What happens when American parent companies open for business in Canada? How can an American company protect themselves when expanding business into Canada?
Most American employers assume that with their expansion into the Canadian business market comes a simple transfer of their company policies and procedures all the while unaware of our complex employment law system.
Although Canada is similar to the U.S. in many ways, our employment rules and regulations are not. Take for example that there is no at-will employment in Canada nor do we routinely drug test job candidates and unlike in the U.S., our workers compensation board is government run.a? Most American employers assume that with their expansion into the Canadian business market comes a simple transfer of their company policies and procedures all the while unaware of our complex employment law system.
U.S. employers operating or employing Canadian workers should either become well versed in Canadian employment standards and compliance or secure the services of an Employer of Record provider. Look at the following example of Canadian company Sure Grip’s misstep in trying to include a U.S. policy in their Canadian company policy:
As seen on Mondaq.com “Canada: Are Your Policies Really Enforceable?” By: Christopher Andree and Jennifer Emmans.
“Oliver was a 9 year management employee of Sure Grip Controls Inc. He had a written employment agreement but it did not deal with the termination of his employment.
Five years after he started, Sure Grip introduced an employee handbook. At the time Oliver signed an acknowledgement that he had received, read and agreed to comply with it. The handbook addressed termination by suggesting Sure Grip would pay only one week's pay for every full year of employment.
The handbook also stated, "I understand that the Sure Grip Controls Inc Management Team Handbook is not a contract of employment and should not be deemed as such."
In March 2011, in the context of a dispute over Oliver's entitlement to a profit sharing payment (which had been denied while Oliver was on medical leave due to a thyroid condition that required surgery) the company terminated him.
Sure Grip took the position that Oliver's entitlement to pay in lieu of notice of termination was limited by the handbook to nine weeks. However, the trial judge found otherwise. She stated that while the parties could have made rights on termination a part of their written contract, the handbook clearly stated that it was not a contract of employment.
Consequently, Oliver's entitlement was not limited to nine weeks' pay as suggested by the handbook. Instead he was entitled to damages based upon the common law principle of reasonable notice. Oliver's damages were assessed at $87,684.00 based upon twelve months' wages and commissions. “
This case illustrates the repercussions to companies that attempt to integrate employment standards derived from another country into Canada. Additionally, trying to implement policies through an employee handbook that clearly states it is not to be used as a contract of employment and having employees acknowledge it in writing is simply not enough. American employers need to take notice of examples like these if they want to protect themselves from legal proceedings when hiring, paying or dismissing Canadian workers.