Imagine securing a new job, signing your contract, and settling into your role, only to later discover that your employer can dismiss you without notice or reason. This practice, known as at-will employment, is prevalent in the United States and puts many workers in a dangerous position.
But the situation is markedly different in Canada, with laws that provide significant employee protections.
Canada’s employment laws starkly contrast with those of the US, where at-will employment is the norm. Yes, in Canada, at-will employment is not legal. Employers cannot terminate employees without giving reasonable notice or severance pay unless there is just cause for dismissal. Even if an employment contract contains an at-will clause, it is not legally enforceable.
Instead, employees are protected by statutory law (such as the Employment Standards Act) and common law, which often provides even greater rights and ensures their security and protection.
Yet, despite these protections, some employers still attempt to include misleading termination clauses in contracts. Employees who don’t fully understand their rights may unknowingly accept unfair terms, while businesses risk legal disputes and financial penalties for non-compliance.
Understanding the realities of at-will employment in Canada is essential for employees and employers. This blog will explain the key legal principles and at-will jobs in Canada: What are your rights?
What Is At-Will Employment?
At-will employment is defined as employment that can be terminated at any time without cause, reason, or notice as long as the reason for termination is not unlawful. As the name implies, the working relationship is “at the will” of both parties, and either may terminate it at any moment.
This means that employees can and are frequently terminated without cause, notice, or pay in place of notice. Many employees in the United States are employed at will, which means they can be fired at any moment without notice or pay instead of notice, even if there is no fair cause for it.
Is At-Will Employment Legal in Canada?
Rest assured, at-will employment is illegal in Canada. In most circumstances, if an employer chooses to terminate an employee without cause, they must give reasonable advance notice or pay in place of notice.
Courts determine what constitutes ‘reasonable notice’ based on various factors, including the employee’s length of service, work position, level of expertise, and the availability of comparable employment prospects. This notice period is intended to give the employee enough time to find new jobs.
If You Signed an ‘At-Will’ Contract in Canada, Can You Resign Without Notice?
In most cases, the answer is no. In Ontario, the ESA requires employees who resign without reason to provide notice. Employees who fail to do this risk being sued by their former employer for wrongful resignation, although these cases are sporadic and exceedingly difficult for the employer to prove.
If understanding the complexities of ‘at-will’ employment in Canada feels overwhelming, you don’t have to go through it alone.
No Contracting Out Under the Employment Protection for Foreign Nationals Act, 2009 (EPFNA)
Under Subsection 5(1) of the Employment Protection for Foreign Nationals Act, 2009 (EPFNA), employers, recruiters, or anyone acting on their behalf are prohibited from waiving or contracting out of any requirement or prohibition to protect foreign nationals. Any attempt to do so is legally void, ensuring that the rights of foreign nationals are upheld.
This rule should be read alongside Subsection 5(2), which defines a “protective measure” as any requirement or prohibition under EPFNA that applies to an employer, recruiter, or their representatives for the benefit of a foreign national.
What Are Protective Measures?
Protective measures are safeguards under EPFNA that ensure the rights of foreign nationals are upheld. They include protections against unfair treatment by employers or recruiters, such as guaranteeing fair wages, safe working conditions, and protection from discrimination. Protective measures are found in Sections 7 to 13 of the Act.
For a similar provision under the Employment Standards Act, 2000 (ESA), see Part III, Section 5 of the ESA Manual. The interpretation of that provision can help clarify the rules under EPFNA with necessary adjustments.
If You Signed an ‘At-Will’ Contract in Canada, Can You Be Fired for No Reason?
No. In Canada, where fairness is central to our employment system, ‘at-will’ employment, in which an employer can fire an employee without cause or warning, is not permitted. An ‘at-will’ clause in a contract is not legally enforceable. Instead, when terminating an employee without cause, companies must provide adequate notice or pay instead of notice to preserve the employee’s value and rights.
Most employees are entitled to notice (whether under the Employment Standards Act (“ESA”) or common law). This notice is usually based on a person’s length of service with an employer, though additional variables, such as age, salary, and job title, are considered at common law.
Employees are entitled to statutory notice, pay instead of notice, or a combination of the two, and statutory severance pay if their employer’s payroll exceeds $2.5 million and they have worked for at least five years.
What is Common Law Reasonable Notice in Ontario?
Employees terminated without cause in Ontario are entitled to reasonable notice or payment instead of notice under common law. Unlike the statutory minimums established by employment legislation, standard law notice is defined on a case-by-case basis.
When determining the necessary notice time, courts consider various variables, including the employee’s length of service, job position, level of specialty, and the market availability of comparable jobs. Employees in senior or highly specialized roles frequently receive more extended notice periods.
Because standard law notice is generally more generous than statutory requirements, employees should carefully review their severance offers before accepting. Conversely, employers should ensure their employment contracts clearly outline termination terms to avoid costly legal disputes.
The Dangers of “At-Will” Clauses in Canadian Employment Contracts
It’s important to remember that “At-will” employment—where an employer can fire an employee at any time without notice—is illegal in Canada, including Ontario. However, some employment contracts may attempt to include “at-will” language or termination clauses that limit an employee’s rights. Awareness of this can help readers feel reassured and aware of their rights.
The danger of these clauses is that they can be unenforceable, leading to higher termination costs for employers. Employees might also mistakenly believe they have no legal rights, even though courts in Ontario typically override unfair contract terms in favour of standard law protections.
Employers should draft employment contracts carefully to comply with Ontario’s laws. Employees unsure about the enforceability of termination clauses in their contracts should seek legal advice.
What Employees and Employers Need to Know
Employees must realize they cannot be fired without reasonable notice or compensation unless there are valid grounds for dismissal. Even if your contract has termination clauses, they may be unenforceable if they violate labour regulations. The protection offered by Ontario’s legislation should make employees feel secure and aware of their rights.
Employers must ensure that employment contracts explicitly explain termination terms and adhere to legal obligations. Poorly constructed terms can be overturned in court, subjecting corporations to higher severance expenses than expected.
Both employees and employers should know their rights and obligations under Ontario employment law. This proactive strategy can prevent legal difficulties and empower both parties to understand the law.
Conclusion
Understanding your rights as an employee or employer in Canada is essential, especially regarding termination laws. Canadian employment law provides significant protection against unfair dismissal. Whether you are an employee facing termination or an employer drafting contracts, ensuring compliance with legal standards is crucial to avoiding disputes and financial risks.
By staying informed, both parties can create fair and secure workplaces that respect employee rights while maintaining business integrity. Dharsi Law can help guide employment contracts, termination rights, or legal disputes.
Contact Dharsi Law today for a consultation and take the first step toward securing your workplace rights.
