Differences Between Federally & Provincially Regulated Employers

A major element of employment law is the difference between federally and provincially regulated employers and their staff.

What does the Constitution say?

Sections 91 and 92 of the Constitution Act, 1867, divide powers between the federal and provincial jurisdictions.

Section 91 states the “Powers of the Parliament,” or federal government. It is comprised of industries such as banking, shipping, air transportation, and postal services.

Section 92 details the exclusive powers of the provincial legislatures. These include property, local works, undertakings, and businesses.

This means that, for example, workers employed in the banking industry will most likely be classified as federally regulated. Employees working in local businesses within one province, will likely be provincially regulated.

Once the employment jurisdiction becomes clear, the applicable employment legislation can be applied.

What laws regulate federal and provincial employees?

For federal employees, there is one overarching statute that governs them — the Canada Labour Code (“CLC”).

Provincially regulated employees are governed by the province-specific legislation that is in place.

In Ontario, this is the Employment Standards Act, 2000. Alberta has the Employment Standards Code, and B.C. has the Employment Standards Act, 1996.

While there are many differences between federal and provincial employment law, a major one is termination. This includes grounds for when a termination is justified and the minimum legislative entitlements upon termination.

When is a termination warranted?

Federal employers often do not have the right to terminate non-unionized, non-managerial employees with 12 months’ service or more on a without cause basis, even if they offer termination notice and/or pay.

Without cause terminations are generally only warranted under the CLC if they are the result of a lack of work or the discontinuance of a function.

Moreover, the reason for termination cannot be discriminatory. Additionally, terminations for just cause are permitted.

Alternatively, provincially regulated employers are allowed to terminate non-unionized staff on a without cause basis.

These employers can do so if the employees are provided with the applicable notice, or pay in lieu of notice, of termination as stated in the legislation, and the reason for the termination is not discriminatory.

What are the minimum entitlements upon termination?

Under the CLC, workers employed for between three and 12 months are eligible for two weeks’ notice, or pay in lieu of notice, upon termination.

Employees exceeding 12 months of service are also eligible for severance pay. Severance pay provides for two days wages per year of completed employment. The minimum severance pay benefit is equal to five days of wages.

While the laws in each province are different, the termination entitlements tend to be quite similar.

In Ontario and B.C., if an employee has been employed for between three and 12 months, they are entitled to one weeks’ worth of notice and/or pay in lieu.

If a worker is employed for more than one year, they will be owed one weeks’ worth of notice for every completed year of service, to a maximum of eight weeks’ pay for eight years of service or more.

Ontario employers may also have a duty to provide severance pay if the terminated employee has worked for the employer for five years or more. The company must also have a payroll of at least 2.5 million or has terminated 50 or more employees in a six-month period due to a closure.

Lastly, termination entitlements differ in Alberta. Employees with between three to 24 months of service are entitled to one week of pay. The entitlements then gradually increase with tenure to a cap of eight weeks of notice for employees with 10 completed years of service or more.

Do you have questions related to federal or provincial employment law?

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