[ESTABLISHING A BUSINESS ENTITY IN CANADA] 83
and Both provincial/territorial and federal privacy laws protect an employee’s right to privacy and personal information. treatment of employees. Acts and policies which are taken for granted in the United States (such as drug testing and video or other forms of electronic surveillance, including monitoring of electronic or telephone communications) must be carefully reviewed to ensure compliance with Canadian laws, which are more stringent in these regards. For example, Ontario employers with more than 25 employees on January 1 of any year are required to have a written policy on electronic monitoring in place prior to March 1 of that same year. The policy must provide employees with information pertaining to whether the employer electronically monitors its employees, and if so, must describe how and in what circumstances employees are monitored and the purposes for which information obtained through monitoring will be used by the employer. Recent amendments to laws introduced new requirements for job postings, specifically regarding pay transparency. Effective January 1, 2026, employers in Ontario with 25 or more employees will be required to include the expected compensation or a range of expected compensation in all publicly advertised job postings. However, this requirement does not apply to positions with an expected annual compensation of $200,000 or more, or where the upper limit of the compensation range exceeds $200,000 annually. Additionally, the range of expected compensation posted by the employer must not exceed $50,000 annually. British Columbia, Prince Edward Island, and Newfoundland and Labrador have also enacted pay transparency legislation that includes provisions requiring employers to disclose pay ranges in publicly advertised job postings.
In many jurisdictions (including the Provinces of Ontario and Québec), the purchaser of a business is deemed to be a continuing employer and inherits the employees and their current employment rights, including compensation, seniority, vacation and other benefits. There is no concept under Canadian law of “employment at will”. An employee’s tenure with a predecessor corporation will be considered for the purposes of determining termination pay required by the employment standards legislation and for determining the amount of reasonable notice which must be given upon termination of employment without cause. Written employment agreements may reduce, but not eliminate, the non-statutory notice and severance requirements. Under Canadian law, non-competition and non- solicitation undertakings are seen as a restraint of trade and are more restrictively interpreted and applied in an employment context than in the context of the sale of a business. Non- competition undertakings will generally be enforced if the scope of the activities covered, the geographical territory and the period of time for which the restrictions are to remain in force are all reasonable considering the employer’s legitimate need to protect its business interests. An ambiguous restrictive covenant is prima facie unreasonable and will be unenforceable. The Supreme Court of Canada also recently decided that non-solicitation undertakings are not subject to the same restrictions. The Canadian courts will generally refuse to write down an invalid clause and will invalidate a non-compete undertaking where they find that a non-solicitation undertaking would have sufficed. In Québec, an employer cannot enforce a non-competition undertaking if the employer either terminated the employment without “serious reason” or gave the employee “serious
ILN Corporate Group – Establishing a Business Entity Series
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