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Winter Has Come Early for Employers in Canada

Employers in Canada not only have to deal with harsher winters than their southern neighbors, but they also have to contend with a Supreme Court that consistently expands the rights of employees, as it recently did when it decided that employers subject to “federal” Canadian law cannot discharge employees, even non-union employees, without cause after those employees have been employed for 12 consecutive months.

Federal Canadian law — as opposed to provincial law — generally applies to industries that operate across the provinces. Therefore, any employees of railways, pipelines, telephone and cable systems, shipping, airlines, radio, and banks would be offered protection by the Supreme Court’s recent decision so long as they had been employed for 12 consecutive months or longer. Federal law preempts provincial law to the extent that it is inconsistent.

What this decision means to non-union employers in Canada subject to Canadian federal law is that they need to treat their non-union workers very much like their unionized workers after the first 12 months. If an employee is not meeting performance standards, the employer should seriously consider making any termination decisions before the employee’s 12-month anniversary. After those first 12 consecutive months of employment, non-union workers enjoy virtually the same rights as unionized workers when it comes to being disciplined.

Terminating employees after the first 12 months is still possible, but the burden on the employer is much greater. Unionized employers in the U.S., Canada, and elsewhere know just how important thorough and well-documented investigations can become when the union contests a termination and the matter goes to arbitration. Because employees subject to federal law in Canada now have similar rights, conducting these investigations in non-union contexts will be just as important — if not more so, since the case will go to court rather than arbitration. Progressive discipline procedures, another common aspect of many unionized workforces, should also be followed in many situations. The real Canadian winter is coming, but the Supreme Court of Canada has again demonstrated that it is cold to an employer’s right to terminate employees in the same way that American courts allow. Therefore, careful handling of employment termination decisions for employers covered by Canadian federal law has become essential.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.