Do American Companies Have to Follow Canadian Employment Law?
Q: Do American companies have to follow Canadian Employment law?
A: When it comes to layoffs and severance, some American-controlled companies have big misconceptions about Canadian severance laws. The reality is, however, that American companies have to comply with employment laws in Canada like everyone else for workers who work in Canada.
For instance, if an employee’s work is performed in Ontario, the employer will generally be governed by the Employment Standards Act, 2000 (“ESA”) with few exceptions.
Section 5 of the ESA makes it abundantly clear that “no employer shall contract out” of an employment standard and “any such contracting out or waiver is void.” As a result, attempts by American companies to invoke state laws are void and unenforceable.
In fact, even if the employee’s work is “to be performed in Ontario and outside Ontario” the ESA will still apply as long as the “the work performed outside Ontario is a continuation of work performed in Ontario.” The foregoing test has a low bar.
In Ontario, the ESA sets the minimum entitlements for workers with respect to layoffs and terminations and creates a minimum “floor” for entitlements. However, the ESA does not set or impose a maximum for termination/severance pay. Instead, Ontario judges set the maximums (also known as “common law”) and severance pay is usually way more generous under judge-made law.
That applies to American companies, along with all other domestic and international companies operating in Ontario — whether the employee works at a “brick and mortar” workplace in Ontario or works remotely from their Ontario home — regardless of where the headquarters is located.
Before signing any severance package, please contact me for employment law advice. You can reach me directly by phone at 905-572-5806 or by email at wjamieson@rossmcbride.com.
This article was originally published by The Hamilton Spectator.
