What Manufacturers Need to Know About Labor and Employment Law in Canada

Manufacturers in Canada face a labor and employment environment that is much more employee and union-friendly than the United States. That said, a sophisticated manufacturing employer that is educated, strategic, and proactive about managing its plant can find itself with a competitive business advantage. Here are just a few of the “Need to Knows” for manufacturers that are presently doing business or thinking about doing business in the Great White North.

Provincial Jurisdiction

Where you are matters!

Unlike the United States, where the National Labor Relations Act applies coast to coast, labor law in Canada falls within the jurisdiction of the provinces. Provinces are subnational jurisdictions similar to U.S. states. This means that each province has its own unique set of labor, employment, health and safety, and human rights laws (think of the U.S. Equal Employment Opportunity Commission with respect to this last bucket). Accordingly, the location of an operation will largely determine which labor and employment statutes apply. And this can mean stark differences in all sorts of areas, from rules governing the minimum wage and hours of work to rules on how unions can form.

Non-Unionized Workplaces

No at-will employment

The concept of at-will employment does not exist in Canada. Employers are entitled to dismiss employees for any nondiscriminatory reason, but they must provide reasonable advance notice upon the termination of employment or pay in lieu of advance notice. There is no fixed formula for what is “reasonable,” and it is generally left to the courts to decide, but a rule of thumb for adequate notice is approximately three to five weeks per completed year of service. (This is subject to many exceptions, so always seek legal advice before proceeding with an employment termination.) The length of the notice period is dictated by various factors such as the employee’s age, length of service, and job classification, and the availability of other employment.

Employers can use written employment agreements to define what constitutes “reasonable notice,” but these contracts must comply with minimum notice periods established by provincial statutes. Notably, the “reasonable notice” that a court awards is substantially higher than the statutory minimum, so a prudent employer will ensure that it has written employment agreements in place for all of its employees that, among other things, define the amount to be paid on termination.

The Unionized Context

Higher union density than in the United States

Unionization rates in Canada are substantially higher than those in the United States. For example, the overall private sector unionization rate is approximately 16 percent. And, according to Statistics Canada, Canada’s national statistical agency, 24.7 percent of employees presently working in the manufacturing sector are employed in unionized workplaces.

The trade union certification process

The trade union certification process in Canada is, in a word, quick.

Once a trade union files an application for certification, a union representation vote may be held as soon as three days later—and that’s if employees are lucky enough to get a vote. Some provinces, such as Quebec and New Brunswick, allow for card-based certification, which eliminates the opportunity for employees to express their wishes through a certification vote. Card-based certification may occur if more than a certain percentage of employees in a proposed bargaining unit have signed union cards and the cards are submitted to the labor board. In such cases, there is no campaign and no chance for employees to change their minds. Once the union has the cards, certification is automatic.

Similar to the United States, when a company in Canada becomes unionized, the union gains the exclusive right to representation and the collection of union dues for all employees in a bargaining unit. Canada, however, does not have any right-to-work laws and employees in a unionized workplace have no choice but to have a “paying” relationship with the union.

Occupational Health and Safety Laws

Written policies

Canadian provinces have robust occupational health and safety laws. Each provincial occupational health and safety statute sets out the rights and obligations of employers, supervisors, and workers.

Typically, every plant will need a written occupational health and safety policy setting out the employer’s commitment to the protection of employee health and safety. Employers with a certain number of workers must create joint occupational health and safety committees consisting of workers and management members.

Most provinces now require employers to create written policies surrounding violence and harassment in the workplace.

Drug testing

Workplace drug and alcohol testing can be justified only in very narrow circumstances in Canada. Preemployment testing is widely prohibited in Canada. Random testing is extremely rare. Generally, to have the right to use random drug tests, an employer must show that all other methods of controlling a drug and alcohol problem in the workplace have been unsuccessful.

Drug and alcohol testing that has no demonstrated relationship to job safety and performance, or occurs in instances in which there has been no evidence of enhanced safety risks in the workplace, is likely illegal and will be considered a violation of human rights law.

The only circumstance in which an employer can confidently rely on drug testing is following a safety accident or near-miss, or where it has reasonable cause to believe an employee may be impaired at work.

Closing Notes

Canada presents a great opportunity for many global manufacturers because of its highly skilled workforce, favorable exchange rates, and proximity to the United States. However, manufacturers may face challenges presented by high-energy costs, emerging restrictions on the free flow of goods, and a labor-friendly regulatory climate.

Successfully navigating these challenges requires a solid understanding of local culture and practices, as well as the foresight and flexibility to adapt U.S. or global policies to fit the local footprint. The items discussed in this article as “Need to Knows” represent just the tip of the iceberg for manufacturers doing business in Canada. That said, employers that successfully manage Canadian operations often find themselves with a strategically important and profitable enterprise in America’s northerly neighbor.