For employers across Canada, navigating the complexities of workplace law is becoming a critical component of business success, not just a legal checkbox. According to Sunira Chaudhri, an employment lawyer with over a decade of experience, many costly lawsuits stem not from malice but from outdated habits. The good news? Proactive planning in 2026 can lead to more efficient operations, significant cost savings, and a dramatic reduction in legal exposure.
Key Legal Updates and Proactive Hiring for 2026
Chaudhri emphasizes that the employment landscape is shifting, and staying ahead of regulatory changes is paramount. A major development for Ontario is the new pay-transparency legislation taking effect in 2026. This rule mandates that companies with 25 or more employees include salary ranges in all job postings. Furthermore, these employers must disclose if artificial intelligence is used to screen applicants and confirm that the advertised position is genuinely available.
Embracing these requirements early does more than just ensure compliance. Chaudhri notes it can help attract stronger candidates, reduce complaints, and avoid unwanted scrutiny from regulators. This forward-thinking approach sets a foundation of transparency from the very first interaction with potential hires.
Critical Revisions to Contracts and Worker Classification
One of the most persistent pitfalls for employers lies in the fine print of employment agreements. Recent court decisions in Ontario continue to strike down termination clauses that conflict with the Employment Standards Act (ESA) or grant employers overly broad discretion. When a clause is invalidated, the employee often becomes entitled to significantly greater severance than originally outlined.
Chaudhri's advice is clear: review and update employment contracts regularly, even if they were revised recently. Termination provisions must unambiguously comply with the minimum standards set by law. Another area of high risk is the misclassification of workers as independent contractors. Courts look beyond the label on a contract to examine the true nature of the relationship. If a worker is economically dependent on the business, controlled by its operations, or integrated into its daily functions, they will likely be deemed an employee, leading to potential liability for unpaid vacation pay, termination pay, and statutory benefits.
Managing Layoffs, Discipline, and Ongoing Compliance
The use of temporary layoffs remains a legal minefield. Courts have consistently ruled that placing an employee on a temporary layoff can constitute constructive dismissal—unless the employment contract explicitly permits it. Employers seeking flexibility should ensure layoff rights are clearly written into agreements or consider alternatives like reduced work hours with the employee's consent.
Effective documentation is another cornerstone of risk management. Many wrongful dismissal claims succeed not because the employer lacked a valid reason, but because the decision-making process was poorly documented or applied inconsistently. Chaudhri recommends addressing performance and disciplinary issues early, in writing, with clear expectations and follow-up plans. Training managers on objective, professional documentation is a crucial investment.
Finally, employers must remain vigilant about changes to the minimum wage and ESA standards. Wage increases impact not only hourly staff but also salaried employees, commission structures, and piece-work arrangements. Regular payroll audits are a simple yet powerful tool to prevent costly retroactive liabilities.
In summary, Chaudhri positions employment law as a core business issue for 2026. Employers who invest in compliance, clarity, and consistency will spend less time fighting legal battles and more time fostering productive, sustainable workplaces. In today's competitive environment, such certainty is not a luxury—it's a strategic advantage.
