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You can have employment that is almost at-will

Some Canadian employers look enviously at the U.S. and its 'employment at will,' wishing they could just as easily reduce their own dismissal obligations. For whatever reason, most don't even try.

We often hear complaints about the HR laws in Canada: "They are too protective of employees"; "It's not feasible to run a business in Canada"; "The courts and tribunals only consider the needs of employees and have no idea what it’s like to actually run a business," etc. It is interesting, though, to consider Canadian HR laws in the global context: How do we compare to other nations? This is anything but a scientific study, but, anecdotally we seem to be, not surprisingly, right in the middle.

Try explaining the Canadian laws of dismissal to an American business person and she is likely to think we are bleeding heart socialists with ridiculously generous severance packages. I heard one American manager comment that he wanted to be reincarnated as a Canadian worker!

Conversely, business people in France and other parts of Europe may see us as near-barbaric because "You can fire someone without any good reason." Their view is, essentially, that unless an employee does something wrong, the employer should not be allowed to dismiss them.

In recent years, I have commented that our Canadian courts seem to be taking a somewhat more employer-friendly approach to HR law than in the past; this comment is based on decisions such as KeaysHydro-Quebec (addressing frustration of contract due to disability) and others. However, even if the pendulum swings somewhat in Canada, we will always be somewhere between what I will broadly call the American and the European approaches (I do recognize there are significant variations from state to state and from country to country).

A simple comparison is Europeans would only allow an employee to be dismissed if just cause existed, Americans would allow dismissals at any time, for any reason and without notice or severance, while we Canadians require notice or "severance" unless there is just cause. 

Our system allows the greatest amount of flexibility. Employers can dismiss an employee for any reason at all — because they found someone better, their needs have changed, they don’t like guys who wear brown socks… the reason is generally irrelevant unless they are alleging cause or impacted a group that is protected by human rights legislation (which does not protect choice of sock colour). We don't have employment at will, so in the absence of just cause, notice or pay in lieu is required.

However, we are free to use contracts in order to reduce the notice and severance requirements substantially. While a 20-year employee might be entitled to 15 months of severance or more at common law, we can reduce that to as little as eight weeks. The key, however, is to use employment contracts, and use them properly. 

I am not advocating that employers use contracts that provide only the minimum amount of notice for all employees. That may be appropriate for some employees, but it will be difficult to attract the best employees with such an offer. Even employers in the U.S. tend to offer severance payments to higher-level or highly attractive candidates.

However, those who look enviously at our neighbours to the south and their employment at will can easily reduce their own dismissal obligations. At the risk of sounding like a broken record (which is now an outdated analogy), use employment agreements to your advantage!

Stuart Rudner is a partner in the Labour & Employment Law Group of Miller Thomson LLP, a national law firm. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. He can be reached at (905) 415-6767 or srudner@millerthomson.com. You can also follow him on Twitter @CanadianHRLaw and join his Canadian Employment Law Group on LinkedIn.

Stuart Rudner

Stuart Rudner is a founding partner of Rudner MacDonald LLP in Toronto. Follow him on Twitter @CanadianHRLaw. He can be reached at srudner@rudnermacdonald.com.
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6 Comments
  • Contract above the law?
    Monday, August 13, 2012 1:21:00 PM by Stuart Rudner
    To clarify, the legislation establishes minimum entitlements. The parties are free to contract however they choose so long as they do not go below those minimums. With respect to notice of dismissal, unless there is a contract of employment that states otherwise, the common law will go beyond the statutory minimums and require "reasonable notice". I hope this clarifies the issue.