Canada Labour Code Employees

Canada Labour CodeThe Canada Labour Code applies to employees who work under the federal legislative authority of the Parliament of Canada. At Monkhouse Law in Toronto, we are experienced at assisting federally regulated employees with employment matters under the Canada Labour Code.

Labour standards under the Canada Labour Code are different than the Employment Standards Act, 2000, provincial legislation for Ontario. Most employees in Ontario are governed by provincial legislation, but those working for large employers such as banks are subject to the Canada Labour Code.

What Is The Canada Labour Code?

The Canada Labour Code provides a set of rules by which federally regulated employees can determine their entitlement to severance, benefits, and associated employment entitlements.

Federal labour standards establish minimum working conditions. They apply to employers and employees in, or in connection with, the operation of any work, undertaking or business under the legislative authority of the Parliament of Canada. Part I of the Code governs workplace relations and collective bargaining between unions and employers. Part II and III govern the following:

Part II of the Canada Labour Code: Workplace Health and Safety
Workplace health and safety is a serious matter. Part II of the Canada Labour Code relates to occupational health and safety and reflects the desire to reduce workplace injuries and accidents in federal jurisdiction.

What is the maximum fine in the Canada Labour Code if convicted of violating workplace health and safety? Offences and maximum penalties include: Any person who contravenes any provision (On indictment – 2 years, $1,000,000 or both; on summary conviction – $100,000). Read more: Summary of Part II of the Canada Labour Code.

Part III of the Canada Labour Code: Labour Standards
Federal labour standards are provisions set out in Part III of the Code. They set employment conditions such as:

  • hours of work
  • payment of wages
  • overtime rules
  • vacation
  • general holidays
  • leaves and
  • rights on termination of employment for federally regulated workplaces.

In order to be covered by the Code, an employer-employee relationship must exist. The Code makes no distinction between full-time, part-time or casual employees. All are covered by the Code’s labour standards if the employees meet the qualifying requirements.

Who Does The Canada Labour Code Apply To?

BanksThe businesses and industries covered by the Canada Labour Code include banks (ex. CIBC, Bank of Montreal), air transportation (ex: AirCanada), rail and road transportation that involve crossing provincial or international borders, marine transportation, pipelines crossing provincial borders, feed, flour and seed mills and grain elevators, telecommunications and broadcasting.

Part III also applies to Crown corporations (ex. Canada Post) and certain Indigenous government activities on First Nations reserves. The federal public service is not covered by Part III. See more: List of Federally Regulated Employees in Canada

What are employees’ rights under the Canada Labour Code?

The Canada Labour Code provides an employee with three rights:

  1. The right to know;
  2. The right to participate;
  3. The right to refuse dangerous work

Employees also have a 1. right not to be unjustly dismissed and 2. the right to severance pay which increases with seniority. Contact Monkhouse Law Employment Lawyers to assist you if you are unjustly dismissed or need your severance package reviewed to make sure it is fair before signing off.

Canada Labour Code Severance Pay

In regards to minimum notice, the Canada Labour Code provides that employees of three to twelve months’ tenure are eligible for 2 weeks’ notice upon termination, and employees exceeding twelve months’ tenure are eligible for the following: two days wages per year of employment and five days wages at the regular rate for employees of 12 months or more. To read more about severance pay assessments, go to severance pay reviews.

Sections 230 and 231 of the Canada Labour Code provide that where an employee is terminated without cause and has been continuously employed by the employer for three consecutive months, the employer “shall not thereafter reduce the rate of wages or alter any other term or condition of employment of the employee . . .“ for at least two weeks. Accordingly, it seems explicitly clear that at a minimum, federally-regulated employers must continue an employee’s benefits for two weeks after termination (provided of course the employee was consecutively employed for three months before termination).

Canada Labour Code Severance Pay Calculator 

For federally regulated workers (such as employees in the banking, telecommunications, uranium mining, and interprovincial/international shipping industries), there are a number of key distinctions which apply when calculating severance pay. First, the CLC stipulates that employees terminated without cause are entitled to two (2) weeks of notice or pay in lieu of notice of dismissal, once they have completed at least three (3) months of service. Second, if the employee has completed at least one (1) year of service with their employer, they are then also entitled to statutory severance pay in the form of the greater of either two (2) days of wages per year of completed service, or five (5) days of wages. 

Like in the provincial context, federal employees also are presumptively entitled to common law reasonable notice of dismissal. However, unlike their provincial counterparts, federally regulated workers may be entitled to pursue an Unjust Dismissal Complaint following their dismissal, in order to seek an order of reinstatement with back-pay in wages. This is a unique remedy only available to federally regulated employees who have completed at least twelve (12) months of service, are not working in a managerial role, have not been dismissed with just cause, and their roles/functions have been eliminated by the employer. Naturally, a federal employer may be concerned with the prospect of returning a previously dismissed employee, and as such, employees are provided greater “leverage” to negotiate an enhanced severance package in lieu of potentially returning to the workplace, relative to what provincial employees may otherwise be able to recoup. 

Canada Labour Code Overtime

Generally, federally regulated employees who work over 40 hours per week are entitled to overtime pay at a rate of time and a half of their hourly rate.

The Ontario Superior Court of Justice has ruled in favour of the employees in the unpaid overtime class action case brought against the Canadian Imperial Bank of Commerce (“CIBC”). The decision in Fresco v. Canadian Imperial Bank of Commerce2020 ONSC 75, is a landmark decision and an important affirmation of one of the key elements of employment law, the entitlement of employees to overtime when they are required to work excess hours. Bank employees who act responsibly and stay late to complete their work when the branch is busy are entitled to overtime pay. The employer cannot pretend that it is not responsible for paying them because the employees were not officially ordered to work the extra time.

Canada Labour Code Overtime Pay

For federally regulated employees, the CLC provides a lower threshold to be entitled to overtime pay. Employees need only complete forty (40) hours of work in a given week to be entitled to overtime pay on the additional time worked. Overtime pay is also calculated at 1.5x the employee’s regular wages for time worked in excess of forty (40) hours in a given week. However, the CLC also provide a number of exemptions for employees who would otherwise be entitled to overtime pay, such as managers, superintendents, and employees in the architectural, dental, engineering, legal, or medical professions.  

Canada Labour Code Unjust Dismissal

What is unjust dismissal?
For federally regulated employees, there is a right in the Canada Labour Code that they can claim for unjust dismissal. This is a right that is in addition to potentially being allowed for reasonable common law notice and allows the employee to ask for their job back.

The purpose of unjust dismissal under the Canada Labour Code is to provide union-like protections to every federally regulated employee in Canada. Those employees can therefore ask for their jobs back if they are let go, and they can be awarded their jobs back in certain circumstances.

Founder of Monkhouse Law, Andrew Monkhouse explains unjust dismissal:

Are there limitations or requirements in order to claim for unjust dismissal?
There are limitations to unjust dismissal claims for federally regulated employees. An employee has to be working for 12 months for their employer to be able to make an unjust dismissal claim. The employer is also able to have reorganizations; they are able to have economic layoffs. And so, whether or not someone is able to make an unjust dismissal claim is a very technical decision and one that can have a very powerful remedy afterwards as well.

Are managers able to make unjust dismissal claims?
Federally regulated managers are not able to make claims. The definition of manager requires the position to be high level managers, or directors, directing mind of the corporation. Generally, sales managers or an account managers would be covered by the unjust dismissal protections.

How is an unjust dismissal claim different than a lawsuit?
Unjust dismissal claims are different than lawsuits insofar as an unjust dismissal claim, what the employee is asking for is to be put back into their position or to be paid compensation. Moreover, unjust dismissal complaints are brought before the Canada Industrial Relations Tribunal and not a Court.

When reinstated, employees are also awarded back pay for the time they were out of their position. For example, when reinstated, employees may be entitled to three years backpay, whereas three years is extremely unlikely to be awarded as notice in a wrongful dismissal lawsuit.

Canada Labour Code Reinstatement

Under the Canada Labour Code, employees may be terminated only for one of the following reasons:

1. Just Cause (this is a high threshold and may involve conduct such as theft or insubordination);
2. Lack of work;
3. Discontinuance of Function; and
4. If the employee is in a managerial role.

Section 240 is the section of the Canada Labour Code that provides employees the right to fight back against unjust dismissals:

240 (1) Subject to subsections (2) and 242(3.1), any person
• (a) who has completed twelve consecutive months of continuous employment by an employer, and
• (b) who is not a member of a group of employees subject to a collective agreement,
may make a complaint in writing to an inspector if the employee has been dismissed and considers the dismissal to be unjust.

Employees who have been unjustly dismissed should file this complaint within 90 days of their dismissal. It is important to keep in mind that even if an employee signs a release regarding their termination, they may still bring an unjust dismissal complaint under the Canada Labour Code.

If you have been dismissed, contact Monkhouse Law as soon as possible to speak with an employment lawyer. We have been recently successful in obtaining reinstatement for two bank employees, one against BMO and another against Bank of Nova Scotia.

If you are a federally regulated employee and have an employment law issue you’d like to discuss, contact us for a free 30 minute phone consultation.

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