As we wrap up 2025 and look forward to 2026, here are 10 key developments Canadian employers should track: 1. Termination Clause Update In Ontario, there continues to be judicial scrutiny of employment contract termination clauses, particularly the use of the phrase “at any time”. The Dufault case maintains precedential value. Please see our post...
As we wrap up 2025 and look forward to 2026, here are 10 key developments Canadian employers should track:
1. Termination Clause Update
In Ontario, there continues to be judicial scrutiny of employment contract termination clauses, particularly the use of the phrase “at any time”.
The Dufault case maintains precedential value. Please see our post here for more discussion on the case here and for more discussion on the issues with the use of the phrase “at any time”.
However, the recently decided Ontario Superior Court decision, Li v. Wayfair Canada Inc., upheld a termination clause that limited the employee’s entitlements to Employment Standards Act, 2000 minimums. The termination provision in question included “at any time” language which the court determined does not automatically render a termination provision non-compliant with the ESA as long as the provision is compliant when read as a whole.
In Bertsch v. Datastealth Inc. the Court of Appeal provided support for employers when it upheld a trial level decision which indicates that termination provisions can be enforced if they are clear and unambiguous, compliant with employment standards law and exclude common law entitlements.
2. Regulation of Gig Workers
With the introduction of the Digital Platform Workers’ Rights Act, Ontario joined British Columbia by introducing legislation regulating the gig economy. The Act provides several entitlements to employees in the gig economy including a right to minimum wage, amounts earned, and a recurring pay period and pay day. Beyond those entitlements, the Act also provides a right to information.
For more information about the requirements, please see our post here.
3. Ontario Procedural Rule Changes
This past year has seen major efforts to transform how disputes are resolved in Ontario.
Civil Rules Review
Notably, the government made progress with the Civil Rules Review (the “CCR”). Ontario’s Civil Rules Review Working Group started in January 2024 with a mandate to review Ontario’s Rules of Civil Procedure (the “Rules”) comprehensively. Through consultation, the CCR sought to identify targeted changes that improve efficiency and access to justice in Ontario, reduce complexity and costs, optimize court resources, minimize delays, and incorporate technical solutions.
A key proposal introduces a new framework where claims are assigned to one of three distinct “tracks” based on the nature and value of the matter, each with its own obligations and guidelines.
The CCR has also recommended a pre-litigation protocol whereby, in some circumstances, parties to potential litigation may be required to not only communicate with one another but also exchange documents and discuss whether mediation would be useful prior to launching a civil claim.
If the final report is approved by Attorney General Downey and Chief Justice Morawetz, the amended Rules may come into force as early as this year. The final report is available for review by the public.
Procedural Changes to the Human Rights Tribunal of Ontario
The Human Rights Tribunal of Ontario (HRTO)has also taken steps to streamline dispute resolution. Starting June 1, 2025, mediation became mandatory for all new applications filed on or after that date. Previously, mediation was optional.
Under the HRTO’s revised Rules of Procedure, every application filed on or after June 1, 2025 will be scheduled for mediation following a preliminary jurisdictional review. If an applicant fails to attend mediation, the application may be dismissed. Respondents who do not attend may lose their right to participate in the proceedings.
Within 14 days after mediation, parties must either submit Form 25 (Confirmation of Settlement) or confirm their intention to proceed. If neither action is taken, the Tribunal may close the application without notice. The application can be reopened upon written request from one or more parties within 30 days of receipt of the administrative closure letter.
Also, effective June 2025, the HRTO introduced a formal process for seeking extensions to deadlines during a proceeding. Previously, extensions were typically granted upon asking. Going forward, parties must apply for an extension through the formal process, understanding that approval is not guaranteed.
4. Federal Government Update
During his first full year as Prime Minister, Mark Carney indicated that his policies may affect employers across all jurisdictions. Specifically, the Liberal government has expressed its intention to launch nation-building projects in the short term. This includes large-scale infrastructure and transportation initiatives.
The federal government has passed the Free Trade and Labour Mobility in Canada Act, set to take effect January 1, 2026. The Act enables a worker authorized by a province or territory to work and obtain a corresponding license or certificate within the federal jurisdiction.
The recent budget also provides important insights into how the federal government may impact workplaces across Canada. It introduced measures aimed at curbing employers who intentionally misclassify employees as independent contractors. The announcement highlights the payroll tax consequences of misclassification, including failure to withhold and remit income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums, as well as the loss of labour law protections, benefits, and pensions available to employees. Additionally, the Government of Canada plans to amend the Canada Labour Code to restrict the use of non-compete agreements in employment contracts for federally regulated employers.
5. Absences from Work Employment Standards Update
British Columbia and Quebec implemented sick note restrictions in 2025:
British Columbia
As of November 12, 2025, employers are prohibited from requiring sick notes for employees taking short term health related leaves. Employees are entitled to take two health related leaves of five days or fewer in the same calendar year without providing medical documentation. Employers may only ask for “reasonably sufficient proof” of illness or injury for a third or subsequent short-term absence or when the sick leave exceeds five consecutive days.
Quebec
As of January 1, 2025, employers are no longer able to require their employees to provide a document attesting to the reasons for their absence due to illness – including but not limited to, a medical certificate – to justify the first 3 periods of absence of 3 consecutive days or less.
Ontario introduced multiple employee leaves this past year:
Leave for Placement of Child: Employees with at least 13 weeks of service are entitled to unpaid leave of up to 16 weeks if a child is placed in the employee’s care, custody or control through adoption or surrogacy. This leave has yet to come into force.
Long-term Illness Leave (now in force): Employees with at least 13 consecutive weeks of service are now entitled to a 27-week job-protected long-term illness leave if they experience a serious medical condition.
Job-seeking Leave (now in force): Up to three days of unpaid leave for employees who receive notice of termination along with fifty (50) or more other employees in the same four-week period.
British Columbia introduced a new employee personal illness leave:
Serious Illness or Injury Leave: Employees are entitled to an unpaid, job protected leave of up to 27 weeks in a 52-week period for serious illness or injury. This leave can be broken-up throughout the 52-week period. Employees who take this leave must provide their employers with a medical certificate from a health practitioner.
For federal employees, new leaves came into force December 12, 2025:
Leave Related to Pregnancy Loss: Up to 8 weeks of leave for still births and 3 days for other pregnancy loss.
Expanded Bereavement Leave: The Canada Labour Code was amended to extend the length of bereavement leave. Prior to the amendment, employees were entitled to 10 days of bereavement leave following the death of a family member. The first three days are paid for employees with three months service. That structure remains, with the addition that the leave can be extended up to 8 weeks for the death of the employee’s child or the child of their spouse or common-law partner.
The Act also introduced a Placement of Child Leave. Employees would be entitled to up to 16 weeks of unpaid leave for adoption or surrogacy-related responsibilities. The leave could come into force later this year.
In conclusion, jurisdictions across the country continue to create health related leaves for employees. In Nova Scotia, effective this past year, employees are now entitled to five unpaid sick days for illness, as well as up to 27 weeks of job protected unpaid leave to tend to a serious illness or injury. Manitoba’s Employment Standards Code was also amended in the lead up to 2025 to provide a similar entitlement where unpaid serious injury illness was amended from 17 to 27 weeks. Both leaves are now largely aligned with federal Employment Insurance (EI) sickness benefits, which were extended from 15 to 26 weeks in 2022.
6. New Recruiting Requirements in Ontario
As discussed in a recent blog post, proposed amendments to Ontario’s ESA regulating job posting platforms through the Working for Workers Seven Act has been passed and became effective January 1, 2026. Operators of job posting platforms are now expected to observe regulations regarding the operation of such platforms. Key obligations include:
- Implementing mechanisms or procedures that allow users to report fraudulent job postings advertised to the public.
- Developing a written policy that explains how the platform operator will address fraudulent publicly advertised job postings. This policy must be posted in a conspicuous location on the platform so that it is easily noticeable to users.
Please see the post for more information.
7. Pay Transparency and Pay Equity Requirements Federally and in British Columbia
Federally regulated employers subject to the Pay Equity Act (private or public sector employers with an average of ten employees) must file an annual statement with the Office of the Pay Equity Commissioner after posting a pay equity plan. For most employers, the first annual statement was due on June 30, 2025. The statement must include prescribed information about the employer and its pay equity plan.
In British Columbia, the Pay Transparency Act became law on May 11, 2023, and requires employers, among other obligations, to prepare a Pay Transparency Report which contains prescribed information, by November 1 each year. In 2025, this requirement expanded to all employers with 300 or more employees in British Columbia. The report was due on November 1, 2025. By November 1, 2026, all employers with 50 or more employees will have to report.
8. Health and Safety Modernization Across Canada
Effective, October 24, 2025, Ontario’s Occupational Health and Safety Act was amended to recognize that “telework” from one’s home falls under the Act.
Quebec has tabled similar legislation through Bill 990 (regulating telework). The Bill, as currently drafted, will amend the Act respecting labour standards to include and define “telework” to regulate how employees may work from home. The Bill has completed its second reading and if passed, may come into force this year.
Some provinces over the past year joined Quebec in regulating the workplace to recognize and limit psychological harassment. Manitoba’s Workplace Health and Safety Act was amended to note that one of its purposes is to enable workers to work in psychologically safe workplaces. Nova Scotia’s Occupational Health and Safety Act was also amended to note that health and safety is both “psychological and physical”.
Some provinces have also used 2025 to amend their regulations on workplace policies. Employers in Nova Scotia are required to draft and implement a policy that is aimed at preventing harassment in the workplace in accordance with the province’s Workplace Health and Safety Regulations. Also, beginning March 31, 2025, employers in Alberta must develop a single violence and harassment prevention plan rather than maintain two distinct plans. The intention behind the change is to remove administrative burden, allowing employers to focus on maintaining the well-being of the workplace.
9. Quebec Bill 96 Update
Additional amendments to the Quebec Charter of the French Language introduced by Bill 96 came into force on June 1, 2025.
One key change expands the number of businesses subject to the Charter’s francization rules. Previously, only employers with 50 or more employees were covered. Now, any business that employs 25 or more people in Quebec for six consecutive months must register with the Office québécois de la langue française (OQLF) within six months.
After receiving the registration certificate, the employer has three months to complete a self-assessment of its use of French in general operations. The required forms are available through the OQLF.
Once the assessment is complete, the OQLF may issue a francization certificate or require the employer to develop and adopt a francization program. If requested, the program must be prepared within three months and submitted for approval.
Non-compliance can have serious consequences. Employers may lose eligibility for certain subsidies or be prohibited from doing business with the Quebec government. Violations can also result in fines ranging from $3,000 to $30,000 per offence, with penalties doubling for repeat violations. Each day of non-compliance may count as a separate offence, allowing fines to accumulate quickly
10. Other Jurisdiction-Specific Updates
The minimum wage has increased across several provinces and territories. Employers should ensure their payment practices are compliant with jurisdictional employment standards.
There have been several amendments to Ontario’s ESA and related legislation through different iterations of the Working for Workers legislation in 2025. Notable changes include:
- Hiring and Newcomers (now in force): the Ontario Immigration Act, 2015 now includes new standards for immigration representatives using Ontario’s immigration nominee programme and imposing penalties on those who violate these standards in the form of fines, multi-year bans and lifetime bans.
- Extended Layoffs (now in force): Ontario’s ESA now permits for extended temporary lay-offs if the employer, employee and Director of Employment Standards agree. If so, lay-offs may extend to 35 weeks or more in a period of 52 weeks, but cannot exceed 52 weeks in any period of 78 consecutive weeks.
PEI has implemented significant changes to its Employment Standards Act. The standard workweek has been reduced from 48 hours to 44 hours, and the probationary period for termination notice has been shortened from six months to 90 days. Employers should review these updates to ensure their PEI workforce is managed in compliance with the new regulations.
Manitoba amended its Human Rights Code this past year and joined other provinces including Ontario by recognizing “gender expression” as a protected characteristic in the Code.
For bespoke implementation advice, or any needed clarification on the new obligations outlined above, please contact your Baker McKenzie employment lawyer. We’re here to support you in 2026 and beyond.
