What is The Difference Between US and Canada Employment Law?

Employers need to know the local employment regulations in Canada and the United States, significantly if they are expanding their operations to Canada. The laws that apply to a worker are typically determined by the location of the work, with a few notable exceptions. 

While the distinctions between Canadian and American employment laws are endless, we have outlined the most important ones below.

Canadian Employment Law Is Largely a Provincial Matter, not a Federal Government Matter

In Canada, the provinces have authority over most workers (around 90%). Similar but different regulations govern labor and employment in each region. The federal government oversees ten percent of the workforce. In the USA, unionized workers are governed by a single body known as the National Labor Relations Board

Because of this distinction between Canadian and American law, it is essential to evaluate your company’s human resources policy, employment agreements, etc., in light of the specific regulations of each Canadian jurisdiction in which your organization operates. 

There are subtle differences in how comparable provincial government organizations handle the same matters. 

For example, human rights tribunals in Alberta and Ontario handle age discrimination complaints differently.

No At-Will Employment

Employers in the US can fire workers “at will.” In Canada, employers are required to give reasonable notice or payment instead of notice unless there is a valid basis to terminate the employee’s employment (or if the employee has a written agreement outlining a termination package). 

Canadian employment laws typically offer severance packages to their employees in case of a factory closure, poor performance, or any other legitimate reason to terminate their employment

Dismissal without cause is prohibited for some employees in several Canadian jurisdictions, including the federal jurisdiction, Québec, and Nova Scotia, once they reach certain service milestones. 

Notification, or compensation for notice, may not be required in certain jurisdictions. Enough to terminate the employment relationship, and depending on the circumstances of the termination, an eligible employee may have the chance to be reinstated in their position.

Overtime-Exempt Positions

In Canadian employment laws, the standards of the relevant jurisdiction determine whether workers are excluded from overtime. In most cases, employers and employees cannot agree on a policy or contract specifying whether overtime is payable, unlike in the United States. 

Employers in Canada are obligated to pay their employees overtime for any hours worked beyond the statutory level unless the employee is working in a supervisory or managerial role if their occupation is exempted (for example, accountants or engineers), or if there are other exceptions.

Employees With Disabilities

Unless it satisfies a severe bona fide occupational requirement (BFOR), an employer cannot discriminate, just like in the US. Accessibility for employees with disabilities is a legal requirement in Canada. 

Unfortunately, the accommodation level reaches the “point of undue hardship.” The extent of the employer’s activities and the employee’s handicap will determine the specifics of this criterion.

Unlike the US, Canada has no mandated compliance standards, where accommodations may be required to meet a low financial barrier before fulfilling this legal obligation. We consider every case individually. 

HR consultants will not absolve big employers of their human rights obligation to accommodate disabled employees unless they have exhausted all other options, such as using adaptive technology or reassigning work responsibilities among employees, to avoid undue hardship.

Constructive Dismissal

If an employer in Canada modifies a vital term of an employee’s employment contract without their consent, it is considered a constructive dismissal. Examples of what can be regarded as constructive dismissal include lowering the employee’s income, cutting their hours, or relocating them. 

Since Canada does not have a termination-at-will policy, a constructive dismissal can have the same effect as terminating an employee, leading to the hefty severance package that is sometimes required.

Human rights protections: 

While anti-discrimination statutes exist in Canada and the U.S., Canadian human rights safeguards are often considered more extensive, protecting a broader array of protected grounds and offering victims of prejudice more recourse.


The number of union members in the U.S. and Canada has declined over the last several decades, but the laws regulating unions in the two nations are very different. 

There is higher popular support for unionization, and unions have better legal protections to organize and strike in Canada.

Non-compete agreements: 

Unless they are short-lived and narrowly tailored to safeguard a valid business interest, non-compete agreements in Canada are typically not upheld. 

Although the precise conditions for enforcement differ from state to state in the U.S., non-compete contracts are generally enforceable.

Termination notice:

Canadian employment laws mandate that, depending on the employee’s length of service, employers either give them advance notice of termination or compensate them instead of notice. U.S. federal law does not mandate that companies provide employees early warning of termination.


Q1: How does employment law in the United States differ from that in Canada?

A1: All jobs in Canada are based on contracts rather than “at-will” employment, like in the U.S. The ideal time for an employer and employee to sign an employment agreement is when the job begins. This will prove that both sides know their respective rights and obligations.

Q2: What do American and Canadian employment laws have in common?

A2: The minimum wage, overtime pay rates for hourly workers, and employment regulations regarding working conditions, severance, absences from work, notice of termination, and dismissal are all similar to those in many American states.

Q3: What are the rights of employees in Canada?

A3: Pension, workers’ compensation, vacation, and public holiday benefits are all legally guaranteed to all employees in Canada. The Employment Standards Act establishes minimal requirements for employment in each of Canada’s provinces.

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