Employment law in Canada generally refers to the law governing the relationship of an individual employee to an employer, as distinguished from labour law, the law of unionized collective bargaining relationships. Employment law includes both the common, or judge-made, law of "master and servant," which is concerned mainly with wrongful dismissal, and a complex mass of statute law dealing with minimum labour standards, human rights, occupational health and safety and workers' compensation.
With some important exceptions, unionized employees are also protected by the statutory part of employment law, although they are seldom concerned with minimum standards because their collective agreements almost always establish higher levels of wages and benefits. Other statutes, such as those regarding human rights, wage-payment protection, occupational health and safety, workers' compensation, pension and unemployment insurance laws, do concern them.
In all provinces except Québec the law of wrongful dismissal is largely inherited from England, but Canadian courts now rarely refer to English case law. The equivalent Québec law is based on the French Civil Code. Generally an employee cannot be dismissed without cause unless he or she has been given due notice or pay in lieu thereof, but outside of these conditions the law of wrongful dismissal provides no protection against firing.
Cause and Due Notice
What constitutes cause and how much notice is "due" notice have been the subjects of countless court cases. The essence of cause for dismissal is usually an employee's failure to comply with his or her obligations to the employer implied by law, including the obligation, within the scope of the job, to obey the employer's lawful directions. The period of notice to which the employee is entitled depends, first, on any agreement or understanding with the employer arising from the practice of the industry or the particular workplace. For example, in some industries or types of job, layoffs are a matter of course. In others, in the absence of employee misconduct, employment is assumed to be long term, and in that case an employer's economic difficulties will not justify dismissal without due notice.
Where there is no agreement or understanding, the length of the notice to which the employee is entitled depends on the character or status of the employment, the employee's length of service and age, and the availability of similar employment. In executive employment, entitlement is often held to a year or more. Blue-collar workers are usually held to be entitled to less notice and may prefer to lay a complaint under labour standards legislation, which although it entitles them to only 1 to 8 weeks of notice, depending on how long they have been employed, is less costly than hiring a lawyer to sue at common law. In the majority of jurisdictions, the minimum protection is only available to employees who have been employed for a specified period of time, usually 3 months.
A wrongfully dismissed employee who sues in the ordinary courts will be awarded money damages equal to the pay he or she would have received if proper notice had been given, but the employee is under a duty to mitigate the damage; ie, any money earned at a new job or which could have been earned if a reasonable effort had been made to find a new job will be deducted. Because of court costs, wrongful dismissal cases usually involve executive-level employees. Unionized employees working under collective agreements cannot sue for wrongful dismissal. They must go through their grievance procedures and finally to arbitration. This may be preferable because arbitrators, unlike the courts, order employers to put employees who are found to have been dismissed without just cause back on the job. Moreover, grievance arbitration normally costs the employee nothing.
Another element of wrongful dismissal is the concept of constructive dismissal. Constructive dismissal occurs when an employer unilaterally changes the terms of the employment contract so fundamentally that the employee quits his or her job. In that case the employee may be able to treat the termination of the employment contract as a dismissal by the employer and can claim severance along similar standards as could be claimed by an employee seeking severance under classic wrongful dismissal. However, an employee must not linger in their decision to quit as the longer the employee waits the easier it becomes for the employer to assert that the employee has condoned the change to the terms of employment. A hallmark trigger of constructive dismissal is a significant reduction in remuneration.
Master and servant law may be thought of as the "old" employment law and the statute law as the "new" employment law, although there has been statutory regulation of the terms and conditions of employment since the Middle Ages. The earliest regulation of employment was largely for the benefit of employers, but since the 1900s, Factory Acts legislation, however inadequate it actually has been, has existed for the protection of employees.
Whether or not a person is subject to any employment law depends on whether he or she is in fact the employee of an employer. There are a surprising number of cases where legally it is unclear whether people are employees or independent contractors. For example, taxi drivers or truckers may do work for only one company but not be considered employees by the law. The courts, or the administrators of labour standards legislation, will ask whether the driver, or any other person who claims to be an employee, owns the equipment or tools of the trade, stands to make a profit or take a loss and, most important, whether he or she is subject to control not only regarding what will be done on the job but how it will be done.
Bodies and Codes
In each province and in the federal jurisdiction, the Labour Standards Code or its equivalent regulated not only notice periods but also minimum wages, hours of work, overtime, the mode and interval of wage payments, wage statements, daily rest, weekly rest, statutory holidays, vacations and vacation pay, time off to vote, maternity leave and equal pay for men and women. In most Canadian jurisdictions the equal pay law is found in the human rights code, which prohibits discrimination based on sex, race, religion, ethnic or national origin and a variety of other grounds that differ somewhat from province to province. The Canada Labour Code, applicable to employees in industries under federal constitutional jurisdiction (eg, banks), also provides that employees who have been employed for more than one year are entitled to reinstatement if they are found by special adjudicators to have been dismissed without just cause. Many other statutes (eg, corporations legislation and debt-collection legislation) can be considered part of employment law, as can legislation governing various aspects of public employment (eg, the civil service and public school teaching).
Since the 1970s the individual-employer relationship in Canada has become increasingly regulated, as is exemplified by the changes in the Canada Labour Code, which has given wrongfully dismissed employees the right to claim reinstatement through a special low-cost administrative procedure. Judges have become increasingly generous in the damages awarded to wrongfully dismissed executives, to the point where a year's pay has become quite common - a measure of damages far in excess of that normally given by American courts. The adverse economic climate of the 1980s and 1990s and the prevalence of dismissals associated with "downsizing" has not yet resulted in the recall of formal legal protections gained in the1970s.