Three distinct types of worker-employer relationships are recognized by law: employees, dependent contractors, and independent contractors. The character of the worker-employer relationship has bearing on statutory and common law entitlements. Employees are owed protection under provincial and federal minimum employment standards legislation and are owed common law notice upon termination without cause. Independent contractors do not receive the same entitlements. Functionally, while 'dependent' contractors are a middle ground between employees and independent contractors, these workers are often treated like employees due to their dependency on the employer and are therefore provided entitlement to common law notice on termination and may be found to be entitled to some statutory minimums reserved for employees. The nature or status of the worker-employer relationship is determined by looking at the actual practice between the parties as well as the terms used to define the relationship. Key considerations in determining a worker's status as either an employee or contractor include the level of control the employer has over the worker's activities, whether the worker provides their own tools and equipment, whether the worker is incorporated and paid as a company, whether the worker has employees or sub-contractors of their own, the level of integration of the worker into the employer's business, the chance for loss or profit by the worker, and the terms of any agreement between the parties.

As for employment status, there are varying forms of employment: permanent employment, temporary employment, full-time employment, part-time employment, self-employment, and other forms of employment such as freelance, co-operative, internship, seasonal, and voluntary.

Employment contracts may be fixed-term or indefinite. The type of employment contract has implications for notice entitlement upon termination. The terminology used in the agreement may not always be the deciding factor in determining the nature of the relationship in dispute; instead, courts will look at the overall character of the relationship to determine the nature of the contract.

In a fixed-term contract, the employment relationship is intended to last only for a specific and definite length of time or until a specific project is completed. When the term or project is finished, the fixed-term employment relationship ends. Early termination of a term agreement will not entitle an employee to common law notice but may entitle the employee to notice in the amount of the remaining term absent specific termination provisions setting out notice entitlements in the employment agreement.

In a contract of indefinite duration, employment is intended to last for an indefinite period of time, with no specified or foreseeable end to the relationship. If the relationship is terminated without cause, the employee has a right to reasonable notice upon termination under the common law absent specific termination provisions setting out notice entitlements and waiving common law notice, in the employment agreement.

Where numerous fixed-term employment contracts are used with a single employee, courts and tribunals may construe the total period of employment of that employee as one continuous period for the purposes of determining entitlements on termination (both statutory and at common law) and other statutory entitlements. Courts and tribunals are savvy to attempts to avoid these entitlements through the use of fixed-term agreements.

Employment contracts can take the form of an offer letter, a formal contract or a verbal agreement. However, collective agreements are required under statute to be in writing.

Fundamentally, for there to be a valid contract, there must be offer, acceptance, and consideration alongside an intent to contract for a legal purpose and clarity of terms. There are three notable potential issues in employment contract formation which require careful attention:

1. a new employment agreement requires “fresh” consideration – employers should be wary of employees beginning work prior to signing their offer letters or written employment agreements as a failure of consideration could arise if no “fresh” consideration is offered for that written agreement and the employee has already started to work on the basis of representations made to them—meaning a contract has already been formed; this is also true when having current employees agree to new and/or revised employment agreements—fresh consideration (which might typically take the form of a raise or signing bonus, for example) is required;
2. the principle of contra proferentem will be applied by courts and tribunals to the interpretation of employment agreements, meaning that any ambiguity will be read in favour of the employee and against the employer, who is presumed to have drafted the agreement and, in most cases, without negotiation; and,
3. in order to be enforceable, terms of employment agreements must meet or exceed minimum entitlements as set out in the relevant provincial employment standards legislation:

• New Brunswick Employment Standards Act, c. E-7.2;
• Nova Scotia Labour Standards Code, R.S, c. 246;
• Newfoundland and Labrador Labour Standards Act, RSNL 1990, c. L-2;
• Prince Edward Island Employment Standards Act, RSPEI 1988, c E-6.2.

Employees cannot contract out of minimum standards entitlements without receiving a greater benefit. Certain minimum standards cannot be contracted out of at all (for example, s.71 of the Nova Scotia Labour Standards Code entitling employees who have been dismissed without cause after ten or more years of service to a right to reinstatement).

Employers should ensure that the terms and conditions of an employment agreement actually reflect only what is intended between the parties. Employers should avoid superfluous language which can result in unintended obligations for the employer.

Atlantic Canadian employment law does not draw a clear legal distinction between full-time and part-time employment, nor does it establish a fixed threshold of hours after which an employee is considered to work full time. 

However, in practice, it is common for employers to differentiate full-time and part-time employees and to provide different benefits based on that status. Employers commonly use 30 hours per week to differentiate between full and part-time work.

There is a common law doctrine stating that an employment contract cannot be assigned without consent. The right to assign an employment contract may also be agreed to within the employment agreement. However, where an assignment results in a change to a fundamental term of an employment relationship (e.g. change in wages or responsibilities), an employee may have a claim in constructive dismissal.

In practice, as corporate structures can be quite complex, the rules surrounding assignment largely depend on the facts underlying the assignment. In a business purchase situation, whether a contract can be assigned depends on the nature of the transaction. In an asset purchase, existing contracts must be assigned or new contracts must be entered into as the buyer is a new employer and is not a party to the existing contract. At law, the implication of the rule against assignments of employment contracts is that the old employment contract will be terminated and an unwritten employment contract will have formed between the employee and the new employer if a new contract is not created.

In a share purchase, the original employer remains intact as the corporation has not changed (only control has changed). In this respect, the employees remain with the existing employer and are subject to the same terms and conditions as in their original employment contracts.

Unionized employees are generally required to be offered employment with the buyer in the sale of a business and on the same terms, as the collective agreement in place is binding on the purchaser and the rights, entitlements, and obligations under that agreement flow through the transaction.

For non-unionized employees, the nature of the transfer is determinative. In an asset purchase, existing contracts must be assigned or new contracts must be entered into as the buyer is a new employer and is not a party to the existing contract. Liability will arise for the vendor with regards to termination notice and any other entitlements owing on termination of employment are not assigned. In a share purchase, the original employer remains intact as the corporation has not changed (only control has changed). In this respect, the employees remain with the existing employer and are subject to the same terms and conditions as in their original employment contracts.

However, in Atlantic Canadian jurisdictions, the buyer can choose whether or not to employ the non-unionized employees of a vendor. If an employee is not offered employment with the buyer, they will be dismissed because of the sale. Liability for termination obligations rests with the vendor subject to the terms of the purchase and sale agreement.

Please note, however, that recent jurisprudence across Canada has lessened the distinction between a share purchase and an asset purchase as relates to continuous employment and obligations and entitlements following such a transaction. The purchaser can likely expect to have liability to employees who account for the previous service to the vendor (e.g. this service will likely count toward calculations of statutory entitlements whether it be vacation entitlements or termination notice entitlements and to calculations of common law reasonable notice). This is an area to consult local legal counsel.

For unionized employees, employment is continued on the same terms and conditions as under the collective agreement.  

For non-union employees, in a share purchase employment is similarly continued on the same terms.

In an asset purchase, for non-unionized employees, a successor employer can determine whether or not to offer employment to the vendor’s employees and can determine the terms and conditions of employment on which employment may be offered. Note, however, that under all four provincial employment standards statutes, cited above, employees whose employment is continued or who are offered employment by a purchaser will not be considered to have had their period of service interrupted for the purposes of determining statutory entitlements (e.g. the appropriate notice period upon termination). Likewise, at common law, a re-hiring as part of a business purchase is not typically found to constitute a break in employment for the purposes of calculating common law notice entitlements and courts across Canada have in recent years cast doubt on whether employees can release entitlements to past service even where they have been paid for a release in favor of the vendor as part of the closing of the asset sale. This is an area to consult local legal counsel.

Typically, significant unilateral changes to an employee’s compensation, position or work location have been found to constitute a constructive dismissal, which is a form of wrongful dismissal. However, an employee must typically object to the change and resign from their employment in a timely manner in order to pursue legal action against the employer in constructive dismissal. Changes to employment terms may survive later claims of constructive dismissal where there is evidence that the employee condoned the changes expressly or where such condonation can be implied through the employee's actions and/or inaction (where, for example, the employee continues working for a significant period of time without complaint about the changes).

However, an employer can make a significant unilateral change to the terms of an employment contract without triggering a constructive dismissal by providing employees with notice of the change. In the event that the employee objects to the change, the employer may provide the employee with reasonable notice of termination, dismiss the employee at the end of the notice period, and rehire the employee under the new terms of employment. Employees are typically found to have a duty to mitigate their damages by accepting the new position. Changes to fundamental terms of employment may otherwise be instituted where employees consent and may be justifiable where employees receive consideration for such changes.

What might constitute constructive dismissal for one employee will not necessarily constitute constructive dismissal for another. For example, reductions in salary or hourly wage (in response, perhaps, to a downturn caused by the pandemic) might not constitute constructive dismissal for very high earning employees (where the total proportion of the reduction is low) but might be deemed constructive dismissal for lowering earning employees where the effect is greater.

Employers cannot unilaterally change the terms and conditions of employment contained in a collective agreement without violating the collective agreement and provincial labor relations legislation.

No. There is no employment-at-will in the jurisdictions covered by these answers. In each Atlantic Canadian province, non-unionized employees are owed statutory notice based on years of service. New hires may be terminated without providing statutory notice where such termination occurs within the first three months of employment in Nova Scotia and Newfoundland and Labrador or within the first six months of employment in New Brunswick and Prince Edward Island; this period is typically referred to as a "probationary period" but employers can contract for longer probationary periods provided statutory minimums are to be provided on termination once the employee’s length of service triggers such entitlements. Employees terminated during these periods still have entitlement to common law reasonable, notice, unless they have explicitly waived such entitlement in their employment agreements; typically, then, contractual probationary clauses serve the purpose of trying to contract out of common law reasonable notice entitlements should the employer elect to terminate the employee’s employment during their first months.

Non-unionized employees also have an entitlement to common law notice (unless otherwise explicitly waived under their employment agreements). Common law notice entitlement depends on a variety of contextual factors including the length of service, age of the employee, the character of the position, availability of similar work at similar pay, and inducements to accept the position. Typically, courts follow a rule of thumb of one month of notice entitlement for each year of employment for mid-level and above employees; however, where there are particular factors (inducement to leave former employment for the position in question or sparsity of similar work, for example), courts may find differently even for employees with short periods of service. Employment agreement language meant to contract out of common law reasonable notice entitlements must be very precise and unambiguous as to what entitlements the employee is waiving and what entitlements the employee will receive. Local counsel should be consulted.

Yes. A non-unionized employee can bring a claim under provincial employment standards legislation or file an action in court.

The Court may apply both legislation and the common law. If the employee is successful, the employee will be awarded damages for the compensation they would have earned over the applicable notice period. Note that in Nova Scotia, specifically, employees with ten years' service or more have an entitlement under s.71 of the Labor Standards Code to reinstatement following a without cause termination.

Unionized employees who have been wrongfully dismissed can file a grievance seeking reinstatement and lost wages in the event just cause for discharge is not established. Grievances are adjudicated by arbitrators appointed under the applicable collective agreement.

Yes. Section 425.1(1) of the Criminal Code, R.S.C., 1985, c. C-46 makes it a summary criminal offense for an employer or a person in a position of authority to an employee to discipline, demote, terminate, or adversely affect an employee's employment, or threaten to do so, in order to compel an employee not to whistleblow corporate violations of provincial or federal law or in order to retaliate for the employee already having done so. In New Brunswick, specifically, whistleblower protections also exist under s. 28 of the Employment Standards Act, c. E-72, whereby employees are protected from dismissal, lay off, penalty, discipline, or discrimination by their employers as a result of having made a complaint relating to a violation of the Employment Standards Act or giving evidence or information relating to a violation of any other provincial or federal act or regulation.

Federally regulated workers are protected by PIPEDA (Personal Information Protection and Electronic Documents Act), which limits collection, use and disclosure of private information. Medical information is protected in Nova Scotia, New Brunswick, and Newfoundland and Labrador by substantially similar legislation.

Unlike some jurisdictions in Canada, none of the Atlantic Provinces have passed employment privacy legislation. However, some general principles may apply. Namely, the information collected should only be used for reasonable purposes. The monitoring of emails, telephone calls and computer use is generally permissible in non-unionized workplaces. To justify monitoring in the workplace an employer must establish that the employee has no reasonable expectation of privacy over the information that is being searched. To maximize the scope for searches, policies should specifically provide that employees have no reasonable expectation of privacy to their emails.

Human rights legislation in every jurisdiction prohibits discrimination in employment on the basis of a number of grounds including, amongst others:

• Race
• Ancestry
• Place of origin
• Color
• Ethnic origin
• Citizenship
• Creed
• Sex
• Gender identity
• Gender expression
• Age
• Record of offenses
• Marital status
• Family status
• Disability

However, an employer will not be liable for employment-related discrimination if the alleged discriminatory act, policy or standard is a bona fide occupational requirement. In this respect the employer must prove that the standard was:

• Adopted for a purpose rationally connected to the performance of the job
• Adopted in an honest and good faith belief that it was necessary to fulfill a legitimate work-related purpose
• Was reasonably necessary to accomplish that work-related purpose

However, employers must attempt to accommodate the protected needs of employees to the point of undue hardship.

Yes. Every Atlantic Province provides statutory rights to vacation, medical leave, pregnancy leave, parental leave, bereavement leave, sick leave, compassionate care leave, critically ill child care leave, and emergency leaves. Additionally, these provinces have introduced leaves for victims of domestic violence.

The employment standards legislation of each Atlantic Province has varying protections for employee benefits during leaves.

The most significant change to leave entitlements in the past year has been in response to the COVID-19 pandemic. New Brunswick introduced emergency leave provisions in April 2020 and PEI followed suit in June 2020. Newfoundland and Labrador introduced a new “communicable disease emergency leave” in March 2020. Nova Scotia’s Labour Standards Code already had in place an emergency leave provision.

These leaves provide for unpaid leaves of absences for employees who are unable to work due to a public health order (including requirements to quarantine or isolate whether due to exposure, positive testing, or travel). In Nova Scotia, New Brunswick, and Newfoundland and Labrador, the leave is broader and also applies to situations in which the employee needs to care for a family member who is affected by the emergency circumstances (e.g. childcare when schools are ordered closed).  These leaves can last as long as the situation requiring the leave persists (e.g. as long as schools are closed, in the previous example, or as long as the employee has been ordered to isolate). The Nova Scotia leave provision is triggered specifically because there is presently a declared state of emergency. The New Brunswick leave provision contemplates that the regulation will be repealed once the pandemic has ceased.

Most recently the Nova Scotia provincial government announced a new paid sick leave program which covers workers who do not already receive paid sick days from their employer for up to four paid sick days that do not need to be taken consecutively. The paid sick leave is available to workers who cannot work remotely and who miss less than 50% of their scheduled work time in a 1-week period due to COVID-19 and includes those: waiting to get tested for COVID-19; self-isolating while waiting for test results; going to get vaccinated. The program will cover eligible sick days taken between May 10, 2021 and July 31, 2021.

As the COVID-19 pandemic and government response thereto remains a fluid situation, local counsel should be consulted prior to providing advice on these leaves and programs.

Restrictive covenants in the form of non-competition or non-solicitation agreements or clauses are recognized.

Restrictive covenants in the employment context are prima facie unenforceable if they result in a restraint of trade. Non-competition clauses and agreements, in particular, are narrowly construed by Courts and will not be read down. Unenforceable or otherwise ambiguous terms will be read against the employer.

Courts will only enforce a restrictive covenant if it: protects a legitimate proprietary interest of the employer; constitutes a reasonable restraint having regard to the factors such as time, geography, and activities prohibited; is expressed in clear and certain terms, and is reasonable in terms of public interest.

Each of the above-listed factors will be considered on a case-by-case basis. Non-competition clauses will not be enforced where an employer’s interests could have been adequately protected by a non-solicitation clause.

Generally, restrictive covenants will be found unenforceable where these covenants are not narrowly construed as to the protectable interest, time, and geographic scope. The covenants must have a legitimate business purpose beyond simply limiting competition (for example, protecting confidential processes and client lists in a competitive field). In some fields or industries, this may be difficult to establish.

Typically, one year is an appropriate term absent very specific circumstances which might merit a longer term of two or more years; these circumstances might arise where the employer is particularly vulnerable to the employee should that employee enter into competition with it. This could be where the employee managed key clients, filled a highly specialized position, or was upper management.

Geographically, restrictive covenants should generally be limited to where an employer actually conducts business or is intending to conduct business. It is important that the geographic terms are limited and are precisely written.

An employee refusing to sign a restrictive covenant would not constitute just cause for termination. If the restrictive covenant did not form part of the employee's original offer or employment agreement, then additional financial compensation is required as consideration for a restrictive covenant.

Yes. Canadian employers are required to deduct Canada Pension Plan contributions as well as Employment Insurance contributions.

No. However, employers must participate in the federally-mandated Employment Insurance and Canada Pension Plan programs. Typically, employers are also required to obtain workers' compensation insurance coverage for employees. Employers must attain workers' compensation coverage where the employer falls within a mandatory industry or where the employer meets a threshold of three or more employees in Nova Scotia or New Brunswick, In Prince Edward Island, the threshold is one employee whereas in Newfoundland and Labrador all employers, including those without employees but who may contract for work in the province, must register for coverage.

Generally, no. Legislative changes in human rights statutes across Canada in 2009, including the Atlantic Provinces, eliminated mandatory retirement. Nonetheless, some restrictions on employee age may be justified as bona fide occupational requirements (see above). Also, specific to New Brunswick, an exception exists where an employer has adopted, in good faith, a legitimate pension or retirement plan which mandates a retirement age (the plan cannot have been adopted to defeat employee rights). Likewise, pension plans governed by the New Brunswick Pension Benefits Act, SNB 1987, c P-5.1, are mandated to include a normal retirement date within one year of an employee turning 65.

When an employee reaches the age of 70, no further Canada Pension Plan contributions are permitted. Benefit plans offered to employees may cease at a given age as set by the provider (typically, age 65).

Yes, employers can make vaccination mandatory. As in other Canadian jurisdictions, employers across the Atlantic Provinces have a duty to take every reasonable precaution to ensure the health and safety of persons in the workplace under occupational health and safety legislation.

In the context of COVID-19, this obligation must be informed by public health orders and the latest information from public health authorities. Further, what is a “reasonable precaution” or “reasonably practicable” (per the wording in the Newfoundland and Labrador Occupational Health and Safety Act) will depend on the circumstances. Requiring vaccination to attend the workplace (particularly one where the employee is not alone) may fall within this duty in the circumstances.

That said, mandatory vaccination policies have significant implications on employee privacy and dignity and human rights and are likely to result in claims of constructive dismissal, privacy claims under tort or statute, and human rights complaints. These policies should be very carefully drafted.

Accommodation may be required where employees refuse vaccination on the basis of protected human rights characteristics (for example, disability or religion). Employers have a duty to accommodate employees requesting accommodations (on the basis of a protected characteristic) to the point of undue hardship. Practically, this may mean either permitting the employee to attend work unvaccinated but with PPE or to work from home, for example, where such an arrangement does not amount to undue hardship.

Employers should develop a full vaccination policy if they intend to make vaccination mandatory and this policy should lay out the options and alternatives to employees who refuse. This policy should include disciplinary responses for failing to abide by the policy which might include termination of employment.

For unionized employers, any such policy should likely be developed in consultation with the union. Unilaterally introduced employer policies, including a vaccination policy, would be subject to the “KVP test” were it to be grieved. In order to be found enforceable the policies would: need to be consistent with the collective agreement; be found reasonable; be clear and unequivocal; be brought to the attention of the employees affected by the policy; employees must have been notified of the consequences of a breach of the policy, and the policy must be consistently enforced. 

Mandatory vaccination for COVID-19 is a relatively untested area of the law and this information could change as more decisions and government guidance becomes available. The issue at present is that mandatory vaccination policy presupposes that the other precautions presently available (PPE, social distancing, gathering limits, working from home, split-shifts, symptom questionnaires, etc.), are not adequate to mitigate the risk of exposure at the workplace. Further, these policies require employees to undertake an invasive medical procedure, going to the core of personal dignity and bodily inviolability, and with human rights and privacy implications. The general population in these provinces has taken to vaccination at a high rate and case numbers are presently low, so it may be difficult to establish the reasonableness and necessity of such a policy in the circumstances. With vaccines now widely available, though, requiring vaccination as a condition of an employment offer for new hires may be a more defensible practice.

Yes, employers have the right to set the location of work and can require employees return to the office. Some employees may refuse to return on the basis of protected characteristics (for example, disability—particularly if the employee could not be vaccinated due to this disability) and request accommodation, which an employer must seek to provide to the point of undue hardship. Under Nova Scotia’s Human Rights Act “irrational fear of contracting an illness or disease” is also a protected characteristic that requires accommodation – though this is a rarely invoked characteristic.  Employees who refuse to return to work, thereby refusing lawful direction from their employer, and who do not have genuine accommodation requirements, could have their employment terminated depending on the circumstances.

Employers should be aware, however, as cases of COVID-19 persist and as governmental mandate states of emergency remain in place that employees may have rights to protected leaves, including emergency leaves or communicable disease emergency leave (Newfoundland and Labrador) that could interfere with a recall to the office. Employers must respect these statutorily guaranteed leaves if requested by an employee. For example, in Nova Scotia, under the emergency leave provisions, a single-parent employee or an employee whose spouse is also required to work in-office or on-site during the public state of emergency and who has childcare responsibilities at home, may be entitled to an emergency leave, if requested to tend to childcare.