Hiring guide in Canada

What should I know about hiring in Canada?

Legal framework

Types of employment contracts

Canadian law recognises one primary type of employment contract known as the Standard Employment Contract. However, based on the varying characteristics of employment, this contract can take several different forms. 

Full-time contracts typically involve employees working between 37.5 to 40 hours per week and generally come with comprehensive benefits. Part-time employment contracts are designed for employees who work fewer hours, with benefits that may vary depending on the employer’s policies.

Fixed-term contracts have a specified end date and are often used for project-based or temporary roles. In contrast, indefinite duration contracts continue indefinitely until either party decides to terminate the agreement, with clear terms regarding notice and severance outlined.

There are also casual, seasonal, and temporary contracts.

The province of Quebec has distinctive contracts that differ from the rest of Canada. An indeterminate-term contract, which is the default type in Quebec, signifies an ongoing employment relationship with no predetermined end date. 

On the other hand, a fixed-term contract has a defined end date, typically associated with a specific project, the replacement of an absent employee, or seasonal work. There’s also casual employment that involves irregular, as-needed work with no guaranteed hours or set schedule, with payment made only for hours worked. 

On-call contracts are similar to casual employment arrangements, expecting the employee to be available for work when needed. These contracts may have a more regular but still flexible schedule. Another subtype of a fixed-term contract is a contract for a specific project which is tied to the completion of a specific project or task.

Finally, trainee or apprenticeship contracts are designed to provide training and education, typically combining classroom instruction with on-the-job training.

Content of an employment contract

Employment agreements typically outline job duties and title, along with essential terms like the start date, working hours, and telecommuting options. Compensation and benefits details include salary, bonuses, and retirement plans, while vacation entitlements and confidentiality provisions protect workplace information.

The agreements also clarify the ownership of work products created during employment and reference applicable workplace policies. Conditions for temporary layoffs, termination for cause, and termination without cause, including notice and severance entitlements, are included as well. Post-employment restrictions, such as non-competition and non-solicitation clauses, protect the employer’s interests.

Download a free employment contract for Canada through Native Teams.

Oral, written or electronic employment contracts

In Ontario, an oral contract can be legally binding. First, there must be a clear offer from one party and acceptance from the other. Plus, something of value must be exchanged between the parties, known as consideration. However, proving the existence and specific terms of a verbal contract can be challenging, often depending on witness testimony and the credibility of those involved.

Written employment agreements represent the most straightforward and reliable form of contract. These documents detail the terms and conditions of employment and are signed by both parties. Unlike oral contracts, written contracts provide clarity, as clearly defined terms reduce ambiguity and misunderstandings. Plus, written documentation serves as concrete evidence of the agreed terms, offering legal protection by providing a clear reference point in case of disputes.

Moreover, federal and provincial laws generally recognise electronic agreements as valid as their paper counterparts. Certain key requirements must be met for an electronic signature to be legally binding. The signature must be unique to the signatory, and the signatory must maintain control over it. Moreover, the signature should be capable of verifying the signatory’s identity and must be tamper-proof, ensuring that any changes to the document are detectable.

Working hours

In Ontario, the typical working hours for most employees are 8 hours per day and up to 40 hours per week, generally spanning from 8:00 a.m. or 8:30 a.m. to 5:00 p.m., Monday to Friday. However, specific employment contracts, collective agreements, or industry norms may lead to variations; for example, some sectors may require standard hours of up to 44 or even 48 hours per week.

Across Canada, there are regional differences in the regulation of working hours. In Alberta, for instance, employees may work up to 12 hours a day, accompanied by specific provisions for breaks and rest periods. In provinces such as Nova Scotia and Prince Edward Island, the maximum workweek can extend to 48 hours.

Breaks and night work

According to the Canada Labour Code, employees are entitled to a 30-minute uninterrupted meal break after 5 consecutive hours of work. This break cannot be split into smaller segments. Although it’s typically unpaid, employees must be compensated if they are required to remain on call or perform any duties during this time. 

Employees are also entitled to unpaid breaks for medical reasons. To qualify, they must submit a written request supported by a healthcare practitioner’s certificate detailing the necessity, duration, and frequency of the breaks. Similarly, nursing employees have provisions for taking breaks to nurse or express milk, which are also typically unpaid.

There’s also a requirement for 8 consecutive hours of rest between shifts. This regulation ensures that employees have adequate time to recuperate before starting another work period.

Annual leave

Vacation pay is calculated as a percentage of the employee’s gross wages earned during the vacation entitlement year. For those with less than 5 years of service, vacation pay is set at 4% of gross wages, while employees with 5 or more years of service receive 6% of their gross wages. Employers have the flexibility to pay vacation pay as a lump sum before the vacation begins, during the vacation, or immediately after the vacation, provided there is mutual agreement.

For federally regulated employees under the Canada Labour Code, vacation entitlements differ slightly. They also receive 2 weeks of vacation after 1 year of employment, 3 weeks after 5 consecutive years, and 4 weeks after 10 consecutive years of employment. Vacation pay for federally regulated employees is structured as 4% of earnings for 2 weeks of vacation, 6% for 3 weeks, and 8% for 4 weeks.

Public holidays

In Ontario, employees are entitled to 9 public holidays under the Employment Standards Act (ESA). These holidays include New Year’s Day, Family Day (the third Monday in February), Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Christmas Day, and Boxing Day. 

For federally regulated employees under the Canada Labour Code, there are 10 paid general holidays. These include New Year’s Day (January 1), Good Friday (the Friday before Easter Sunday), Victoria Day (the Monday on or before May 24), Canada Day (July 1), Labour Day (the first Monday in September), National Day for Truth and Reconciliation (September 30), Thanksgiving Day (the second Monday in October), Remembrance Day (November 11), Christmas Day (December 25), and Boxing Day (December 26). 

In Quebec, the national holidays designated as non-working days include New Year’s Day, Epiphany, Easter Sunday, Easter Monday, Labour Day (also known as May Day), Statehood Day, Corpus Christi, Day of Anti-Fascist Struggle, Victory Day, Assumption of Mary, All Saints’ Day, Remembrance Day, Christmas Day, and St. Stephen’s Day.

Salary

In Ontario, the current minimum wage rates are set at $16.55 per hour for general employees and $15.60 per hour for students. In Quebec, salaries are required to be paid by the 15th of each month; failure to do so will result in fines for the company.

To calculate the salary and taxes in Canada, click here.

Sick leave

To be eligible for sick leave, an employee must have been with the same employer for at least 2 consecutive weeks. Acceptable reasons for taking sick leave include personal illness, injury, or medical emergencies, including surgeries related to these issues, but excluding purely elective procedures like cosmetic surgery.

In Ontario, employees are entitled to up to 3 days of unpaid sick leave each calendar year. This entitlement doesn’t restrict employees from using other types of leave, such as critical illness leave, for the same or related conditions.

Employees are required to inform their employer either before the sick leave starts or as soon as possible afterwards. Employers may ask for “reasonable” evidence, such as a medical note, to confirm the need for sick leave. 

In Quebec, salary compensation during sick leave is calculated based on the compensation base, reflecting the average salary received by the insured in the 6 months preceding the onset of the illness or injury, regardless of the party responsible for payment.

Paternity and maternity leave

Maternity leave in Ontario is regulated by the Employment Standards Act (ESA), allowing pregnant employees to take up to 17 weeks of unpaid leave. This leave can begin as early as 17 weeks before the expected birth date. To qualify, employees must have worked for at least 13 weeks before their due date.

Parental leave is available to both biological and adoptive parents, and it can be taken by either or both parents. Birth mothers who have taken maternity leave are entitled to up to 61 weeks of parental leave, while other parents can take up to 63 weeks. This leave must start within 78 weeks of the child’s birth or the date the child first comes into the parent’s custody.

In Quebec, pregnant women, whether employed or self-employed, are required to start their maternity leave 28 days before the expected date of birth and may begin it no earlier than 45 days prior. Maternity leave continues until the baby is 6 months old, with the mandatory portion covering the time from 28 days before the expected birth until 70 days after the child is born, totalling 98 uninterrupted days.

After the mandatory maternity leave ends on the 71st day following the child’s birth, additional maternity leave is available until the baby reaches 6 months old. Parents, whether employed or self-employed, are entitled to parental leave after the child is 6 months old, which can be taken until the child turns 8 years old.

Methods of employment termination

Employment termination can occur in several ways in Ontario. Termination with cause happens when an employer ends the employment due to serious misconduct by the employee, which may include actions like theft or gross insubordination. On the other hand, termination without cause refers to ending the employment for reasons unrelated to the employee’s behaviour, such as business restructuring.

Constructive dismissal occurs when significant unilateral changes to the employment terms force the employee to resign, effectively treating it as a termination by the employer. Frustration of contract arises when unforeseen circumstances, such as a severe illness, render it impossible for the employee to continue working.

Temporary layoffs involve suspending employment while intending to recall the employee once conditions improve. Lastly, mass terminations refer to the termination of 50 or more employees within a 4-week period, which requires special notice and procedures to be followed.

Quebec has slightly different rules when it comes to terminating employment. It can occur upon the death of the worker or the death of the employer if the employer is a natural person. In cases where the employer is a trader, termination may happen upon their death if the trade isn’t transferred according to special regulations. Additionally, cessation of trade by force of law, as outlined in specific regulations, can lead to termination.

Fixed-term employment contracts automatically end at the conclusion of the agreed-upon period. When a worker reaches 65 years of age and has completed 15 years of pensionable service, the contract may also terminate unless both the employer and worker agree otherwise. 

Mutual agreement between the worker and employer can also result in termination. Moreover, the contract may be terminated on the day the employer is notified about the decision recognising the right to a disability pension due to a complete loss of workability. Other methods of termination include dismissal and a decision by the competent court.

Ordinary dismissal by employer

In Ontario, employment termination generally occurs in two ways: with cause or without cause. Termination with cause, often referred to as “just cause,” permits an employer to dismiss an employee without notice or severance pay, typically in response to serious misconduct, like theft or persistent rule-breaking after warnings.

Termination without cause, which is more common, obliges the employer to give notice or pay in lieu of notice. In this case, the employer doesn’t need to provide a specific reason for the dismissal.

For Quebec, an employer may terminate an employment contract with notice if there is a justified reason. One common ground for termination is when a position becomes unnecessary due to economic, technical, or organisational changes within the company. This type of dismissal, often called business-related dismissal, allows employers to restructure or downsize based on operational needs.

Another reason for termination occurs when an employee cannot fulfil job requirements due to certain permanent personal characteristics or limitations. Known as dismissal on personal grounds, this type of termination applies only when an employee is unable to perform their duties effectively and cannot be reassigned to a more suitable role within the company.

Termination may also result from misconduct, where an employee has breached their work obligations. Moreover, during a probation period, if an employee’s performance is unsatisfactory, the employer may choose to dismiss them at the end of the probationary period.

Notice period and challenging the dismissal

Employees in Ontario who have been continuously employed for at least 3 months are entitled to written notice of termination. Continuous employment includes times when an employee may not be actively working but remains in the employment relationship, such as during sick leave, a leave of absence, or lay-offs.

The required notice period depends on the employee’s “period of employment,” which accounts for all time in which the employment relationship exists. Some exceptions apply, for instance, if a lay-off exceeds the temporary lay-off period, employment is considered terminated on the first day of the lay-off, and time after this does not contribute to the employment period. Moreover, if two employment periods are separated by over 13 weeks, only the most recent employment period counts.

The ESA defines specific notice periods based on an employee’s length of service, beginning with a minimum of 1 week for less than 1 year of service and increasing up to 8 weeks for employees with 8 years or more.

The notice period for termination in Quebec varies according to the length of employment, with the law stipulating periods from 2 weeks for employees with less than 1 year of service up to 3 months for those who have worked continuously for 20 years. 

In cases of ordinary dismissal, the required notice period is at least 2 weeks for employees with less than 1 year of continuous employment. For employees who have worked 1 continuous year, the notice period is 1 month; for 2 years, it is 1 month and 2 weeks. Employees with 5 years of continuous service are entitled to 2 months, while those with 10 years receive 2 months and 2 weeks. After 20 years of continuous employment, the notice period extends to 3 months.

For employees with twenty years of continuous service, the notice period increases by an additional two weeks if the employee is fifty years of age and by one month if they are fifty-five. When termination results from the employee’s misconduct, the notice period is reduced to half of the usual notice period.

Suppose an employer releases an employee from work obligations during the notice period. In that case, they must provide compensation and grant all rights as if the employee had worked through the notice period. For extraordinary dismissals, no notice period is required. When termination occurs during a probationary period, the notice period is a minimum of 7 days.

If an employee initiates the termination, the notice period cannot exceed 1 month if there is a justifiable reason for the resignation.

Rights and obligations of unemployed individuals

Canadian workers in Ontario facing an unexpected job loss have access to a financial support system through Employment Insurance (EI), which is administered by the federal government. EI provides temporary assistance to eligible individuals who have lost their jobs for reasons beyond their control. This guide covers essential aspects of EI, including eligibility requirements, the application process, benefit calculations, and the obligations involved in receiving these benefits in Ontario.

To be eligible for EI benefits, certain criteria must be met. Primarily, applicants must have lost their employment through no fault of their own; they should not have been terminated for misconduct or resigned without just cause. Plus, they must have worked a minimum number of insurable hours within a specific qualifying period, which depends on the regional unemployment rate.

Severance pay

In Ontario, severance pay is a statutory benefit provided to compensate employees for their extended service when their employment ends. This payment serves a different purpose than termination pay, which covers the required notice period if notice isn’t given. 

To qualify for severance pay, employees must meet certain criteria. First, they must have completed at least 5 years of service. Plus, the employer must have an annual payroll of $2.5 million or more or have terminated employment as part of a broader business discontinuation affecting 50 or more employees within a 6-month timeframe.

Severance pay is calculated based on an employee’s regular weekly wages. It’s set at 1 week’s pay for each year of service, with pro-rated amounts for partial years, and capped at a maximum of 26 weeks’ pay.

In Quebec, employees can receive severance pay after 2 years of continuous work. Workers whose employment contract was terminated due to behavioural reasons and who, during the time of the termination, were 65 years old aren’t entitled to severance pay.

Probationary period

In Ontario, probation periods generally last around 3 months, although this duration can vary depending on the terms of the employment contract.

The Ontario Employment Standards Act doesn’t require a probation period; instead, it is established through individual employment agreements. During this time, employers have the option to terminate an employee without the notice or severance typically mandated by the ESA, as long as the probation clause is clearly defined in the contract and the termination occurs within the first 3 months.

Prohibition of competition

Non-compete clauses are designed to prevent employees from joining competing companies or starting similar businesses for a specified time and within a certain geographic area after their employment concludes. However, the Employment Standards Act (ESA) explicitly prohibits non-compete agreements for employees, rendering them generally unenforceable. This prohibition extends to anyone providing work or services for wages, undergoing training in a skill utilised by the employer, or working as a homeworker.

There are exceptions to this rule. For instance, if a business is sold and the seller agrees not to compete with the buyer’s business, the non-compete clause may be enforceable if the seller subsequently becomes an employee of the buyer. Plus, non-compete clauses can be enforced against individuals in executive positions such as Chief Executive Officer, President, or Chief Financial Officer.

For a non-compete clause to be enforceable, it must be reasonable in terms of scope, duration, and geographic area. Courts are likely to invalidate clauses that impose overly broad or unreasonable restrictions.

In contrast, non-solicitation clauses prohibit former employees from soliciting clients, customers, or employees from their previous employer. These clauses aim to protect the employer’s business relationships and are generally more enforceable than non-compete clauses, provided they satisfy the reasonableness standard established by common law.

Intellectual property rights

Employment contracts are essential for defining intellectual property (IP) rights within the workplace, often containing clauses that determine the ownership of IP created during employment. These clauses typically specify that any IP developed by an employee as part of their job duties or by using company resources is owned by the employer. 

Common terms in IP clauses include the assignment of rights, where employees agree to transfer their IP rights to the employer, and the scope of work, whereby IP created within the boundaries of employment is owned by the company. Plus, if company resources are used in the creation of IP, ownership generally lies with the employer.

In Canada, intellectual property rights are governed by statutes such as the Patent Act, Copyright Act, Trade-marks Act, and Industrial Design Act, each providing legal protections and outlining the rights and obligations of creators and owners. 

The Patent Act governs inventions, granting exclusive rights to inventors for a set period. The Copyright Act protects original works, including literary, artistic, dramatic, and musical pieces, by granting exclusive rights to authors. The Trade-marks Act safeguards distinctive marks used to identify goods or services, providing exclusive usage rights to the owner. Lastly, the Industrial Design Act covers the visual design of objects that are not purely functional, granting exclusive rights to designers over their creations.

Employee data privacy

Federally regulated employees are protected under the Personal Information Protection and Electronic Documents Act (PIPEDA), which outlines rules for the collection, use, and disclosure of personal information. Several provinces, including Ontario, have privacy laws that are similar to PIPEDA, providing comprehensive protections.

In Ontario, public sector employees are covered by the Freedom of Information and Protection of Privacy Act (FIPPA) and the Municipal Freedom of Information and Protection of Privacy Act (MFIPPA). The province also recognises invasion of privacy as a civil wrong, allowing employees to seek legal remedies for breaches of privacy.

Employers can establish workplace policies that limit employees’ expectations of privacy. These policies, which may be included in collective bargaining agreements or individual employment contracts, must be clearly articulated and unambiguous. Typical policies include the Email Use Policy, Internet Use Policy, and Records Management Policy, which govern the collection, use, and disclosure of personal information on company property.

Remote working policy

In Ontario, remote work is regulated by several important statutes, including the Employment Standards Act (ESA), the Occupational Health and Safety Act (OHSA), and guidelines from the Canada Revenue Agency (CRA). 

Under the Employment Standards Act, remote employees are entitled to the same minimum employment standards as their on-site colleagues. This includes provisions related to wages, hours of work, and overtime pay. 

The Occupational Health and Safety Act mandates that employers maintain a safe and healthy work environment for remote workers. This involves assessing and addressing potential risks associated with remote work settings. Plus, employers must provide the necessary training and resources to promote health and safety for remote employees.

The Canada Revenue Agency has developed administrative policies to clarify the tax implications for those engaged in remote work. Remote workers may be eligible to claim home office expenses if certain conditions are met, such as having a designated workspace and spending more than 50% of their working hours at home.

Health and safety at home

Employers in Ontario are responsible for providing a safe working environment for all employees, whether they work in the office or from home. This responsibility entails taking reasonable precautions to safeguard the health and safety of workers, and ensuring that remote workspaces adhere to safety standards. While the Occupational Health and Safety Act (OHSA) applies broadly, there are statutory exemptions for work conducted in private residences. 

Employers must ensure that home offices are safe, which includes conducting assessments and addressing any hazards that employees may identify. Remote workers are entitled to workers’ compensation for injuries sustained while performing their job duties at home, and it’s crucial for employers to report these incidents and maintain appropriate documentation. 

Moreover, employers need to address the potential risks of online harassment and domestic violence by incorporating measures in their remote work policies to prevent and respond to these issues effectively.

What are the advantages of hiring employees from Canada vs other countries?

Hiring Canadian employees can facilitate access to the North American market, especially for companies based in the U.S. or looking to expand into that region. Canada’s proximity to the U.S. can streamline operations and communication.

In addition, Canada has various programs aimed at attracting skilled workers from around the world, which can make it easier for companies to hire international talent who want to relocate.

Finally, many Canadians are bilingual, providing businesses with a workforce capable of engaging with both English and French-speaking clients, which is advantageous for companies with international operations.

Why use Native Teams for hiring in Canada?

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• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.