You’ve been hired under an at-will employment contract and you’re wondering if this is enforceable in Canada – the answer is no.
What is At-Will Employment?
At-will employment is a type of employment that can be terminated at any point in time without providing cause and without providing any reason or notice to the employee. At-will employment is at the will of both parties involved and can be terminated by either party without consequences. Employment, however, cannot be terminated if the reason for termination is unlawful, for example, termination on the basis of discrimination. The closest thing in Canada to this type of employment is a fixed-term job contract. This is when an employee is hired for a fixed period of time or to perform a specific task. If the employment is terminated before the end of the contract, then the employer will have to pay the employee damages. At-will employment is illegal in Canada. This is because employees in Canada are entitled to reasonable notice upon termination unless the employee has been fired for just cause. The law of reasonable notice was established in the famous decision from the former Ontario High Court, Bardal v. Globe and Mail.
At-Will Employment in the Unites States
At-will employment is common in the United States. In some instances, US based companies will employ Canadians under an at-will employment contract. If a Canadian employee signs an at-will contract and it is clear that the employee is in fact a Canadian employee, the law in Canada will permit the employee to sue for wrongful termination. Canadian courts will therefore void any at-will contract and replace it with an indefinite contract that can only be terminated by reasonable notice. If it is unclear whether the employee is an employee of a Canadian corporation, this could lead to a legal dispute regarding the jurisdiction of the employment contract.
Since the COVID-19 pandemic, it has become increasingly common for US companies to seek out employees from overseas to work remotely. Because at-will employment is so common in the US, this poses a problem for Canadians working remotely for US companies. Although these employees may be carrying out their work in Canada, the organization is based out of the US. These companies, therefore are not governed by the laws in Canada and are able to hire employees on an at-will basis. This leaves Canadians vulnerable to having their employment terminated freely with no cause of action to obtain damages.
Case Law on At-Will Contracts
In a case from the BC Court of Appeal, Stanley v. Advertising Directory Solutions, the plaintiff was terminated from her employment at Verizon and offered a severance package that was well below what she was entitled to under common law. Her employer argued that because Verizon was a subsidiary of an American parent company and because the plaintiff had signed an at-will contract, her employment could be terminated without providing reasonable notice. The BC Court of Appeal found that his term was unenforceable in Canada. The plaintiff carried out work in Canada for a Canadian subsidiary. As a result, the termination was found to be wrongful and the plaintiff was awarded 19 months in lieu of notice.
The bottom line, at-will employment is not legal in Canada. However, it stands to pose a problem for many Canadians, as remote US-based employment becomes increasingly common.