A new year in Canadian employment law

It’s that time again – when we look back and take stock of the year that was, and what lies ahead. In this update we recap a few developments or trends in Canadian employment legislation that emerged in 2023, and that we anticipate will develop further in 2024. 

This update takes a broad look across the country, except for Quebec. Our Quebec team has written an employment law review for that province, which you can read here.

New developments for all employers

Tax and employment part 1 – mandatory disclosure. In June 2023, new mandatory disclosure rules under the Income Tax Act (Canada) came into effect, requiring taxpayers and their advisors to disclose certain transactions to the Canada Revenue Agency (CRA). 

For a time, there was confusion as to whether these rules applied to employee severance packages and settlements. The CRA has since issued guidance that, in most cases, such disclosure is not required. See our update here.

Wage-fixing and no-poach agreements. On June 23, 2023, the federal Competition Act was amended to criminalize two types of arrangements between unaffiliated employers – “wage fixing” (agreements to control wages across an industry) and “no poach” agreements (in which employers agree not to solicit or hire each other’s workers).

Employers who participate in illegal wage-fixing or no-poach agreements risk significant criminal penalties and potential civil lawsuits. See our update here.

New developments for federally regulated employers

Ban on replacement workers in the federal sector. In November 2023, the federal government introduced legislation to prohibit use of replacement workers during strikes or lockouts. At present, federal law allows employers to engage replacement workers to achieve “legitimate bargaining objectives” (i.e., to put pressure on a union). 

If this legislation is adopted, it will prohibit use of replacement workers except in narrow circumstances (e.g., where continued work is essential to prevent significant risks to safety or the environment). See our update here.

Greater termination notice in the federal sector. As of February 1, 2024, federally regulated private sector employees will have greater entitlement to notice (or pay in lieu) when terminated without cause. The basic notice entitlement, which is currently capped at two weeks, will rise to eight weeks for an employee with eight years of continuous employment. See our update here.

Evolving workplace norms across Canada

Accessibility in employment

Accessibility legislation across Canada advanced in 2023, aiming to make public life, including the workplace, more accessible to persons with disabilities. The federal jurisdiction, British Columbia, Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec and Saskatchewan now have such legislation in place, though most jurisdictions are still developing accessibility standards to implement the legislation.

Saskatchewan was the latest to adopt this legislation, in December 2023. Accessibility Standards Canada published its draft federal standard on accessibility in employment in October 2023. Ontario remains the jurisdiction with the most mature framework – the latest round of accessibility reporting for the private sector was due by December 31, 2023. See our update on the proposed federal employment accessibility standard here.

Gig workers

The legal status of “gig workers” (workers who choose their own working time and assignments through online apps) will continue to be a hot topic in 2024. In March 2023 the federal government released a report on consultations regarding labour protections for gig workers, signalling interest in new legislation on the subject.

At the provincial level, in 2022 Ontario adopted a new legislative scheme applying certain employment standards to gig workers, and in November 2023 British Columbia followed suit. In both provinces the legislation is not yet in force, as supporting regulations are being developed. However, we will likely see new rules applicable to gig workers in those provinces in 2024. See our most recent update on Ontario’s plans for gig workers here. 

Pay transparency

Several jurisdictions have implemented, or plan to implement, new “pay transparency” laws. The requirements of these laws vary, ranging from mandatory reporting of wage rates to government, including compensation ranges in job postings, prohibiting asking job candidates about compensation history, and prohibiting reprisal against employees for discussing their compensation arrangements. 

In November 2023, British Columbia became the latest province to adopt pay transparency legislation, joining the federal jurisdiction, Nova Scotia and Prince Edward Island. Newfoundland and Labrador and Ontario may bring similar legislation into force in 2024. Each jurisdiction has a unique mix of pay transparency rules. See our update on the British Columbia legislation here.

New rules for recruiting

Several provinces are establishing more stringent rules around job advertisements and recruiting practices. The most common are the pay transparency rules described above. In addition, Ontario has proposed legislation that will prohibit employers from including Canadian experience as a requirement in job postings or application forms, and will require employers to disclose any use of artificial intelligence (AI) to screen, assess or select applicants. 

Employers recruiting across Canada should review their practices to ensure they meet these emerging rules in all provinces. See our most recent update on Ontario’s proposed recruiting laws here.

Artificial intelligence

The issue of responsible AI use caught the attention of legislators, regulators and advocacy organizations across Canada in 2023. In particular, the issue of discriminatory or unfair treatment of workers is at the forefront of concerns regarding AI use in employment. For example:

• As mentioned above, Ontario employers may soon have to disclose use of AI in screening job candidates;
• The draft federal standard on accessibility proposes that employers take reasonable steps to demonstrate use of AI in recruitment does not discriminate against persons with disabilities; and
• The federal government’s proposed amendments to the upcoming Artificial Intelligence and Data Act (AIDA) include identifying AI as “high impact,” and thus subject to regulation, where it is used in matters related to employment, including recruitment, referral, hiring, remuneration, promotion, training, apprenticeship, transfer or termination. See our most recent update proposed amendments to AIDA here. 

While organizations explore AI applications as powerful tools to streamline workplace administration, it is worth keeping in mind that potentially stringent rules on their use are on the way.