the situation/industry, and the age of an individual employee. The minimum wage is liable to increase regularly, so it is important for employers to be up-to-date with changes in order to remain compliant with labor laws.

For example, from January 1, 2022, the following minimum wage rates are required in Ontario:

  • General minimum wage: $15 per hour
  • Student minimum wage: $14.10 per hour
  • Hunting, fishing, and wilderness guides minimum wage: $75 per hour (working less than 5 hours daily), $150.05 (working more than 5 hours daily)
  • Homeworkers minimum wage: $16.50 per hour.
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Public holidays in Canada

In Canada, holidays are celebrated at national and provincial levels and include the following:

●      New Year

●      Good Friday

●      Easter Monday

●      Victoria Day

●      Saint-Jean-Baptiste Day (Quebec only)

●      Canada Day

●      Civic Holiday

●      Labour Day

●      Thanksgiving Day

●      Remembrance Day

●      Christmas Day

●      Boxing Day

Conclusion

Canada labor law can be confusing as Canada has both federal (national) and provincial legislation, meaning rules and regulations vary depending on the area within Canada. Whilst many rules are generally similar across the country, there are some differences which must be considered.

Employers are required by law to apply minimum standards so that there is uniformity across the workforce and to maintain certain standards of work practice across the country.

At Horizons, our experts will manage your company’s payroll, benefits, and expenses, and will be responsible for your HR and tax compliance in Canada. Horizons is the only Canada PEO with an in-house recruitment team, meaning we can also source, hire, and onboard your local workforce.

Contact us today for more information on Horizons and how we can help hire in Canada in accordance with Canadian labor law.

Frequently Asked Questions (FAQ)

Yes, Canada labor law (‘Canada employment law’) is the legislation that governs employment activity including working hours, pay, employee benefits etc. In Canada, there are different federal and provincial legislation. As such, companies should be informed about the laws and regulations that are applicable to the particular province in which they operate.

Yes, Canadian labor laws can vary depending on the province however many rules overlap. It is therefore important to check which laws are applicable in order to remain compliant.

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