U.S. companies considering employment in Canada need to be sure to understand the differences between U.S. and Canadian employment laws. Handling things like overtime, employee leave, background checks, and employee privacy issues can be complex enough with one country; differing laws bring a whole new layer of complexity. Canadian employment laws are very different from those in most U.S. states and carry new and unexpected risks of legal liability for the unprepared U.S. employer.

There are a number of considerations for U.S. employers who want to hire employees and operate in Canada, starting with pre-employment practices and employment contracts. Because both Canadian federal and provincial levels of government have jurisdiction over employment, it is important for U.S. employers to know which regulates their industry and abide by their laws.

In a webinar presented by BLR titled "Operating in Canada: New Dos and Don’ts for Employers," Kathryn Benson and Tim Baker outlined how employment in Canada differs and the importance of understanding the employment contract norms there before getting started.

What Is an Employment Agreement? When Should it be Used?

In the webinar, Benson explained that a Canadian Employment Agreement is "a letter or written agreement between an employee and an employer that outlines the agreed-upon terms and conditions of an employment relationship."

There are three types:

• Complex. Typically used for senior management or executive level. These are generally more detailed and costly.
• Informal letter agreement. This is more common, mostly for salaried employees, mid-to-lower management level, and sales personnel. These are usually one or two pages.
• Simple offer of employment letter. These are used for hourly positions and low-level salaried positions.

When should you have an employment agreement? In the webinar, Benson advised that employers wishing to start employment in Canada should always use them. She explained: "Canadian law assumes that employees retain all rights, unless specifically contracted away, which is very different than in the U.S. with at-will employment. However, of course, contracts must always provide for entitlement at least equal to the minimum employment standards legislation. So, for example, you can’t put in a contract that an employee will earn less than minimum wage or that it’s an at-will employment contract. If you do anything like this – in other words, going below employment standards in Canada – then your entire employment agreement or contract will be void.

Employment in Canada: Employment Contract Basics

Here are some additional considerations:

• All contracts need to provide clear consideration to the employee in exchange for them to enter in to the agreement. For example, it should include the specific salary, benefits etc., that will be provided for the work they will be performing.
• Always give the contract to the employee prior to starting the position. It’s also a great idea to make sure that you are providing updated agreements each time there is consideration being provided to the employee; any time you give a raise, bonus, promotion, or other change, provide an updated version to keep contracts up-to-date. Courts will not rely on old contracts from 10-15 years prior, especially if any employment conditions have changed since the original signed contract.
• Always provide a reasonable opportunity for the candidate to review and/or seek legal advice regarding the agreement, if required.

Employment in Canada: Common Clauses in Canadian Employment Agreements

Here is a list of potential employment agreement clauses you could have in your agreements. Obviously some are meant for the more senior or executive agreements.

• Title/Position
• Probationary period
• Duties/hrs of work
• Contract duration
• Reporting structure
• Location
• Start date
• Travel
• Remuneration
• Benefits
• Expenses
• Vacation
• Stock options
• Change of control
• Termination
• Temporary layoff
• Non-competition
• Non-solicitation
• Confidentiality
• Remedies
• Conflicts of interest
• Acknowledgement of company policies
• Severability
• Jurisdiction
• Waiver
• Arbitration
• Amendments
• Survival
• Independent legal advice

If you are contemplating employment in Canada, it’s crucial for you to get up-to-date on local laws and get tips that can help you seamlessly employ a workforce in Canada without worrying about ending up in court.

For more information on the legal aspects of employment in Canada for U.S. companies, order the webinar recording. To register for a future webinar, visit http://catalog.blr.com/audio.

Kathryn Benson is a Senior HR Options Consultant, and has worked with a variety of clients across different industries, including companies new to Canada. (www.hroptions.com) Her areas of expertise include reduction and avoidance of workplace liability related to federal and provincial employment legislation.

Tim Baker is the Business Development/Human Resources Representative for HR Options. He has years of experience partnering with clients in the areas of performance management, employee relations, legislative compliance, workplace policy, workplace training, and best practices in hiring.