Canadian Manufacturing

Employment law tips for Canadian manufacturers

by Lai-King Hum (she/her), Principal of Hum Law Firm   

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Canadian manufacturers, grappling with an aging workforce and lack of available skilled workers, can face a myriad of employment law issues.

Each workplace has its own unique challenges. Canadian manufacturers, grappling with an aging workforce and lack of available skilled workers, can face a myriad of employment law issues. Given the wide range of employee classifications – from machine operators and technicians to administrators and management, here are some legal tips to help you maximize the efficient and smooth operation of your business and avoid costly errors.

1. Managing an Aging Workforce

With the need to innovate and keep up with technological change, we are seeing more age-based discrimination claims as employers phase out existing and often older employees without the skills to manage new technology.


To manage risk (and address labour shortage issues), employers might consider offering training internally for workers who could be displaced by technology, and also use this as a means of retaining knowledgeable workers who otherwise might retire early. If the training costs are a concern, you can make it a term of taking training that an employee stays with you for a certain period of time, or be responsible for reimbursing the costs.

2. Managing a more Diverse Workforce

In terms of labour shortages, manufacturers should be aware of the federal temporary foreign worker programs (“TFWP”), particularly if you are in an eligible manufacturing sector, such as food manufacturing, wood product manufacturing, and furniture and related product manufacturing. If you operate in Quebec, a special pilot project related to the TFWP has expanded this year, with increased flexibilities for employers of certain sectors in that province.

We are also seeing more claims of race-based discrimination as the demographics of workplaces change. Remember that all workers, including your temporary foreign workers, are subject to employment standards and human rights legislation.

3. Overtime and Hours of Work Management

Facing a labour and skills shortage, Canadian manufacturers inevitably find more employees working overtime. All employers must respect the maximum hours of work and minimum periods of rest as required by provincial employment standards legislation. If you are regularly paying overtime pay, consider overhauling how overtime work is managed, and the use of averaging agreements or providing employees with paid time off work. You will need to implement these changes strategically to make them binding on your employees.

4. Risk Management for Workforce Reductions and Business Downturns

While a typical feature of collective agreements, it is still surprising that most non-unionized workplaces do not have temporary layoff provisions in their employment agreements. We are seeing many employers dealing with costly constructive dismissal claims due to temporary layoffs.

If you are going to add a temporary layoff clause to your workers’ terms of employment, you should also have your termination clauses reviewed. When the employees you hire do not work out, or your business suffers a downturn, reducing your workforce can be a significant cost unless you are well prepared by limiting employees’ entitlements upon termination. If not limited contractually, all employees are entitled to reasonable notice of the termination of their employment.

A termination provision is rendered unenforceable if it contravenes the applicable employment standards legislation. Except in Quebec, liability related to termination of employment can be managed with carefully drafted employment agreements with enforceable termination provisions. With enforceable termination provisions you can limit your employees’ entitlements to the minimum amount required by applicable employment standards legislation which is considerably less than the employee would be entitled to based on common law reasonable notice. Unlike the common law provinces, Quebec poses a special challenge and different strategies would apply.


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