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3 Things U.S. Companies Need to Know About Canadian Labour Laws

Posted by Stacey Jones


Jul 3, 2014 1:46:00 PM

3 things american companies need to know about canadian employeesAmerican companies eyeing a workforce expansion into Canadian markets need to be aware of many social and legal differences between our two countries. Without an understanding of these many differences, it will be difficult, if not impossible, to avoid delays, or even fines and penalties, if you are looking to actually put in place a bricks and mortar business. While some of the differences can be incredibly complex, most of them fall into a few broad categories. Looking at these categories, and the requirements for setting up a business in Canada, can help you determine if it's something you want to attempt on your own, or if you want to seek professional assistance. When contemplating a Canadian workforce expansion, you should keep the following three things in mind.

Workers' Rights

Cultural and legal differences give Canadian employees more rights than are found in most US states. While it's not uncommon to find "at will employment" laws throughout the US, you'll find no such provisions in Canada. Instead, employees are granted certain statutory rights that govern how employers must treat them. Canadian workers are entitled to vacation pay, notice of termination, accommodations for disabilities, and are largely free of drug testing obligations. These are just a few of the most basic differences between US and Canadian employment laws. Failing to understand all of the differences can lead to fines or even a visit from the Canadian Human Rights Commission.

Employer Obligations

With increased workers' rights also come increased employer responsibilities. These responsibilities can be very similar to US requirements, or completely different. In the US, employers must make reasonable accommodations for workers with disabilities, unless it creates an undue hardship on the business. In Canada, there is no exception for undue hardships. If an employee needs an accommodation, the accommodation must be made. There are also numerous requirements regarding workplace safety and training, along with keeping required postings and reading materials on hand. Failing to abide by any of the statutory requirements can result in substantial fines, or even shutter your business.

Getting Started

Taking your Canadian workforce expansion from concept to completion can be a convoluted and time consuming process. You can't simply hire someone and start conducting business in Canada. There are processes that must be followed to the letter and, if they're not, your expansion could be delayed or derailed. Creating government accounts, setting up banking and insurance, and dealing with multiple bureaucracies takes time. Trying to do it on your own can actually cost you money in the long run, as you'll likely have to fix mistakes along the way.

If you are looking to hire Canadian employees but are not doing any transactional sales with Canadian companies, then an Employer of Record service like The Payroll Edge could be the answer to hiring the workforce you need without the complication of understanding foreign employment and taxation.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: American Companies, Canadian Employment Laws, US and Canadian Employment and Labour Law

3 Differences in Employment and Labour Law in Canada and U.S.

Posted by Stacey Jones


Apr 14, 2014 3:22:00 PM

3 differences in employment and labour law in canada and usOn their surface, Canada and the US can seem very similar. However, even a quick glance at the employment and labour law in each country reveals stark differences. A US business expanding into Canadian markets needs to understand and respect the differences in employment and labour law. A US company that tries to operate under the same rules in Canada as they do in the US will soon conflict with Canadian authorities. While there are many differences between Canadian and US employment and labour law, these three examples demonstrate just how wide the disparities can be.

Terminating Employment

Throughout most of the US, employees work "at will." This means that employers can dismiss them without cause, and with little or no notice. In most cases, it is up to the employee to prove that they were dismissed without cause to qualify for unemployment compensation.

In Canada, an employee who is to be terminated, even with cause, must be given appropriate notice, or be paid in lieu of that notice. The amount of notice required, or the amount to be paid in lieu, varies from province to province, and can be affected by the length of employment, overall wages, and employee classification. Any contractual provisions that reduce the required notification or payments in lieu below statutory minimums are unenforceable and will be ignored by the courts.

Employees with Disabilities

Both countries have statutory provisions against discrimination against employees with disabilities. In the US, the definitions of "disability" are limited, and the accommodations required are also limited. A US company is not required to undertake accommodations that would cause an undue hardship or burden. While they can't discriminate against employees with disabilities, they aren't required to undertake drastic measures to accommodate them, either.

In Canada, employers are required to make accommodations, even if they pose and undue hardship or burden on the business. This requirement will vary depending on the disability, and the nature of the business. Moreover, unlike the US, conditions like alcohol and drug dependency fall under the definition of a disability. A US-based company that refuses to make accommodations for treatment time or other dependency programs could run afoul of the non-discrimination laws.

Changes to Employment

In the US, employers are largely free to change the terms and nature of the employment as they see fit. If the employee continues to work, this is viewed as their acquiescence to the changes. Essentially, a US company can make wholesale changes to the contract of an employee and, if the employee doesn't quit, they are viewed as having agreed to those changes.

Canadian employment and labour law takes quite a different view on the matter. If the contract or terms are changed after employment, the employee is owed a consideration or raise. Continued employment is never viewed as consent to the changes. The only consent accepted by the courts is active, willing, un-coerced consent to the changes. If the employee refuses to consent, and is terminated, the employer will likely owe them any payments, bonuses, holiday, and overtime pay that they would have earned during the period of statutory notice.

Scratching the Surface

These three examples hardly begin to describe the differences between US and Canadian employment and labour law. While there are many similarities, the US and Canada are very different countries. Where US employment and labour law is designed to protect businesses or, at best, strike a balance, Canadian employment and labour law is designed to protect the workers. To avoid running afoul of these differences, it's usually best to consult with a professional payroll or employment agency. 

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: US and Canadian Employment and Labour Law, Employment and Labour Law, US and Canadian Business

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