This was a challenging year for many, which I deeply hope changes for the better. I am more grateful than ever for the peace and health I enjoy, and that we mainly do in Canada.
Here is a summary of some employment law and ESG (yes, I said it, but am adopting new language…) updates from recent months, things I learned or was reminded of, with some practical tips and uplifting message if you make it to the end!
Employment law updates – legislation and recent cases
Note that most of the legislative updates referenced below are required for employers with 25 or more employees, but any employer can follow them as recommended practices.
- Reminder about the ON job posting requirements effective January 2026: Must include expected compensation for the position within a range of $50,000 (unless salary is greater than $200,000). Employers can no longer require Canadian experience. They must specify if the posting is for an existing opening. They must also specify any use of AI to screen, assess or select candidates.
- Also: Any candidates interviewed must be notified if a position decision is made. Documents in relation to any postings must be retained for 3 years. That includes the posting, all applications and correspondence with applicants.
- Equitable hiring practises: In the Horne case, the Ontario Human Rights Tribunal found that an employer can explicitly seek to hire members of a disadvantaged group(s) if it can demonstrate the rationale (in this case gender under-representation). On the candidate side, self-identification as being a member of a disadvantaged group(s) is lawful if voluntary (and presumably true).
- Quebec has passed legislation requiring employers to prevent and control workplace psychological/sexual harassment, including training and risk identification. Other updates include the Health & Safety rep playing a more active role, and privacy legislation. French language requirements: Employers with more than 25 employees (in Quebec) must be certified with the office of French language and meet various requirements over time.
- Employers have a duty to investigate a harassment claim, even if the offensive conduct happened off duty and/or the offended employee doesn’t want to file a formal complaint. In the ON Metrolinx case, the employer was informed of offensive language used by employees in a private WhatsApp group, proceeded with an investigation, and fired 5 employees for cause. An arbitrator overturned the decision and had the employees reinstated. But the ON Court of Appeals overturned that decision, finding that an employer has a duty to investigate, even in the absence of a complaint, and off duty conduct can still impact employees, as a matter of workplace health and safety.
Employment agreements and terminations
- The common law (case law) goal posts on termination provisions in employment agreements are shifting, but there are still risks to their enforceability. Termination clauses can still be struck due to problematic language, and common law notice may apply, even if the challenging employee is terminated for reasons other than the offending language.
- Since the Waksdale case in Ontario, the law stands that an employer cannot provide for less than ESA notice in a termination for cause (unless explicitly stated it would apply in the event of wilful misconduct). Since the 2024 Dufault case, the language “at any time” in a termination clause is problematic due to some unlikely but possible circumstances, such as termination during a statutory leave.
- However, recent cases in ON and BC indicate that some judges will uphold ESA termination clauses when, if read as a whole, the intent is clear. This commonsense approach does not eliminate the risk entirely though. Bottom line is employers should ensure their contract clauses are enforceable based on current law, and try to avoid any other possible pitfalls.
Other cautions for employers:
- Based on the Adams case, note that an accepted verbal offer or terms letter could be interpreted as an employment agreement (!). The follow-up employment agreement must have additional consideration, even if signed on the same day. If you must provide a terms letter, it is recommended to write on it something like, “this is just for information purposes, not an offer for acceptance; agreement to follow”.
- There has been an uptick and aggravated and punitive damages in wrongful dismissal cases, even involving the administrative side of terminations. Damages have been awarded to terminated employees whose employers made errors or were late paying ESA notice and/or issuing the Record of Employment (ROE). As always, employees should be treated with dignity and respect at all times, including every stage of the termination process, if applicable.
Immigration
- Employers can ask job candidates if they are eligible for employment, not just in Canada, but at their organization (i.e., not tied to another organization) and can make that a condition of employment in their employment agreement.
- Employers can ask for proof of eligibility documentation after their offer is accepted (if the work permit is temporary or there is some other issue, they can then do something). Note that a social insurance number (SIN) is not proof of employment eligibility – it just allows for taxation.
- An employer can’t make a job candidate ineligible for employment, but there is no obligation to assist with their status.
- Employers should have a policy about whether they will assist with permanent residency or work permit extension if, e.g., their work permit is expiring, they had good performance reviews, they commit to remain with company, and/or are a key employee at management discretion (e.g., not able to find their skill set in the marketplace.) An employer can include language that they have the right to claw back on PR fees (not work permit fees) if the employee leaves within 2 years, for example.
- Date of the application must be before the initial work permit expires. Employee has that information, not the employer. The immigration website shows over 200 days to process extensions. The SIN renews when the work permit renews.
- Onus is on the employee if the application is late, and that can be considered frustration of contract. Refusal of the extension can also cause frustration of contract.
Leaves and Accommodation
- Updates: Ontario now has a long-term illness leave, and employers can no longer require a doctor’s note for short-term leave.
- Employers can ask for information though, especially restrictions, so they can accommodate their employee’s health concerns. It is recommended to have a policy for this and a standard questionnaire that goes to the health professional via the employee, noting the possible consequences for failure to participate.
- Caselaw still affirms that employers have a duty to assist/cooperate with a statutory leave request, have back-and-forth discussions with the employee and consider options. Employees have a duty to participate in the process, and do not have a right to their accommodation of choice. The employer can choose from options.
- Family status – needs must be accommodated, not preferences. Espinosa v Napanee
Status of ESG & DEI
Most of my clients are too small to be reporting on Environment, Social, Governance (“ESG”) or launching formal Diversity, Equity & Inclusion (“DEI”) initiatives. However, I am appreciative that they are aware of and follow the principles of both, and both are areas of ongoing interest to me.
- I was very relieved to hear that, contrary to news of backlash, ESG is not dead. By many accounts, it is evolving, adapting and re-branding to the more palatable and encompassing terms like sustainability, inclusion and governance.
- Europe is still the most advanced in these areas, both in government and corporate realms. US is the most resistant, particularly at the federal level, but initiatives still happen at the state and corporate level because data shows that it’s good for business, especially in the long term, and preferred by constituents in some areas. Canada still falls somewhere in between Europe and the US.
- ESG, now more accepted as sustainability, has evolved from sweeping goals and values to more concrete terms such as: what are you measuring? how is that tied to risk and performance? what are the controls? what is material to the business? Goals have shifted from aspirational to operational, and there is increased scrutiny around greenwashing.
- Sustainability measures are more technical and data driven, i.e., aligned with what boards and management need to make decisions.
- Canadian companies operating in the US are being more strategic, nuanced and targeted to adapt to jurisdictional compliance requirements and local perceptions. Eg, California measures different things than Texas.
- There has been a shift from advocacy more to risk management. ESG was moving to a harmonized approach, e.g., reporting, but has become more regionalized.
Legal developments in Canada (ESG/Sustainability)
- There has been a shift from soft expectations to hardening rules, laws and regulations, such as supply chain transparency and climate disclosure (e.g., child labour, environmental permits, emissions disclosures)
- Growing aversion to greenwashing is showing up in law. Companies can incur significant fines for misleading conduct (to more than offset the benefit). E.g., challenges to Keurig’s single use pods not being accepted by most recyclers; Dollarama bags not being compostable. Burden of proof is on the business to substantiate its claims with evidence of testing and reporting.
Recommendations for multinational companies:
- Invest in data and controls. ISSB standards are the best global baseline – a common language, metrics and governance structure.
- Collect data once, package it differently, customize locally for legal compliance and cultural norms.
Status of DEI (or EDI or Equity or Inclusion etc.)
- DEI is not dead because the issues are not – e.g., income, gender and racial inequality. Companies should and want to make their employees feel included.
- In Canada, DEI is intrinsically linked to human rights laws and multiculturalism policies of the 1970’s, the Charter of Rights and Freedoms, the Truth and Reconciliation Act. Since the uncovering of residential schools, there is deeper commitment to indigenous reconciliation at government and corporate levels, beyond land acknowledgements to more consultation.
- Historical context in the US is very different, as is the basis for legal challenges. Reverse discrimination cases there are a backlash against former affirmative action programs, which were put in place to address wealth disparities and segregation due to the abolishment of slavery, and support equal education and employment. Those initiatives have started to be dismantled in recent years.
- Companies can treat backlash to DEI as a passing circumstance. Some still commit to equity-based programs, despite political shifts or surges or declines in popularity, because of their inherent value to the business.
- Changing market and political sentiment around DEI is occurring more in the US. Companies may now incur risk by engaging in certain programs, but not engaging can create other risks, like operational, reputational etc.
- Hiring quotas are ok in Canada, not the US, but awareness training is acceptable in the US.
I learned a new term: “greenhushing,” where the company does DEI initiatives but keeps it quiet to avoid triggering backlash. Hopefully that sentiment shifts. These initiatives are good for business and employee engagement, if thought out and done well.
Recommended components of Equity/Inclusion initiatives:
- Start with data and respond to actual needs – e.g., an employee survey with external consultant to identify and address what the workforce feels and perceives, then develop a focused, analytical program to alleviate risks, with short term responses and a multi-year strategy.
- Have stakeholder engagement at all levels (leaders, managers, staff) and invest in resources, budget, and a team to implement.
- Measure success via survey or other KPI, and have consistent communication with data to support.
A few final thoughts…
- When you start to get down because all the news you get or consume is negative, remember that much of the good stuff going on isn’t reported, and try to seek that out too.
- Do what you can at a grassroots level – such as volunteering for a cause you care about. It’s something good within your control, and a win-win.
- Take a walk in nature whenever possible, preferably with a dog or a good friend.
- Enjoy the holidays – whichever and however you celebrate, with family and friends, and have a peaceful, safe, happy and healthy new year!
Note: My blog contains a general overview of legal cases, updates and perspectives from a variety of sources, and is not intended to be relied upon as legal advice or opinion. Laws may change and should be interpreted in their context at the time. It is strongly encouraged to consult with an employment law professional for situation-specific advice.
Thank you to Aird & Berlis, Littler and Blakes for your newsletters, webcasts and in person (finally!) events, from which most of this content was drawn.