In Canada, employers are governed by either federal laws or provincial laws depending on the type of undertaking. While some undertakings (such as telecommunications, banking or enterprises which involve interprovincial transportation) are federally regulated, the majority (such as most manufacturing, retail sales, service industries, etc.) are governed by provincial laws, sometimes called statutes.

For example, a trucking company that transports goods both inside and outside Ontario will likely be a federally regulated undertaking. Accordingly, the federal Canada Labour Code will govern many of the minimum requirements of the employment relationship including hours of work, minimum wage, vacation, holidays, leaves of absence etc.. On the other hand, a company manufacturing plumbing fixtures in Ontario will be a provincially regulated undertaking, governed by the provincial Employment Standards Act, 2000, which sets out many of the minimum requirements.

In every case the relationship between employers and employees is affected by:

• the contract of employment (which can be either written or unwritten);
• the common law of employment (judge-made law); and
• the federal or provincial statutes applicable to the undertaking in question.

Generally, an employer and employee cannot agree to a contract for less than a minimum statutory obligation, but a contractual term which exceeds a statutory minimum or limits common law entitlements will be enforceable. See the discussion of obligations and entitlements on termination in Question 3 for an example of the application of these principles.

A contract of employment between an employer and an employee may include enforceable terms arising in a number of ways, both written and unwritten:

• a written employment agreement, signed by both parties;
• workplace policies and procedures contained in a written document, such as an Employee Handbook;
• unwritten policies, procedures and practices which are generally known to and followed by the parties;
• statutory rights and obligations, which are deemed to be part of every employment contract;
• common law rights and obligations, some of which are deemed to be part of every employment contract. This includes reasonable notice of termination of employment in the absence of just cause (see Question 3).

The terms of an unwritten contract are legally enforceable. However, they are more difficult to prove in the event of a disagreement and that is why wise employers provide prospective employees with a written employment agreement setting out the specific terms and conditions of the position being offered.

Both provincial and federal employment statutes set out the minimum standards for employee entitlements on termination, which are intended to provide a period of financial support while the employee seeks alternative employment.

Employees are entitled to written notice of the termination, which can be by way of working notice, pay in lieu of working notice or a combination of the two ("notice of termination"). For example, in a provincially-regulated workplace in Ontario, once an employee has worked for an employer for three months, s/he will be entitled to approximately one week's notice of termination per year of service to a maximum of eight weeks.

In that same workplace, employees are also entitled to severance pay if:

• The employer has an annual payroll of $2.5 million in Ontario; and
• The employee has more than five years' service with the organization.

Severance pay is intended to be something of a "golden handshake" – recognition for the employee's contribution to the employer's endeavours over the years. In provincially-regulated workplaces in Ontario, it is calculated as approximately one week's pay per year of service to a maximum of 26 weeks' wages.

However, employee's entitlements are not limited to those contained in employment statutes. Common law entitlements, created by judges applying legal precedents, are almost always greater than the minimum entitlements set out by statute. The fundamental principle is that employees are entitled to "reasonable" notice of termination, except in circumstances where the employee has acted in such a way that s/he has breached the employment contract and thereby created "just cause" for the termination.

"Just cause" (sometimes simply referred to as "cause") is generally accepted to be a very high standard for an employer to meet. Serious dishonesty, repeated intentional and knowing breaches of company policies and incorrigible absenteeism without reasonable excuse are some of the behaviours which may result in a finding of cause for dismissal. However, in most cases an employer must be extremely vigilant about documenting problems, addressing them directly with the employee and providing the employee with an opportunity to correct his/her behaviour in order to successfully claim just cause for dismissal.

Where an employer does not have just cause for dismissing an employee, reasonable notice of termination under the common law is calculated by taking into account a number of factors, which include:

• the age of the employee;
• the employee's length of service with the employer;
• the wages being paid to the employee;
• the seniority/responsibility of the position held;
• whether the employee was recruited away from secure employment elsewhere; and
• the manner of termination, i.e. if the employer acts in bad faith in the course of the termination such that the employee suffers additional damages, the employer's liability may increase.

As a general rule, the greater of any of these factors, the longer the reasonable notice period will be found to be. However, short-service employees are granted proportionally longer notice periods due to the principle that a successful job search requires a certain minimum time, so an employee with only six months' service could be granted a reasonable notice period of six months depending on the other applicable circumstances. Some Canadian courts have capped notice periods at twenty-four months, even for the most senior employees.

In Ontario, a rough estimate of reasonable notice is sometimes made by calculating a period of time somewhere between two and four weeks per year of service, depending on the other applicable factors. This estimate is typically expressed in a range rather than a hard and fast number. For example, consider a 35-year-old administrative assistant who has worked for the same company for 15 years – essentially her whole working life – and is now earning $50,000 per year. Roughly estimating the reasonable notice period, we would say she would be entitled to a reasonable notice period of between two and three weeks per year of service, or approximately 30-45 weeks (7-10 months). When looking at the specifics of her situation, we would assess that her age would not affect the calculation significantly and the level of responsibility in her position is likely low. However, she has never worked anywhere else and is now earning a relatively high income, which might be hard to replace. In this case, it is therefore likely that the reasonable notice period would be found to be closer to the high end of the range.

Of course, that is only the first step in the analysis. Under the common law (although not pursuant to statute) employees also have obligations when employment is terminated. They have a common law obligation to "mitigate their damages" by making reasonable efforts to find alternative employment. To the extent that s/he is successful, the employer's obligation to provide reasonable notice is reduced. Using the example of the administrative assistant above, if she were to find alternative employment earning $50,000 per year three months after her dismissal, then her employer would be responsible for her loss of wages and benefits only for three months. If she could not find comparable employment and but found a position earning $25,000 per year after three months, the employer would be responsible for "topping up" her income for the entire reasonable notice period.

The interrelationship of the ESA and the common-law can create numerous complex situations and this brief overview is not intended to constitute legal advice. Of course, other statutes can also have an effect (see, in particular, Question 6 relating to human rights legislation). The proactive employer will provide prospective employees with a comprehensive employment contract for review and acceptance before employment commences. Such a contract would include provisions setting out obligations and entitlements on termination and would, if enforceable, protect both parties in the event the employment relationship ends.

If the employer is provincially-regulated, the certification of a trade union is governed by the Labour Relations Act, 1995. For most workplaces , the certification process begins with an organizing campaign by the Union. Union representatives, usually at least one employees assisted by an external organizer, contact other employees ask them to sign membership cards in the Union. This is sometimes done by way of one-on-one meetings, but it is also common for Unions to arrange group meetings at the home of a supporter or a local bar.

If the Union obtains memberships from 40% or more of the employees in the group being targeted (the "proposed bargaining unit"), it will deliver an Application for Certification (the "Application") to the employer and file it with the Ontario Labour Relations Board (the "OLRB").

The timelines from this point forward are very short, so it is important for employers to understand the process and be prepared to react quickly. The employer's Response to Application for Certification (the "Response") must be filed with the OLRB by the end of the second business day after the employer receives the Application. The Response must contain a complete list of all employees in the proposed bargaining unit and, if the employer disagrees with the description of the proposed bargaining unit, any other employees who it believes should be included. In the non-construction sector, employees entitled to vote include those who are on leave from the workplace due to vacations, illness, disability, pregnancy/parental leave, etc..

In non-construction workplaces, a vote will normally take place on the fifth business day after the Application is filed with the OLRB. The vote is overseen by a representative of the OLRB, who typically attends at the workplace, sets up voting booths, monitors the vote and then counts ballots following the vote.

A number of issues may arise, such as a difference of opinion between the Union and the employer about which employees should be included in the bargaining unit. Nonetheless, the vote will almost always be held on the fifth business day following the filing of the Application. All individuals who attend on the voting day will be allowed to vote but, if their membership in the bargaining unit is in dispute, their votes will be segregated (not counted but held) until such time as a determination of their eligibility to vote has been made by the OLRB.

Once all the votes have been counted, if more than 50% of voters have said "Yes" to the Union, then it will be certified as the bargaining agent for all employees in the bargaining unit, i.e. the employer will be unionized.

If 50% or more of the votes have said "No" to the Union, then the employer will not be unionized and the Union's Application will be dismissed. In the event the Union is unsuccessful, it will be prohibited from filing another Application for one year from the date of dismissal.

In workplaces in the construction sector, there is an alternative route to certification. The first significant difference in the construction sector is that only employees who are actually at work doing the work of the bargaining unit on the day the Application is filed are eligible to be counted.

Where a Union has membership cards from 40% of these employees or more, the vote-based certification system as set out above is available, keeping in mind that only those individuals at work on the date the Application is filed are eligible to vote.

However, in the construction sector, if the Union obtains membership cards from more than 55% of the employees at work doing the work of the bargaining unit on the day the Application is filed, then the Union is automatically granted bargaining rights for the Employer.

As an example, consider a situation where Canada Day falls on Tuesday but the employer and employees in a concrete-forming business agree to take Monday off instead. However, two employees ask the employer if they can work Monday, but have the Tuesday off to take their children to the Canada Day parade. The employer agrees.

On Monday, only two employees are at work pouring concrete for a driveway. If both of them have signed Union membership cards, the Union can file an Application with the OLRB and the company will be unionized.

In Ontario, the Labour Relations Act, 1995 provides that "every person is free to join a trade union of the person's own choice and to participate in its lawful activities." Comparable language is found in the federal Canada Labour Code. Accordingly, employees' rights to unionize are integral to the employment relationship.

Employers are entitled to communicate a preference to remain non-union where they wish to do so. However, it must be done without threatening, intimidating or making promises to employees which would discourage them from exercising their right to choose a union to represent them.

The following are a few examples of prohibited employer conduct during a Union organizing campaign:

• Any activity which would suggest that the employees are being kept under surveillance to determine who is and who is not participating in union activities.
• Telling employees they will be fired or punished for union activity.
• Laying off or discharging an employee for union activity.
• Granting wage increases or special concessions in order to keep the union out.
• Trying to limit union representatives from soliciting memberships during non-working hours.
• Asking employees about confidential union matters, meetings, etc.
• Asking employees how they intend to vote in the event of a representation vote.
• Threatening employees with negative economic consequences for unionization, eg. the Company will move to Mexico if the Union wins the vote.
• Announcing that the Company will not deal with a union.
• Asking an employee during an interview about his/her affiliation with a labour organization.
• Making distinctions between union supporters and others when assigning overtime or desirable work.
• Promising employees a reward or a future benefit if the Union campaign is not successful.
• Visiting the homes of employees to urge them to reject the union.

Employers who prefer to remain non-union are permitted to do the following:

• Keep outside Union organizers off the employer's premises.
• Inform employees from time to time of the benefits they presently enjoy (avoid veiled promises or threats).
• Inform employees of any untrue or misleading statements made by the organizer and provide the correct facts.
• Reply to union attacks on employer policies or practices.
• Give factual position on labour/management matters.
• Insist that any solicitation of membership or discussion of union affairs be conducted outside of working time. This must be done even-handedly – i.e. employees must be told they are not to discuss the Union issue, either "pro" or "con", during working hours.
• Treat both union and non-union employees alike in making assignments of preferred work, desired overtime, etc.
• Enforce rules impartially, regardless of the employee's membership activity in a union.
• Tell employees, if they ask, that they are free to join or not to join any organization, so far as their status with the employer is concerned.
• Share personal experiences with a union with the employees.

Federally-regulated workplaces are covered by the Canadian Human Rights Act while provincially-regulated workplaces are covered by the Ontario Human Rights Code. In each case, these pieces of legislation provide that employees may not be discriminated against on a variety of grounds including race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, age, record of offences, marital status, sexual orientation, family status or disability. As well, each piece of legislation also prohibits sexual harassment in the workplace

It is important for employers to note that human rights legislation is considered to be of paramount importance and it will always "trump" agreements between the parties (including those with trade unions) or even other pieces of legislation. The employer should bear in mind that its obligations under human rights legislation which be in place from the hiring phase until the point at which employment ends.

The Human Rights Tribunal of Ontario has published its procedural guidelines on its web-site: http://www.hrto.ca/NEW/home.asp. The Tribunal web-site also includes a link to the Ontario Human Rights Commission which publishes a wide range of guidelines on workplace related issues including the hiring process itself. The Canadian Human Rights Commission web-site, which will be of interest to federally-regulated employers may be found at: http://www.chrc-ccdp.ca/default-en.asp.

There have been a few notable changes to the human rights regime in Ontario recently. Effective July 1, 2008, the manner in which complaints are handled under the provincial Human Rights Code is significantly different. Complaints will no longer be investigated by an officer appointed by the Commission who has the power to decide whether a particular complaint will be the subject of a hearing. Under the new system, a Complainant makes their complaint directly to the Human Rights Tribunal of Ontario which will try to mediate the complaint. If unsuccessful, however, the complaint will proceed directly before the Tribunal for a hearing.

In addition to this procedural change, a recent change to the substantive law has occurred with the elimination of the right of an employer to require mandatory retirement for all employees at age 65. This would be an example of the type of case in which an employer might have an existing contractual term with its employees which is now "trumped" by the Human Rights Code.

Finally, it is worth noting that there is one aspect of human rights legislation with the potential to present particular challenges to employers. The obligation not to discriminate because of disability is one which requires employers to be aware of their duties and responsibilities. Employers dealing with an employee who has or claims to have a disability should try to educate themselves about their obligation to accommodate the disabled employee in the workplace. This is an area that is extremely complex and one resource that is a good starting point is the Guideline published by the Ontario Human Rights Commission at: http://www.ohrc.on.ca/en/resources/Policies/PolicyDisAccom2/pdf.

While both employees and independent contractors are free to negotiate for whatever contractual rights they choose, an independent contractor is not an employee and generally has fewer legal rights as a result. However, an independent contractor is also considered to be self-employed, which sometimes results in certain beneficial tax consequences and other positive outcomes which can be attractive to both parties.

It is critical to determine the actual nature of the relationship in order to correctly characterize it as either that of an independent contractor or an employee. Failure to accurately make this determination at the commencement of the relationship can result in significant liability for both parties.

If the answer to most of the following questions is "yes", then the worker is likely an independent contractor:

• Does the worker have an incorporated business:

- (a) Which advertises?

- (b) With business cards?

- (c) With a separate telephone listing in business directory listings?

- (d) With office space outside of the corporation's premises?

- (e) With employees of his or her own?

• Is there a written agreement between the corporation and the worker characterizing the relationship as a relationship that of an independent contractor?
• Is the worker's work for the company sporadic and/or irregular?
• Is the relationship relatively short-lived?
• Is the worker free to supply similar services to other corporations when not performing services for the corporation?
• Does the worker actually provide services to other corporations (especially competitors)?
• Can the worker provide a substitute if the worker is away, e.g., sick, or working for another business?

- (a) Does the worker have his or her own tools, e.g., stationery, computer, relevant "tools of the trade"?

- (b) If the corporation supplies the equipment to the worker, does the corporation charge the worker for use of any equipment or office space provided by the corporation?

• Does the worker control what is to be done; when it is to be done; where it is done; the location in which it is to be done; and the manner or method in which the work is performed?
• Does the workers perform work which is different from the work performed by employees?
• Is compensation is based on the task/project or some factor other than time which provides the worker with a greater opportunity for profit?
• Does the worker invoice the corporation?
• Does the corporation obtain from the worker a Clearance Certificate issued by the Workplace Safety and Insurance Board confirming that the worker has registered and paid all Workplace Safety and Insurance Act premiums personally?
• Does the worker charge and pay GST?

If the answer to most of the questions above is "no", then the worker would probably be considered an employee.

There is no way in which any web-site can provide a comprehensive list of laws which may apply as the range of laws is as wide as the range of issues that can come up at any time. That said, we wish to provide a number of links which may prove a good starting point for issues that commonly arise for provincially-regulated employers (see also Question 1):

Ontario Employment Standards Act

Ontario Occupational Health and Safety

Workplace Safety and Insurance

Ontario Labour Relations Board

Ontario Pay Equity

Ontario Human Rights Commission

Human Rights Tribunal of Ontario

Employment Insurance

Employees have a clear legal right to leave employment at any time. Employers do not "own" them and therefore they are free to offer services to whomever they wish.

However, employment agreements and/or company policy manuals may impose some specific obligations when resigning, such as stated notice periods, return of company property, etc. and there are a number of obligations that exist whether or not they exist in written form.

For example, employees must provide reasonable advance notice of resignation date and, for most positions, this translates into a generally accepted practice of two weeks' written notice. This notice requirement may be much higher for people holding specialized and/or senior level positions in an organization because they cannot be quickly replaced.

Special rules also apply to Ontario employees of provincially-regulated employers who decide not to return to work after taking pregnancy and/or parental leave. These individuals will be expected to provide a minimum of four weeks' written notice of resignation date under the Employment Standards Act. Employees who do not plan to return to work are generally encouraged to provide as much notice as possible in order to maintain positive relations with the former employer.

After resignation, employee will still have ongoing obligations to their former employer. This includes a general obligation not to disclose or use confidential information obtained during employment.

Employees also have a general obligation not to take any actions that are likely to injure the former employer's business. Depending on the position held, this may include an obligation not to solicit away their customers and/or their employees, or not to be involved in competing business for a certain period of time.

Employers also have some obligations to employees who resign. Regular wages and vacation pay accrual up to and including your resignation date must be paid together with regular contributions to your employee benefit coverage until the date the resignation takes effect, even if the employer chooses to waive the notice period, i.e. to direct the employee that they do not have to attend work during the notice period.