Elisa: Good morning. I think we'll get started as we wait for additional participants to join. My name's Elisa Scali. I am a partner with Gowling WLG and I am practicing the Employment and Labour Equalities group with the firm. On behalf of our Employment Labour and Equalities group I'd like to welcome you to our fourth webinar of our 2022 webinar series. If you missed our previous webinars, you can access them on demand through our new website that's dedicated to labour and employment law. In addition to accessing our on demand webinars on that website, you will also find information on the right to disconnect, remote work and employee privacy. So the link to that web page can be found in the chat. The webinar today, Not the 51st State - Introduction to Employment and Labour law in Canada, will be an introduction to Canadian employment law, for our US neighbours, doing business in Canada. Given the focus of our webinar today we've invited a special guest to join us, Wendy Wagner, a partner with Gowling WLG and the leader of our firm's US initiative. I'd like to pass it over to Wendy now to share with us a bit about the firm's US initiative. Wendy?
Wendy: Hi. Good morning everyone and thanks very much for attending. I just wanted to spend a brief moment introducing Gowling WLG and our geographic footprint and services and how we approach the US. So about 7 years ago Canadian based Gowlings combined with a UK firm called Wragge Lawrence Graham and that formed Gowling WLG. We have about 1,500 professionals globally and a presence in Canada, the UK, Europe, Middle East and Asia but no office locations within the US. So as a head of our US initiative I lead the group that works to develop and maintain our client and firm relationships within the US market. One of our objectives is that through our global office, and a lot of long standing and established relationships that we have in over 30 countries, we can frequently provide a rest of the world solution for our US colleagues. Within Canada we have 7 offices and we're present in the major jurisdictions of Alberta, British Columbia, Ontario and Quebec. We're offering services in essentially all sectors and across all practice areas. Just one brief word on firm culture. We focus on excellence in the quality of our legal advice, but also just on getting the job done while increasing certainty around deadline and cost, so that our clients can stay focused on growing their business. Relevant to today's topic, we've repeatedly been recognized as a top employer and we're very, very committed to diversity and inclusion and innovation and practice as well. So enough about the firm. I just wanted to briefly introduce and turn it over to my colleague, Chris Andree, who's worked hard to put this program together. Chris is a past head of our Employment Labour and Equalities group, practicing out of our Waterloo office. He has, despite his youthful appearance, he's practiced for over 25 years and offering advice to both small and large companies on all aspects of their relationships with their employees, and also has a contentious practice appearing before courts and tribunals. So, Chris, I will hand it over to you and thanks everyone for involving me in that brief explanation of our firm and our US activities.
Chris:Thanks for very much, Wendy. I appreciate the compliment. That's one of the beauties of Zoom. You can't see all the lines across my forehead that my three children have dedicated themselves to putting there. I want to welcome everybody. Thank you very much for coming and I'll welcome the folks who are not in the Eastern time zone. I welcome you even just a little bit more because I know it's an early start for you so I really appreciate it. To give you a little bit of information about our employment and labour practice, we have more than 40 professionals across Canada and we're in all of the Provinces in which we have offices. Wendy has mentioned those and those are the major business centers in Canada. Beyond that we have strong relationships in our other Provinces and Territories, as required, so if your business has employees in Canada we can help you. We provide support to all sizes of businesses and we're across all of the industries. I was looking, just because I need to for this purpose, the Fortune 50 businesses, we act for at least 4 of the top 10. In terms of our experience and our level of sophistication, we've got that, but our other sort of main focus is, and I know in employment and labour it's sometimes difficult to find, we are decisive in our answers. There's always grey but we try to be decisive because that's what helps you make good decisions. The second thing that we do is we focus on practical solutions. You don't want to hear about the case law. You don't want to hear about the legislation, other than to ground the decisions that you're making, so we focus a lot on practical solutions. Ultimately we're invested in your success. It's not just a tag line or a slogan. We're very committed to trying to help you manage your business to take advantage of the opportunities you have, particularly here in Canada, so we would love to help you do that. In terms of the presentation housekeeping, the slides that you will see today will be available, and sent to all of the attendees after the presentation. There will be a link to this presentation. It's being recorded. Please share that with your colleagues. Please share that with your counsel because we are looking to help as many businesses as we can, exploit the opportunities that exist here in Canada.
So to get into the details, I'm going to start with the legal landscape. Unlike you we only have 14 jurisdictions to worry about. So we have the Federal level, we have 10 Provinces 3 Territories. Now there area also regional and municipal legislation that may influence or may apply. We certainly saw that during COVID. There were lots of municipal regulations regarding masking, and lockdown and those kinds of things, but typically it is at the Provincial level. We have two legal systems. So we have a common law system, which is essentially legislation and judge made law, and then we also have in our Province of Quebec, we have the civil law, the Civil Code of Quebec. The common law is based on precedents that have developed over the last 150 years. Quebec is unlike the rest. It is similar, I think, in some respects to Louisiana, for those of you who may have some experience there. So the Civil Code suggests that the precedents are less important but I will not try to put too much gloss on it. It can be a difficult place to do business, particularly for those who haven't had any exposure to Europe. If you've dealt with Europe, you're going to be quite comfortable in Quebec. Another feature of our country is we're highly regulated. There's lots of legislation, both in and outside of Quebec. The common law implies a lot of terms into the employment relationship, in particular, and I'll talk a little bit about how special that relationship is in the minds of the court, and generally speaking individual rights are given prominence. So union employee favourable legislation, administrative bodies would seem to lean toward employee rights rather than employer rights. So it does take a good deal of strategy and execution to be successful in the employment relationship in Canada.
The next thing that I want to do is quote from a couple of Supreme Court of Canada decisions. They're a little bit long but they're really important to understand the context.
"Work is one of the most fundamental aspects in a person's life, providing the individual with a means of financial support and, as importantly, a contributory role in society. A person's employment is an essential component of his or her sense of identity, self-worth and emotional well-being. Thus, for most people, work is one of the defining features of their lives. Accordingly, any changes in a person's employment status is bound to have far reaching repercussions."
That is the Supreme Court of Canada saying that. So that's the highest court that we have and it signals the mindset of the courts. So to play that, sort of in my personal context, I'm a father, a husband and a lawyer, in that order. That is how people see me and that is how I see myself. So if you affect the lawyer part of me, you affect my identity. Both my self-identity and how people see me. If you affected the Gowling WLG lawyer part of me, you would affect my identity. So there is very much an inclination to say the sense of fairness will usually favour employees. There's another quote there which you can read and it has to do with non-competition provisions. So it is the kind of environment that you need to be comfortable recognizing that employees are likely going to have a little bit of leeway. You will held to a high standard. They may not be held to the same standard.
So now I want to talk about some fundamental differences and I'm going to start with a thing that seems to stick out like a sore thumb to a lot of people from the US. We spell labour with a "u". We're not dumb. Our spellcheck works just fine. But we spell it with a "u". So when you get documentation from Canada, and it looks as though it's misspelling labour, it's probably not. It's one of the great mysteries of Canada and dealing with folks from the US. We decided that we were going to continue to follow the English spelling. You, I know in the late 18th and early 19th century, rejected all things British and so among those other things you dropped the "u" in many of your words. But we retained them. So please don't lose confidence in us when you see words spelled with a "u".
The next thing that I want to tell you is employment is primarily Provincially regulated, and I know it's similar for many of your States, but what's a little bit different is there's no equivalent to the Federally enforced FMLA, ADA, OSHA, NRLA. Those concepts certainly exist but they exist in the Provincial legislation, and because they exist in each piece of Provincial legislation, there are often variations from each Province. So one of the things to recognize is when you're going online, or when you're looking for resources, you need to ensure that you are getting the right Province and you're getting Provincial information. We'll talk a little bit later about the Provincial employment standards legislation applies to most of the workers in the Province. Generally speaking, it's about 90% of the people in the Province and another thing to recognize is the residence of the employer is irrelevant. So whether you incorporated in British Columbia but you have most of your operations in Ontario, or you're a US business that has direct employment relationships with employees in Canada, where the employee is employed will be the governing law. Now there are certain industries that are Federally regulated, and subject to what's called the Canada Labour Code, but it's a very defined group. Generally speaking, telecommunications, broadcasting, aviation, inter-Provincial transportation. We do a lot of work with trucking companies and transportation companies, logistic companies. So those may be Federally regulated, depending on their circumstances.
The next thing, and this is something that everybody has to get their head around, we have no employment at will. That may be disappointing to some of you. But where that leads us is the employment relationship is a contract. I know that many of you spend a lot of time and ink making sure that your agreements and your handbooks, etcetera, say that there's nothing in here that makes this a contract. In Canada, the employment relationship is a contract, and so it's key to understanding our laws and the advice that you'll get your HR and your legal advisors. So what we encourage folks from the US to do is to accept that that's where we are, and then to adapt, and we can help you adapt. Generally speaking, employment is deemed to be indefinite unless there's proof otherwise. So fixed term contracts, probationary contracts, etcetera, and generally speaking, indefinite employment is really ended by the employer in two ways. Just cause. So for cause terminations, you can imagine some sort of misconduct by the employee. In that circumstance no notice is required. In certain Provinces there's a higher standard called willful misconduct. The second way it can end is without cause. So without just cause or willful misconduct. In that circumstance the employee is entitled to notice of termination, or pay in lieu of notice, and we'll talk more about what that really means and how big those numbers can get. Another thing that we often see certainly in handbooks and sometimes in other policies, is we have zero tolerance of zero tolerance policies. So there's no such thing as a zero tolerance policy. Context is critical. So I've included a little quote, again from the Supreme Court of Canada, and this is a circumstance where the person was dishonest, was found to be dishonest but the court said that's not enough.
"Whether an employer is justified in dismissing an employee for dishonesty is a question that requires an assessment of the context of the misconduct."
What that means in many cases is even where there's serious misconduct you still have to consider the context. You still have to consider that behaviour in the context. It may not amount to just cause. So examples of that might be dishonesty, theft, violence. Those will surprise you as being situations where it may not be just cause. Well, that is our law. So the same behaviour by one employee may not lead to just cause, whereas the behaviour by another may amount to just cause. So I'm going to talk now about just cause.
The first distinction to recognize is there is a common law definition of just cause or some descriptions in the Quebec Civil Code about what just cause means. In some Provinces, Ontario being one of them, Nova Scotia being another, there is legislation that has made a higher standard. So willful behaviour. What that means is behaviours like poor performance, repeated less serious misconduct, may not satisfy the test. The only way that you're going to know is if you have knowledgeable legal advice from someone like us. Now the common law, again to go back to the concept of context, the common law or the judge made law requires a balancing of the misconduct and the performance deficiency or performance deficiency against the employment history of that employee. To give you an example, there is a case where the employee and their customer went out for lunch. Unfortunately both of them drank too much. They had both been work colleagues. They've also been social colleagues. Their spouses knew one another. They had travelled together. Unfortunately on the way back to the customer location, the customer made a comment to the employee that was very derogatory towards the employee's wife. When they arrived at the customer's location, the employee proceeded to beat the customer to a pulp in the parking lot. Not surprisingly, the employer terminated the employee's employment. The employee sued for wrongful dismissal. It went all the way to the Ontario Court of Appeal and the outcome was no just cause. Now that may surprise you. But the reason was, he was a 25 year employee. He had a spotless record. The customer admitted that what he had said about the employee's wife was very offensive. They knew one another personally and I think one of the most important things was the customer didn't stop doing business with the employer. So in that context, no just cause. When I tell that story to folks from the US, I can see the eyebrows raised. I can't see your eyebrows raised but I'm anticipating that some of them have gone up. The core question for determination is whether an employee has engaged in misconduct that is incompatible with the fundamental terms of the employment relationship. Can this relationship be continued? Is there a possibility of some discipline short of termination? Then there's a quote there about proportionality. So again, it's about balancing the body of work of that employee, so to speak, with the misconduct.
I also want to talk about, and the next topic is even more distressing for some clients, and that is the right to reinstatement in employment. Generally speaking, in our Provinces, an employer has the right to terminate an employee without cause. That does not apply in Quebec. It does not apply at the Canada Labour Code in some circumstances. But generally speaking, that is the rule. But there are rights of reinstatement in certain Provinces in certain contexts where if the employer terminations without just cause, the employee can seek reinstatement and be awarded reinstatement. So it's like having a unionized kind of concept in a non-unionized relationship. There are other circumstances where employees can be reinstated. So in the context of human rights violation, one of the remedies that the Human Rights Tribunal has is to order reinstatement. It also can award back pay for the period from the time the employee was terminated to the time they're reinstated. So obviously that could be quite expensive depending upon how long it takes but there are circumstances where that can occur. Similarly under employment standards legislation, there's a right to reinstatement after leaves of absence. If the employer breaches that right of reinstatement the employee can complain, and months potentially later, be reinstated to that job. The remedies, when you are determining what action to take, need to be considered including that right to reinstatement.
The next topic is the one that we spend an awful lot of time on and that is termination without cause. So termination with notice or pay in lieu. I'm going to exclude Quebec because of the reasons I just said. In terms of in Quebec you need just cause or a genuine reorganization of the business in order to end employment for most employees after 2 years. When you are terminating without cause you must consider both legislation and the common law. So what's written in the legislation, and then the common law, or that judge made law. The factors that are considered to determine how much notice an employee is entitled to are different under each of those headings. So under the legislation, it's really about length of service. There's often a mathematical calculation. 1 week per year. 2 weeks per year. That kind of thing. Other factors that the legislation will take into account are the size of the payroll. In Ontario, if the employer has a 2.5 million annual payroll, employees with 5 or more years of service are entitled to a greater amount of pay in lieu compensation for termination. So it's important to understand what the payroll is. There's some case law that suggests it's the global payroll. Well for many of you in the US, even if you had on only 1 employee in Ontario, you might trip over that if the worldwide payroll is considered. Then the last feature that is considered under the legislation is the number of terminations in the last 4 weeks, or the last 6 months or the last period. So it's a bit like your WARN Act, and we'll talk a little bit about that, but generally speaking, if it's 50 or more employees in a 4 week period in Ontario, in BC it's a different period, so we'll talk about that a little bit. The second heading, or the second stream of law that needs to be considered, and this is the one that's harder to find online, is the common law. It considers not only the length of service but the age of the employee. The character of employment. So what kind of job did they do and then the availability of similar employment out there in the marketplace. So those factors are different than length of service, size of payroll. It's about how long is it going to take this person to replace the employment? So that is a bit more of an art than a science, for sure. Some of those numbers can be as much as 24 months for older, longer service, high level workers. When you're looking at the contrast between just cause and termination with notice or pay in lieu, and the gap is that large, you can understand why there's lots of litigation and lots of involvement of lawyers. The other thing that you need to recognize is at certain points, at certain levels, depending on the number of employees that you are dealing with, you may have to give notice to the Provincial Ministry of Labour. So give notice to the government of what you are doing in your business in terms of the number of terminations.
The next thing I want to talk about is constructive dismissal. That's a term that I think you're familiar with but our reference to constructive dismissal is a little bit different. Going back to the concept that we started with, which is the employment is a contract. So if an employer unilaterally changes the terms of the contract, that is a breach of contract, and the employee has certain rights. You enter into contracts all the time. The whole point of a contract is we agree on what's going to happen, we agree on the price and neither of us can unilaterally change the terms. The employment contract is essentially the same. Now there will be terms that change year over year. Salary increases, job responsibilities, but those will be negotiated or at least they'll be offered by the employer and usually the employee accepts an increase in their wage. So there's not too much negotiation that goes on there. But when you're looking at a constructive dismissal concept the focus is on the impact of the changes on the employee. It's not really about the impact of the changes or the reasons for the change by the employer. Even though you may have very good reasons like, oh I don't know, a worldwide pandemic? The importance of employment, and I'll refer you back to that Supreme Court of Canada quote, that's where the focus is. What is the impact of these changes on the employee? So where an employer decides unilaterally to make substantial changes to the essential terms of the employee's contract of employment, and the employee does not agree, so that's the negotiation part, to the changes and leaves his or her job, resigns, the employee has not resigned but has to be constructively dismissed and can make their claim as though you have terminated their employment. Their job had certain terms and conditions. You offered them a job effectively with different terms and conditions. They have the right to say no. If the changes are substantial enough they can resign and sue as though you terminated them from that job. So all things being equal, it's more likely to lean in the favour of employees. I think you're getting that theme.
The second thing I want to talk about when we're talking about constructive dismissal and the fact that the relationship is a contract, is consideration. Consideration is a fancy word for providing value to the employee. If you want to make changes to their employment, you need to negotiate those changes, rather than unilaterally impose them. In order for those changes, and in an employment that is executed in the context of those changes, you need consideration or value. So if I want to change your job duties, maybe I need to give you a raise, or a promotion. Maybe I need to give you more paid time off in exchange for your agreement to these other changes. So that concept, I don't want to belabour it too much, but the idea of going into an employee's office, putting before them a document, getting them to sign it and expecting the document to be enforceable, is not the case in Canada.
I'm going to take very briefly about Quebec. I don't profess to know the law of Quebec and that's why I have so many great colleagues in our Montreal office. They have a civil law tradition which comes from the Civil Code that Napoleon originated. So it's more codification of the law, and one of the things that's most important about it that's a bit different from our other Provinces, is the power to contract is very much restricted. So for example, employees cannot agree in advance to how much notice they will receive upon the termination of their employment without cause at some point in the future, because they're entitled to reasonable notice and that reasonable notice can only be assessed at the end of the employment relationship. The second thing that I want to emphasize, and this has been renewed just in the last 2 or 3 weeks, French is the official language of Quebec. To put in context there are about 370 million people in Canada and the US. There are only 8 and half million people in Quebec. So they are surrounded by people who are English speakers and for them to preserve their French language they need to take steps that in other Provinces would appear, from the outside, to be rather draconian. But they have implemented some of these changes. The most recent change is, for example, employment agreements in Quebec must be presented in the French language first. The employee can then request an English version and then you can present the English version. Ultimately the French and English both need to be executed and the French will govern. So there are very interventionist government policies. To go along with that, government agencies and tribunals are very willing to intervene, and in Quebec there are some wonderful things about their society from the perspective of many employees. They have very generous social policies. So they have $7.00 a day daycare. There's Workers' Compensation for pregnancy related illnesses. So there are lots of things that, while in some place government is the problem, in Quebec that doesn't seem to be the perspective.
The next topic is drug and alcohol testing. This is something that I know is foremost in some locations and certain for some employers. Generally speaking, the goal of testing is to measure impairment at work. It's a fundamentally different approach. There was a war on drugs but it wasn't fought nearly has hard and it wasn't fought for nearly as long. The goal of testing is not to detect past use. It is to detect present impairment. So following from that, most pre-employment testing is prohibited, because whether someone used drugs at some time prior to commencement isn't relevant. The effects of those drugs have waned, despite the fact that you may be able to detect that they had used. Contrasting that, post-incident testing may be allowed. So if there's a safety incident, or some other circumstance, you may be able to test in that context to see whether that incident was influenced by someone who was under the influence of alcohol or drugs. There are generally prohibitions against random testing. There may be some circumstances where it's allowed. So safety sensitive positions. Generally speaking, it's only alcohol testing because our science will allow you to detect whether someone is impaired, based upon their blood alcohol level. The same is not true for drugs. That's a matter of science and biology. It's not a matter of opinion. It's even more important now, because as I suspect you know, cannabis is legal in Canada. So there are lots of people who are using cannabis on a regular basis. The cannabinoids and the metabolites that result from the use of cannabis can be detected days and weeks later. But the goal is to determine impairment, and so there is an oral swab for cannabis, but it really is used to determine whether there is such a concentration as to invite the police, or whomever it is, to conduct further testing and that further testing is what's the pulse rate, blood pressure, pupil dilation, physical coordination tests, etcetera. It and of itself is not a positive test, so to speak. There are other circumstances where drug random testing may be allowed. In the Alberta oil patch there's generally a sense of things are really dangerous there. We're going to make this mandatory. Construction sites similarly pre-access testing to the site. So there may be circumstances, but generally speaking for most businesses, it's not allowed. Then the second piece of alcohol and drug testing is addiction is a medical issue and constitutes a disability. Our approach to that is I think different than in some circumstances. If there is impairment detected the duty to accommodate kicks in. Is this person addicted? If they are, or are they perceived to be addicted, therefore they're entitled to accommodation because it's a disability. What kinds of accommodation? Typically it's time off. You don't have to typically pay for rehab or those kinds of things. It may be that there's a reassignment from a more safety sensitive job to a less safety sensitive job. The other thing that you'll need to recognize is, where there's an addiction issue, part of the addiction process is typically relapse. So, again going back to my comments earlier about zero tolerance, usually that's not going to fly. There are certainly circumstances where if there have been multiple occasions, you may be able to enter into what's called the last chance agreement, but that would not likely be on the first occasion. Okay? Next slide.
The last point I want to touch on, and this is just a little bit different than you and I'm not going to spend much time on it, we have three main political parties. Sort of call it right, center, more center, a little left center. The left center is the New Democratic party. It calls itself Social Democratic. So it's generally perceived as a little more socialist. It has never held power at the Federal level but it regularly holds power in certain Provinces. So the point of all of this is not to educate you about our political system but to tell you that where there are Provincial elections, and there is a government change, it is not at all unusual for employment and labour legislation, particularly labour legislation. Another thing that is a little bit different now than your system, as I understand it, is we can have somewhat informal coalition. So currently there's sort of an informal coalition between two parties at the Federal level. But the point of all of this is to say that the employment and labour legislation often changes. So as you are aware of those changes in the Provinces in which you have employees, you need to be wary of changes in labour and employment legislation.
Now I'm going to turn it over to my colleague, Shefali Rajaputra. Shefali is a senior associate. She's in the same office as I am in Waterloo which, for those of you who wouldn't know, it's about an hour and a half West of Toronto. So still in Ontario. She practices exclusively employment and labour. She has a particular expertise in M&A transactions, human rights issues, accessibility issues. So she's got some very important skills. She also, as a point of interest, has two dogs, one of whose name is Chaos. So you can imagine the nature of that dog which is loveable but measures up to his name. Shefali?
Shefali: Thank you for that introduction, Chris. Good morning, everyone. I'm now going to cover a couple more topics and fundamental differences before we jump into subtle differences in the employment law landscape between US and Canada.
Restrictive covenants. Restrictive covenants are prima facie and enforceable primarily for two important reasons. One is that courts in Canada assume that there's an inequality of bargaining power between an employer and an employee when they engage or enter into such arrangements. Two, as you may recall from the earlier quote from the Supreme Court of Canada, restrictive covenants are considered contrary to public policy. So generally speaking, it's safe to assume that all non-competes are enforceable except in the context of a sale of business or most senior executives, think C-level. Another important aspect is that until most recently the enforceability aspect of non-competitions was governed by common law only. What I mean to say by that is, that there was no legislation which addressed restrictive covenants in one way or the other, but as of December 2021, Ontario is the first jurisdiction in Canada to address non-competition restrictions as part of its legislation. So what's now happening in Ontario is that there's a total ban, or prohibition, on employers entering into non-compete agreements with its employees, unless there's specific exemptions. One is that they're senior level employees or it's in the context of sale of business. Again, non-competition governance is rarely enforceable and only if a non-solicitation is insufficient to provide the necessary protection. Where the courts turn their mind to then looking at a non-compete provision, and say, is this really required to protect the interest of the company? Non-solicitation covenants are enforceable, generally enforceable or may be enforceable, if they are reasonably drafted. When I say reasonably drafted, they have to be drafted keeping in mind the duration and the competitive activities or the protections that they company is seeking to imply by those provisions, and it's very important that they're drafted in an ambiguous manner. Which is if the employee has no idea what they're agreeing to, or what customers that they're not supposed to go after, then the courts are most probably not going enforce it because they will side with the employees to say they had no idea what they're agreeing to.
Another important aspect is non-deal provisions. What I mean by non-deal provisions is that if you have a provision that says, employee will not do business with customers, no matter what, even if they're approached by the customers, that would be analyzed as a non-compete as opposed to a non-solicit, and if those kind of provisions or that kind of language finds its way in an otherwise enforceable, reasonable non-solicit provision, the codes are going to strike down the entire provision. So we have no blue penciling in Canada. So if you want an enforceable non-solicit provision, it's very important to ensure that they're separately drafted, and they're not culminated into one another and can be easily distinguished. Next slide, please.
Next up is human rights. Human rights they are Province specific human rights legislation that provide for a list of protected grounds, and this list is very similar to your list of the EEOC, discriminating grounds. But only that the list that we have is a little bit broader. What I mean by broader is that some of the nuances or unique grounds that provide protection to employees is family status. Employers cannot discriminate in hiring, or promotion or training, or termination of employment because a person is caring for a child or a parent. Or employers cannot discriminate because of an employee's marital status, which includes same sex marriages and long-term cohabitation arrangements. Another unique aspect that we have is something called record of offences. So what this means is that employment decisions cannot be based on whether a person has been convicted and pardoned for an offense under a Federal law, like the criminal code, or convicted under a Provincial law, think the Highway Traffic Act. Some other unique grounds that are included in Provincial human rights legislation, again recall Chris mentioning that because we have Provincial level of legislations, these list of grounds vary from Province to Province. Most probably I would say 90 to 95% similar but there are certain Provinces which have unique grounds. Citizenship is one of such grounds that is recognized in Ontario and I think the only other Province would be Nunavut. That citizenship is something that employers cannot discriminate based on in terms of employment relationship.
The other important aspect that I'm going to address now is the process of starting a human rights claim in Canada. It is very different, as I understand it, as in the US. So it's usually claims are pursued to arbitration in a unionized context, but in a non-unionized context, it's as simple as an employee just going onto the website of Human Rights Tribunal, downloading an application, filling out the application, filing the application and boom. That's how you start a human rights claim in Canada. Another fundamental difference is that Human Rights Tribunals do not aware punitive damages here. Usually the damages are limited to compensate for any damages, which are pretty modest, and they also cover lost wages and lost income. But the awards are typically in the range of say starting at $5,000.00 and going up at $25,000.00 to $30,000.00. In exceptional circumstances they would go probably over that but usually it's within this range. Next slide, please.
Let's now look at some of the subtle differences between employment laws in Canada versus US. In terms of legislation, which we're going to cover in the next few slides, the subtle differences in employment standards and labour standards and these standards differ from Province to Province and there are certain standards which are industry specific and they would be different. Then subtle differences under human rights. Yes, we already discussed a little bit of fundamental differences in human rights but there are also subtle differences under human rights that I want to highlight. Then we'll get into labour relations. We'll talk a little bit about privacy, pay equity, workers' comp, occupational health and safety, and finally, accessibility. Next slide, please.
Employment and labour standards. Very similar. We've got minimum wage that applies at the Province level and every Province has established its own minimum base that's applicable to most employees. Whether they are in full-time or part-time, casual, hourly paid or salaried. Some exemptions apply like if they are professionals or if they're lawyers, or architects, then obviously the minimum wage provisions do not apply to those professionals. Our employment standards also regulates maximum hours worked in a day and a week. Typically they're about 8 hours in a day and 48 hours in a week. One of the important distinctions that I want to spend a little bit of time on is overtime. Incidentally, there is no bright line distinction that we have between salaried and hourly paid employees here in Canada, for the purposes of overtime, specifically. What that means is that our receptionist and admin staff, even if they're paid by a salary, they are entitled to overtime. So the general norm is that most employees are entitled to overtime, unless they fall within one of the applicable overtime exemptions, and those exemptions could be if the employee is employed in a managerial or a supervisory position, or if they fall within one of the professional categories that are listed under the legislation, etcetera. Again, overtime thresholds differ based on hours of work. Say, per day versus per week. There are Provinces in which there is no daily overtime, for example, Ontario only recognizes a weekly overtime, hours more than 44 hours are recognized as overtime hours. But by contrast, we have British Columbia where there's daily overtime for hours anywhere over 8 hours, and also weekly overtime for any hours worked in excess of 40 hours. So that's to do with overtime, and that's one concept that we always discuss with our US counterparts, which is a lengthy painful topic to explain.
The next one I want to touch upon is public statutory holidays. We've got more paid holidays in most Provinces. Typically the paid holidays differ anywhere between 8 to 10 days, depending on the Province. We've got holidays for the same purposes as the US, some of the holidays, say for example, New Years Day, or Christmas Day and Labour Day, and we've got some on the day but for a different purpose. I believe we have our Family Day which is the same day as your Presidents' Day and some are on the same time. We just had our Victoria Day weekend, late May, and then one week later, that's usually one week prior to your Memorial Day weekend. That's to do with public statutory holidays. Next topic I want to quickly touch upon is vacation with pay. We have minimum statutory paid vacation that employees are entitled to. I know this is very different from the vacation concept in the States, so this is again another important topic, and what it means is that employees are entitled to minimum paid vacation every year. Usually the duration is 2 to 3 weeks depending on the tenure of the employee. The way that vacation pay works, an employer is expected to holdback a percentage of the employee's annual wages and hold it in trust, and when the employee goes on vacation the expectations of the employer dips into that trust and pays the employee for the days that they're off. We have equal pay for equal work provisions that are embedded in the employment standards. This is different from pay equity which I will deal with in the next few slides. We also have temporary layoff provisions which are embedded in the employment standards legislation.
Notice of mass termination. Chris touched upon a little bit about this when he was talking about the Provincial differences and the nuances in termination. This is very similar to your WARN Act, but also different in the sense that WARN Act, our understanding is that it appears to focus a notice to individual employees but doesn't really require a notice to a government agency. When I say a government agency, like the Minister of Labour, so to say. By contrast, in Canada we have our employment standards talk about mass termination, where that is defined differently in different Provinces. For example, in Ontario if there's a termination of 50 employees in a specific establishment in a 4 week period, that is considered as a mass termination trigger and there are different sets of notice requirements that apply in an establishment where there's the mass termination. We had to deal with tons of mass terminations just recently during COVID. Which was very unfortunate to see with all the employers and the employees. British Columbia has a different standard. It is 15 employees in a 2 month period and Quebec has even more different standard, which is 10 employees in a 2 month period. So what we need to do when there's a mass termination, again of course we will help you and if you have the right resources and you reach out to us, is that not only are you required to give a different amount of notice for all the employees depending on their tenure, you're also required to notify the Ministry of Labour that you are going to terminate employment of X number of employees in the next period. There are specific forms that are prescribed the government and the Ministry of Labour. The employers are each required to use that.
Next up we have legislated leaves of absences. Again, our leaves of absence are vast and they vary from Province to Province, and all of these leases are job protected leaves, in the sense that if an employee has gone off on a leave of absence, the expectation is that when they complete their level of absence, when they return from their leave of absence, They are reinstated in the position that they had been before they commenced their leave. Certain things that might jump at you, what we have in Canada is that we've got really lengthy pregnancy and parental leave. So just to give you an example, we've got in total an employee who is entitled to a pregnancy and parental leave, can be off from work on a job protected leave, for at least 12 months. Most of these leaves are unpaid, except for a handful of leaves like a domestic violence leave where a few days starting in the domestic leave would be expected to be paid, but otherwise these are all unpaid leaves of absence. Other types of leaves of absence, that you can see that are quite common in Provinces are, family responsibility or personal emergency leaves, personal illness, compassionate care and organ donor, victim of crime, family wedding leave, etcetera. I want to quickly touch upon temporary help agencies. As such, same rules of termination and severance apply to temp agency workers as well, but there are some specific rules for temporary help agencies to avoid exploitation by a few bad factors. To give you a quick example, temporary help agencies, there's a prohibition on restricting an assignment employee from entering into an employment contract with a client. So you can't simply tell the agency worker that you cannot enter into an employment contract with the client. That is prohibited by the legislation.
The last one that I want to touch upon in the employment labour standards is, corporate director liability. In Canada there are several Provinces that do not require a Canadian director, as a requirement to incorporate. In fact, until recently, Ontario used to be one of those Provinces where there was a requirement that at least 25% of your directors had to be Canadian, but not anymore. So under the employment standards, directors of a company have personal liability for unpaid wages and unpaid vacation pay. So it's something to keep in mind and to watch out for because liability expense reaches out of the corporation and can attach to the directors of the company, with respect to unpaid wages and unpaid vacation. The last subtle difference that I'm going to deal with is with respect to human rights. Now as we understand, the Age Discrimination Employment Act, as amended by the Older Worker Benefit Protection Act, prohibits age discrimination against people who are 40 years or older. It does not seek to protect workers under the age of 40 years. What's different here is that in Canada the age discrimination is specifically addressed to Provincial human rights legislation and the focus on discrimination is based on any age rather than a specific age of 40. So that's something to keep in mind. Anyone can make a human rights complaint, say anyone who's 18 or 20 years old, if they feel that they have the circumstances and the rights facts to say that they were discriminated against, and they didn't get a position because they employer chose to higher someone who's 30 years old because they thought that they had better experience. I'm going to leave you with that and I'm going to now turn it over to Chris to highlight a few more subtle differences in the labour relations context. Over to you, Chris.
Chris:Thanks, Shefali. As someone who is well past 40, of course I'm morally outraged that that's the age level, but I'll move on from that. I'm going to talk a little bit about labour relations. Generally speaking, I think our labour relations environment is a little bit similar to yours in that there used to be a lot more unionization than there is now in the private sector. In the public sector there's probably 85% unionization but in the private sector it's now well under 20%. I think it's closer to 15 than 20, in terms of the total number of employees who are unionized. We shall see whether the COVID pandemic has changed people's views. We'll also see whether the political climate may be changing to encourage a resurgence of unionized workplaces. But generally speaking, it has been on the wane for a number of years. I'm going to take a little bit about it though. So there are Provincial differences in labour law, the same way that there are Provincial differences in all of the other aspects of the employment relationships across the country. In all the Provinces there's collective bargaining but in certain Provinces you can have first contract arbitration. So if the parties cannot agree on a first contract you can have an appointed individual come in and essentially impose that first contract. That is different from one Province to others. We also have, going back to the theme of employee and union friendly legislation. There are substantial limits on the right to strike in Canada, as well as the limits on replacement workers. It is not, as I understand it, as easy to use replacement workers in some of the Provinces as there is in some of your States. The decertification rules, so the opportunity for the union members to decertify the union, are intensely complex and I think organized that way so as to make it very difficult for unions to lose their status once they've achieved the bargaining rights. Another thing that may be a little different than what you're used to is secondary picketing. Generally speaking, it is permitted within certain parameters, so it's not uncommon to have a strike that spills over into more than one location. The other thing that may be more prominent here is privacy rights. Obviously everybody has a perception of their privacy rights. They're highly guarded by unions and they are the subject of bargaining often. So it's important to recognize that, what I understand to be a bit of a difference. There are also industry specific rules in certain industries. So construction being an example where there is no consistent worksite. Obviously they're moving from place to place as they're doing their responsibilities so you may have unionization or a bargaining for a unit that covers a geographic area as opposed to a certain municipal address, so to speak. I'll remind you again that labour legislation tends to change as Provincial governments change.
So the next thing is the union certification process. I'm not going to beat this to death because it's different, often, in each Province and those of you who deal in this context will understand that there is a process but a couple of things that need to be recognized. Differences. So in Alberta, for example, non-members can petition to trigger a vote. I think that's different than most other jurisdictions. In several jurisdictions card based certification, in certain sectors or some Provinces, can occur. BC, British Columbia where Vancouver is, had just very recently implemented that legislation, and on the theme of changing governments, it is a more social democratic government in British Columbia. That is one the changes that they had made. In order to get a vote, a certification vote, the percentage has changed depending on the circumstances. So it's anywhere between 35 and 605% support, based on signed cards, to trigger a vote. But I think this is the same in all of the Provinces, it's 50% plus 1 of those that vote to achieve certification. So obviously getting out the vote, as an employer, where you've got people who are opposed to the union certification is one of the keys. The period for the application to vote varies. So in Ontario the whole process in most cases is over in 5 days. The application is made on day one. You need to provide your list of employees. You need to provide any response or objection that you have and within 5 days there's going to be a vote. So you cannot be caught flatfooted when you only have 5 days to campaign. It's important to have a 5 day plan in place because when the timeline is that short often the campaign is covert, right up until the application is made. So your managers and your supervisors need to be trained to recognize employees who may be interested in unionizing and to take appropriate steps to address the concerns that are arising.
The other thing that I understand to be quite different in Canada is we have significantly narrower free speech rights in Canada than you are used to. So I would say, and of course it's a bit cynical, but most of what an employer wants to say is deemed to be an unfair labour practice. On the next slide there are some acronyms. So captive audience meetings where you gather the employees together and tell them all the reasons why they shouldn't unionize, that would, generally speaking, be considered an unfair labour practice. Then there's an acronym, TIPS. So threats, intimidation, promises and surveillance, those are generally considered to be unfair labour practices. Why would you care about unfair labour practices or upsetting, because the remedies that can be given for unfair labour practices include a new vote. Or in some cases reinstatement to employment, with compensation, if there was an individual who's considered to be an organizer and is terminated or suspended. The most important one to recognize is in some cases there are remedial certifications. So irrespective of the outcome of the vote, the labour board could certify the union in that work location. So obviously you don't want to make that mistake which results in a union where you actually won the vote but you lost the certification.
The next topic is workers' compensation. I don't want to spend too much on it. WSIA is the Workplace Safety and Insurance Act. CNESST is the Quebec version and if I tried to pronounce it, any of my Quebec colleagues who speak French on this video will be horrified, so I won't try. But the generally high level, there's mandatory coverage for most occupations. Not occupations that are considered to be low risk. But what I think is different is there's a government agency that operates the workers' compensation scheme. There is no private insurance, generally speaking, for workplace safety. There are certain industries and certain businesses that are excluded but, generally speaking, there is a government agency called the Workers' Compensation Board, or the Workplace Safety and Insurance Board. They assess and collect the premiums. They adjudicate claims. They pay benefits. They sanction violations. Like most insurance type plans, your experience rating effects your premiums. You may be subject to a surcharge if you had too many claims or an above average number of claims. There's quasi criminal prosecution for violations. It is a very serious violation by an employer to avoid their obligations under the Workers' Compensation schemes. I'm going to turn it back to Shefali now to talk about a couple of other things and these are areas where she's really got some expertise.
Shefali: Thanks, Chris. So I'm going to talk a little bit about privacy. In Canada we've got a little bit of patchwork in terms of privacy legislation. The reason I say that is at the Federal level we've got the PIPEDA but it only applies to Federally regulated workplaces and governments and it does not apply directly to Provincially regulated employment relationship. Now as Chris alluded to earlier on during the presentation, 90% of the workforce in Canada is Provincially regulated and there are, as of now, just 3 Provinces that have actually regulated and implemented a Province specific privacy legislation. Those Provinces are Alberta, British Columbia and Quebec. So in these Provinces, the privacy rights of employees are held closely in the sense that you require consents and there is a requirement for disclosure. There are timeline and guidelines with respect to how do you handle and deal with personal information. Oftentimes, especially when you're transferring, your server is out of Canada, the US, these questions come but. But aside of these 3 Provinces there are few privacy rights. Employers must be sensitive to employees perception of privacy rights and usually, in Canada, there is a reasonable expectation of privacy and that is flowing from the Charter of Rights and Freedoms and that is recognized by our Supreme Court. So it's important that, although there's no specific legislation, the courts have recognized it and when it comes to employers dealing with reasonable expectation of privacy, it is very critical that the employer's policies manage or specifically deal with how they address the reasonable expectation of privacy, in terms of the employment relationship. What I mean by that is that when you're drafting your acceptable use of computer usage policy, or your social media policy, it's very important that employers are to create the purposes for which employees access system information, employers access system information. For example, to audit or to investigate to conduct a discovery, etcetera. It's also important that employers, particularly the means by which they will access the information that they are providing, when I say system information, the equipment that they are providing. Say for example, through traffic analysis. Could be a content analysis or by restoring deleted information, etcetera. Finally, it's very important to explain to your employees that they have a choice and they can tell the employees that if they require private means of computing in sending communications, then please use a personal device which is unconnected to our network. Now without all of these, if you don't have policies that are governing this or to speak to this, it's going to be very difficult to enforce employer's rights when they say, we want to look into the emails of the company with the employee, are we allowed to do this? These are typically questions that raise this kind of queries so it's important to address them head-on in your employment policies and agreements. Some privacy targets that are recognized in Ontario, which are similar to American jurisprudence, is the intrusion upon seclusion, public disclosure of private facts, misappropriation of personality and placing a person in a false light.
Privacy concerns and background checks. Generally speaking, we don't have a prohibition on obtaining background checks in Canada, but the way we go about checks in general is only when it's necessary. The reason for doing that is that credit checks and criminal checks, they both require express consent. Especially for credit checks, the disclosure of the name of the credit agency is very important. Usually credit checks is used by those employers or organizations where they're hiring for positions where the employee is going to be dealing with bank accounts or cash, etcetera, because they're not usually necessary for other sorts of provision. And because there are specific consent requirements and specific disclosure requirements, employers are wary about it and unless it's required they're not going to get into it. With respect to criminal background checks, again, there's no prohibition as such but it gets complicated in the sense that the minute you do a criminal background check, and the information that you receive out if and if there's information that could potentially fall within one of the protected grounds, what do you with that information, or are you exposing yourself to a risk that an employee later on can argue that because of the information that they received out of a criminal background check, for example you could get a record of offenses from a criminal background check which we discussed a short while ago, that is a protected ground. So you want to be wary about that. The database for the criminal records check, it may not be completely up to date. For sure your getting a criminal record check but you really don't know whether or not that is completely or fully up to date. It can also take a long time. Sometimes up to 3 months, especially if you're requiring fingerprinting criminal record background check. Finally I want to quickly touch on the vulnerable sector check. So not all employers are permitted to ask for a vulnerable sector check. Usually this is only restricted to those employers who employee workers or volunteers who have jobs where they're in positions of trust, authority over children, say childcare workers or soccer coaches, etcetera. Last is there is no prohibition against review of social media. Say you can go on Instagram and Facebook and quickly review but the problem is going to be if you do end up finding some information, which is again a prohibited ground, then you've got to be careful about how you deal with that information.
Next up. I'm going to quickly deal with the pay equity stuff. So pay equity, what it aims to ensure is that, work that is traditionally done by women is paid the same as the work of equal value traditionally done by men. Now there are already protections under the Employment Standards Act and the Human Rights Act which kind of support this but it doesn't really get into equal pay for equal value of work. What we have in the employment standards is equal pay for equal work and in the human rights context, there cannot be a discrimination based on gender.
I'm going to skip over to the next portion which is occupational health and safety. I guess the subtle difference here is that occupational health and safety is enforced our Provincial Ministry of Labour and because they are Provincially regulated the fines vary widely. One of the key aspect is that the maximum penalties under the occupational health and safety had just been recently increased to 1.5 million and there's also an imprisonment for a term of 12 months. As of today, the limitation period under occupational health and safety is 1 year, but there's a recent amendment that will come into effect as of July of this year that will extend the limitation period to 2 years. The next topic on this would be offenses under occupational health and safety are strict liability offenses. What I mean to say by that is that the Crown only needs to prove that there has been an act which contravenes the state. They don't have to prove to a balance of probability that the act was done in a reasonable manner. There's also criminal liability for willful workplace safety violations and that criminal liability can be attach to senior management.
Next topic is accessibility. Now our accessibility legislation it's similar to ADA but kind of also different in the sense that the rights under the accessibility legislations that we have in Canada are actually complimentary or they draw on from the human rights legislation. The duty to accommodate and the discrimination actually lies with the human rights legislation. What the accessibility legislation aims to achieve is that they're implementing changes to promote accessibility for those with disabilities by removing barriers in everyday life. At a Federal level we have the Accessibility Act, which applies to the Federal workers, and at the Provincial level, Ontario was the first Province to introduce an accessibility legislation. Later on we have a few other Provinces that are follow suit, including Manitoba and New Brunswick. Now the accessibility legislation itself tries to address barriers of accessibility in terms of employment, in terms of customer service, in terms of information technology by acquiring websites to be compliant to a certain standard, which I believe is very similar to the ADA, built environment and transportation. Next, I'm now going to turn it over to Chris to talk about subtle differences and absence management.
Chris: Great. Thanks, Shefali. Just to pause there I can see that there are some questions coming in. Your welcome to submit questions. I'm not optimistic that we're going to get the chance to answer them live. If we have time we will but you will get an answer to your question. You may just get it via an email later on. In terms of absence management, conceptually it's similar to your context, as I understand it. It's not uncommon for employers to have long-term disability coverage, long-term disability benefits. Some employers, usually bigger, have short-term disability benefits. A couple of the highlights that I wanted to hit on is in Canada, while we have universal healthcare, there is often a group insurance plan that is purchased by the employer to provide additional benefits to the employee. So life insurance, LTD benefits, medical/dental coverage in terms of pharmaceuticals, in terms of paramedical services, teeth cleaning, fillings for your kids, etcetera. That is a relatively common circumstance. When it comes to absence management, sometimes employers will engage an insurance company to do the assessment administrative work but they will pay the benefits, or they may have insured benefits. Around absence management, I guess what I want you to take away from this on this topic is, we want you to be proactive in managing the absence of employees. Yes, there are human rights considerations. Yes, there is a risk of an allegation of breach of human rights under the heading of disability or a failure to accommodate. But conceptually, they remain your employees and you can actively manage their absence. We can help you. We have systems in place. We've developed systems to assist you in doing that. So if you find yourself in that circumstance please reach out for help. The second thing that I want to talk about is if an employee is absent for an extended period of time, and there's little prospect that they're going to return, again going back to the concept of the relationship being a contract, it may get to a point where the contract is something called frustrated. Which means through no ones fault the contract cannot continue. In that circumstance there may be very minimal obligations by the employer, but again, that usually occurs after a long period of absence and you have enough information to know that that employee's not likely to return in the near future.
The next topic is independent contractors. Again, we have similar concept here. The misclassification issues are similar to what you would be familiar with. The factors to determine the status between employee and independent contractor are similar here. So control by the principal over the work being performed. Ownership of the tools. There are some factors that I think may be slightly different, or I haven't read too much in the US context, so does the employee have a chance of profit or a risk of loss in the business that they are conducting? The ultimate test issued by the Supreme Court of Canada is, is the contractor engaged in a business of their own? Well, that's a pretty nebulous kind of concept so we look more to the factors and we can assist you with assessing whether the folks that you have set up are independent contractors. What I can tell you is telling each other that they are independent contractors is not going to be sufficient. Putting the title or the label on isn't going to be enough. So the courts and the tribunals, etcetera, are going to look at the totality of the relationship. All of those factors are like an old time scale. Some are going to point towards employment. Some are going to point towards independent contractor. Obviously we want to set it up so that we could put as many weights on the side of the scale related to independent contractors, if that's the way you want it to tip. I'm going to turn it back to Shefali and this is something that she spends days, nights and sadly some weekends working on.
Shefali: Thanks, Chris. I'm going to quickly touch upon transaction considerations and this personally based out of my experience when I'm dealing with US counsel and my US counterparts in the transaction. Typically speaking, in a transaction structure matter, when it comes to employment law considerations in Canada, is if it's a share transaction it's very similar to the US, which is it just steps into the shoes of the seller, there's no change of employer, the employment relationship continues, you're good to go. Now the difference is when you are entering into an asset purchase transaction and you are US purchaser and you're trying to employ the employees of the seller entity here. At common law the asset purchase does not automatically transfer employment relationship or employees from the purchaser to the seller. What happens at common law is that, in fact, the employment relationship comes to an end. So the asset purchaser finds themselves in a unique ability because of this concept, to select which employees they are intending to hire from the seller and which employees that they don't intend to hire. Of course subject to human rights related considerations. The purchaser has the right to select what employees they want and which employees they don't want. Now the unique aspect about this is that when the purchaser makes an offer of employment to a seller employee, and the seller employee accepts that employment, the legislation in Provinces in Canada specify that the employment of such seller employees is bound or deemed to be continuous, in the sense that when the purchaser offers employment to the seller employees, they are required to recognize their service with the seller. So in other words, purchaser cannot enter into an employment contract with the seller employee which specifically says your commencement date is as of 2022. We are not going to recognize your service with the seller. So those kind of agreements are not going to be enforceable so that is a concept that you've got to keep in mind when you are looking at asset purchases in Canada.
I'm going to quickly skip over to the next slide and touch on integration of Canadian workforces by a purchaser. Now, again, it differs whether it's a share versus an asset transaction. It's very easy if it's a share transaction. There's already an existing Canadian entity. All the purchaser's doing is stepping into the shoes of the seller, taking over all the employment contracts and you don't necessarily have to incorporate a different Canadian entity to continue the business that you've just purchased. But by contrast, when there's an asset transaction, there could be a possibility where the US purchaser does not have a Canadian entity. Now what are the options that are available to a US purchaser when the are looking at an asset purchase, and they want to hire the employees of the seller? The first option is that they incorporate in Canada and that company is the new company, takes on the assets of the seller and it can continue with the employment of the seller employees that the purchaser chose to continue. That's option one and that's the easiest option that can be done. But sometimes US purchasers would not be interested in incorporating in Canada, and the option in that circumstance is that there's no prohibition on directly hiring employees in Canada through a US entity, but there are a couple of minor things that you need to keep in mind when you're doing that. For example, you've got to have your payroll registration for deduction and remission of taxes. You've got to have a registration for workman compensation coverage, if that applies to your industry. So these are little things that you've got to keep in mind, and accountants usually can help you set up those payroll accounts, and then you can continue to hire those employees, and of course, the employment relationship would be gone by the laws of Canada or where the employee is employed, as opposed to the laws of the company where the company is incorporated. Now in the last option where employers don't want to incorporate, or they don't want to hire directly, which is often asked in transactions is, can we engage through a professional employer organization? The answer to that is, yes, you can and oftentimes lots of US companies choose to go through the PEO route because it's just easier in terms of compliance. There's an agreement that's put in place with the PEO. The PEO hires the employees in Canada and continues their benefits, continues their payroll and all of those other obligations that are required to be complied with a Canadian employer. But the only thing that you need to keep in mind when you are engaging PEOs is that the US purchaser is not absolved of any compliance issues when it comes to the liability related to employees that are engaged through a PEO. What it essentially means is that both the PEO and the purchaser could be held liable, as a joint employer, if there are issues with respect to compliance where there's unpaid wages or an employee complains about human rights, etcetera. So I'm just going to leave you with that and I'm going to turn it over to Chris now for the final piece of the webinar. Over to you, Chris.
Chris: Thanks, Shefali. Okay, so the last bit that we want to cover is, that's a lot of information. Your hair may be blowing back with all of the information that you've received, but what do you do with all of that information, or how can you address the information? How can you make use of the information that we've provided. So I want to touch on that for a couple of things. I'm going to call them employment systems but there are components to that. The first and the primary component is individual employment agreements. Unlike in the US, where I understand it, employment agreements are not prevalent for all levels within the organization. I know that it's often typical for more senior people within the organization to have an employment agreement. It may not be typical for lower level people within the organization to have those agreements. In Canada it's very typical for everyone to have a written agreement. The reason they have a written agreement is because they are in a contract, going back to the original concept that the relationship between the employer and the employee. So that individual employment agreement will document the terms of employment. So it will talk about whether it's indefinite or fixed term. Whether there's a probationary period. What the compensation is. The remuneration. Rights on overtime. Shefali spoke to that. That constructive dismissal concept that I talked about. So if you want to make changes in the future to the terms and conditions of employment, you can contract for that right, but if you don't contract for that right you don't have that right. You need to negotiate at the time. So there are ways within an employment agreement to lessen your risk around constructive dismissal. Another thing that is not assumed, but you can contract for, is the right to temporarily layoff employees. We found out who had those and who didn't when COVID struck because there were lots of our clients who had those provisions, because we had assisted them to put those in, and they had far less upset employees and nasty letters from opposing lawyers, than those employees who didn't have those provisions. One of the biggest things that you want to address is termination rights. What are our rights on termination? I told you that the potential liability is up to 24 months. You can contract down from that. If you think of the common law liability as the ceiling, and the Employment Standards Act that Shefali talked about as the floor, you can take that common law liability and push it all the way down to the floor. You can't push it into the basement because that's below the legislation but you can push it all the way down to the floor. So the way you do that is through an individual employment agreement. You can also define what just cause is in your business, subject to what the legislation says, but you may be able to contract out.
The next thing is in employment agreements you will also want to protect your confidential information. I know that that's common but we have some different language, we have different pieces of legislation. You may want to address a conflict of interest. What constitutes a conflict of interest? Separate and apart from sort of non-competition concepts, may be you want to address that. If you're in the business where the person is creating intellectual property, you want to make sure that you have assigned the rights to that intellectual property and that you've waived moral rights. In Canada you cannot assign, you can only waive moral rights. And then the restrictive covenants that Shefali talked about. Those need to be precisely drafted. They need to be applying to the right people. They need to have the right scope so those are discussions that need to occur and they need to be customized for Canada.
Another thing that we do a lot of is the employee handbooks. So we will take your US handbook and we will Canadianize it. We'll take out the references to the handbook not creating a contract and I've talked about why that is. We may adjust some of the reference to exempt and non-exempt because we use those terms less I think than you do. We will address the issue of vacation with pay. So we'll talk about that and how it differs from PTO. I know you have concepts of PTO but because the vacation is statutorily required you have to track that. I'll address some of those other issues that I talked about in terms of leave of absence and drug and alcohol testing and violence in the workplace. So to summarize, we can Canadianize your US policies and your procedures. We can help you draft those written employment agreements. A couple of other things that I want to remind you of. In Canada "zee" is pronounced "zed" in most place by most people, those Quebec French language requirements and finally that we are not the 51st State. We may appear similar to you. We may know your movies and TV. We may sound a bit like you but we are not the 51st State. So let us help you have success with your business in Canada. I'm sorry there's not more time for questions. As I said, we will answer your questions online. I'm going to turn it back to Elisa.
Elisa: Thank you, Chris, and thank you, Shefali for that informative session. We'd love to have your feedback today on the session so I'd encourage you to complete our survey, which you can access if you see that QR code on your screen, point your camera to it and you can access our survey through that QR code. We have another seminar that is coming up and it will focus on Quebec's Bill 96, which was newly adopted. That speaks to the French language obligations that Chris has alluded to. These are new French language obligations that will have an impact on the workplace. So please stay tuned. You will see an invitation for that webinar coming to you shortly and we hope you will be able to join us for that webinar. I hope you have a wonderful day, and if you have any questions regarding this information you learned today, please don't hesitate to reach out to Chris or Shefali or any other of our professionals. Thank you.