Employment in Multiple Jurisdictions

In Canada, employment relationships are almost always contractual in nature. In some other jurisdictions, such as some of the United States, the concept of at-will employment applies. This distinction potentially gives rise to issues when transferring employees from one jurisdiction to another or when a number of jurisdictions are involved in an employee relationship.

In the Canadian context, terms of an employment contract may be drawn from the actual terms expressly agreed upon by the parties, either orally or in writing, terms implied by law or by industry practice, as well as terms which have been formulated by the conduct of the parties throughout an employment relationship. This contractual framework gives rise to a variety of minimum rights and obligations, whether or not intentionally created by the parties.

For example, where an employment contract does not provide for a termination notice period, a Canadian court will find as an implied term of the contract that termination of the contract by either party occurs only on "reasonable notice." While the amount of reasonable notice required by an employee has been construed by the courts as being a relatively short period, reasonable notice on the part of an employer can result in a very substantial notice period. A number of factors can impact on the assessment of reasonable notice: the duration of employment; the duties and responsibilities of the employee; the employee's age; whether the employee's position was managerial; as well as the availability of alternative employment. At present, the maximum notice awarded in the common law provinces of Canada is generally 24 months.

In jurisdictions where the concept of at-will employment applies, there must be an express intention to create a contractual relationship. Without such an intention, there are no terms which will be implied into the employment relationship. Thus, for example, employees may be terminated without notice or payment of any kind. Such an employment arrangement in Canada is automatically void, because it is contrary to provincial employment standards legislation. It also invites the potentially costly application of the common law termination notice provisions. Accordingly, if multiple jurisdictions are relevant to an employment relationship, both employers and employees ought to obtain legal advice applicable in each jurisdiction to determine their respective rights and obligations.

If one jurisdiction's laws are determined to be more favourable than another, the choice of law governing a particular employment contract can be made a term of a written contract, even if the contract is not performed in that jurisdiction. However, a choice of foreign law will be enforceable in Canada only if the express notice of termination provided for in an employment contract is no less than the employee's minimum entitlement to such notice in the province where the contract is performed.

If no choice of law is provided for in an employment contract, an assessment will be required to determine which jurisdiction has the closest connection with the contract, in the event of a dispute. Such assessments can be time-consuming, costly and uncertain, especially if performance of the contract occurs in many jurisdictions, if the place of performance is different from an employee's place of residence or if an employee's salary is paid from a jurisdiction different from the jurisdiction in which the contract is performed. In such circumstances, it is far more desirable for the parties to contractually settle their respective rights and obligations under an appropriate choice of law at the outset of a new employment relationship.

The foregoing comments are of a general nature, and are not intended nor should they be used as a substitute for legal advice or opinions which can be rendered only when related to specific fact situations.

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