Is a foreign employer subject to the Act Respecting Labour Standards (the “ARLS”) merely because one of its employees performs work from home in Quebec? In a much-anticipated decision released on November 5, 2026, in Marchetta c. Petros 724 inc.1, the Quebec Court of Appeal answered that question in the negative and dismissed the appeal of an employee who sought to have the ARLS applied to her employment relationship with her U.S. employer. Lavery wishes at the outset to underscore the significant contribution made to the debate by the Canadian Association of Counsel to Employers / Association canadienne des avocats d’employeurs (“CACE”). In a context where the employer did not participate in the appeal, CACE obtained leave to intervene as amicus curiae (“friend of the court”) in order to assist the Court on the interpretation of section 2 of the ARLS and on the issues relating to its territorial scope. This decision is of particular importance to foreign employers that employ individuals working remotely from Quebec or domiciled there, a situation that has become increasingly common with the rise of remote work and the dematerialization of tasks made possible by technological tools. It also highlights the private international law issues raised by determining the laws applicable in such contexts. The practical impact of these issues is all the more significant given that the ARLS provides employees with recourses and remedies that differ from those generally available in most North American jurisdictions. In particular, the ARLS allows employees with at least two years of uninterrupted service to seek a reinstatement order from the Administrative Labour Tribunal (the “ALT”) in the context of contesting a dismissal without good and sufficient cause. Background: The Territorial Scope Provided for in the ARLS To properly frame the issue, it is important to recall that section 2 of the ARLS establishes a specific territorial connecting-factor regime that differs from those found in other provincial statutes governing labour and employment standards in Canada. Section 2 of the ARLS establishes both connecting factors relating to the employee and a distinct connecting factor relating to the employer. As regards the employee, the provision applies more specifically to an employee who performs work both in Quebec and outside Quebec, as well as to an employee who, while domiciled or resident in Quebec, performs work outside Quebec. In both situations, however, the ARLS further requires that the work be performed for “an employer whose residence, domicile, undertaking, head office or office is in Québec.” That specific wording was central to the analysis in Marchetta. Marchetta in Brief In this case, the employee, who held the position of financial consultant, performed most of her work remotely from her home in Quebec, using her own computer and personal telephone. She worked for a U.S. employer that had no head office, residence, domicile, office or other official presence in Quebec, and in respect of which no activity in Quebec had been established. The employee’s services were provided exclusively for the benefit of U.S. clients, and she only occasionally travelled to the United States to meet with some of them. The evidence also did not support a finding that the employee’s home served as a place of business for the employer. The employee was advised in December 2018 that her employment was being terminated following the company’s sale of a substantial portion of its Canadian assets. She then filed a complaint with the Commission des normes, de l’équité, de la santé et de la sécurité du travail (the “CNESST”) alleging dismissal without good and sufficient cause and contesting the termination of her employment. The complaint was subsequently referred to the ALT. In an initial decision, the ALT upheld the complaint and ordered the employee’s reinstatement, despite the jurisdictional arguments raised by the employer. Following an application for administrative review, however, the ALT revised that first decision and dismissed the complaint, among other grounds because the ARLS did not apply territorially and the termination of employment resulted from a genuine layoff. The Superior Court subsequently upheld that second decision in judicial review proceedings. Seized of the matter, the Court of Appeal in turn confirmed that the Superior Court had committed no reviewable error in concluding that the mere fact that the employee performed her work from her home was not sufficient, in and of itself, to establish that the employer maintained an office or carried on an enterprise in Quebec within the meaning of the ARLS. The Court of Appeal confirmed that, to reach such a conclusion, there must be at least some evidence showing that the employer intended to use the employee’s residence or home to conduct its business. More specifically, such evidence must reveal a certain degree of organization of the place where the employee works, making it possible to conclude that it constituted a foothold for the employer in Quebec for some of its activities, whether concrete or in development. The Court nevertheless acknowledged that a different finding could be warranted in other circumstances, even in the absence of an establishment in Quebec, including in cases where the evidence shows that the employer carries on activities in Quebec or uses the employee’s home to conduct its business. For example, the case law reviewed referred to situations where: the employee acted as a salesperson or representative in Quebec from a home office used as the employer’s business address, with certain related costs borne by the employer;2 the employer paid for the installation of business telephone lines, Internet or fax services at the employee’s home, provided the equipment necessary to perform the work, and stored documentation or promotional materials there for its clients, some of whom were located in Quebec;3 although working largely from home, the employee nevertheless carried out concrete market development, representation or public relations activities in Quebec for the employer’s benefit.4 Key Considerations for Foreign Employers The decision confirms that, while the physical location where the work is performed remains relevant to the analysis, the specific connecting factors set out in the ARLS must still be met before a foreign employer is subject to it. In that regard, there is no automatic rule: remote work from Quebec alone is not sufficient. The analysis will depend closely on the evidence and on the concrete organization of the employment relationship. In our view, it is also worth emphasizing that the analysis may evolve over the course of the employment relationship. The absence of activities in Quebec at the time of hiring does not preclude a sufficient territorial connection from arising later if the employer’s activities or how the work is organized change. Foreign employers should, therefore, pay close attention to the evolution of their activities and how work is organized throughout the employment relationship. It should also be noted that this decision is specific to the ARLS’s scope and to the circumstances in which it may be found inapplicable. This does not, however, mean that other Quebec laws that may govern the employment relationship, including the Civil Code of Québec, are therefore inapplicable. Accordingly, each situation requires a case-by-case analysis based both on the applicable legislative framework and on the characteristics of the employment relationship, including the duties and responsibilities performed, the clients served, and the arrangements for expense reimbursement and the provision of equipment. Particular attention should also be paid to the drafting of employment agreements and policies applicable to employees hired in Quebec to work remotely. Finally, the Marchetta decision forms part of a trilogy of judgments released the same day by the Quebec Court of Appeal concerning remote work and the notion of establishment. These decisions raise important issues for employers in Quebec. Our Labour and Employment Law team is currently reviewing this trilogy, and a more detailed bulletin on its key takeaways and practical implications will follow in the coming days. 2026 QCCA 1461. Ladouceur et Almico Plastics Canada inc., D.T.E. 90T-490 (T.A.). Commission des normes du travail c. Micros System Inc., 2009 QCCS 6083. Boisvert et Marnier-Lapostolle Chile Spa, 2018 QCTAT 4718.

This article is part of our two-part series on what foreign buyers of, and investors in, business ventures need to know about the Charter of the French language (the “Charter”) in the context of a business transaction involving operations and employees in Quebec. The first instalment focused on French language issues during the due diligence process. Reference is made to the following hyperlink for access to part one. Continuing our exploration of the Charter in the context of merger and acquisition transactions, this part two focuses on the importance of language compliance during and after the deal-making process, from incorporating language obligations into representations and warranties to post-closing strategies for addressing compliance issues. 6. In the Deal-Making Process: Your Closing Documents Representations and warranties in transaction documents shall generally address language-related matters. For example, the target corporation may be required to represent and warrant that it has fulfilled its language obligations as imposed by the Charter. As a foreign buyer/investor, you may want to ensure that findings from the due diligence investigation are incorporated into the representations and warranties of your share or asset purchase agreement. As you prepare your closing agenda, it is of utmost importance to assess whether the principal and accessory agreements themselves will be subject to French language requirements. For example, it will be advisable to translate into French restrictive covenant agreements or intellectual property assignment agreements that will be applicable to Quebec-based employees or other agreements that may be deemed contracts of adhesion. The requirement to translate any agreement or documents following the results of the due diligence analysis can be included as a closing deliverable in a form satisfactory to the foreign buyer/investor. 7. Post-Closing: Addressing Language Compliance Beyond the Deal Obviously, not all aspects of French language compliance under the Charter will be addressed during the merger and acquisition transaction itself. Potential areas of non-compliance noted during the due diligence stage can give dealmakers a roadmap of steps to undertake after closing to mitigate risks. In recent transactions, there has been a growing need for law firms to provide post-closing support in French language matters. If a purchase price adjustment clause is included in the share or asset purchase agreement, a buyer/investor could benefit from using the costs associated with rectifying any translation defaults as a lever for the negotiation of the price to be paid. This could also include any penalties imposed by the OQLF on the target corporation. Recent amendments to the Charter have significantly increased the fines that a corporation may face for non-compliance with an order issued by the OQLF, which range from $3,000 to $30,000. These fines are doubled for a second offence and tripled for subsequent offences. If an offence persists for more than one day, it is considered a separate offence for each day it continues. Additionally, directors of the corporation are presumed to have committed the offence unless they can demonstrate that they exercised due diligence by taking all necessary precautions to prevent the offence. In cases of complaints, our experience indicates that the OQLF tends to prioritize achieving compliance rather than imposing fines when companies are responsive to complaints. This presents a positive outlook for foreign buyers/investors, as it underscores that the intent of the new Charter and its enforcement provisions is not to penalize foreign buyers/investors, but rather to reaffirm the status of the French language as the official language of work and business in Quebec. Conclusion Prospective foreign buyers/investors may question the wisdom of doing business in Quebec, given its Charterrequirements. However, achieving Charter compliance can provide a distinct competitive edge. By embracing it, you open doors to the predominantly French-speaking market in and outside Quebec, unlock opportunities in thriving sectors like mining, renewable energy and aerospace, and pave the way for lucrative partnerships with the Quebec government. However, considerations relating to the French language shall not be overlooked when it comes to due diligence or other phases of a merger and acquisition transaction as compliance is key to accessing the thriving Quebec market. Moreover, failing to address these aspects could result in various challenges to a buyer/investor’s entry into the market, such as the unenforceability of restrictive covenant agreements with key employees, potential fines, penalties and director liability. A reputational risk can also be associated with non-compliance with the Charter, in light of the media attention that surrounds this type of issue in the Quebec landscape. By adhering to the requirements of the Charter, foreign buyers/investors can position themselves as responsible corporate citizens and set the stage for successful ventures in Quebec's dynamic business landscape. As more guidance becomes available regarding the application of the new provisions of the Charter, and as we gain practical experience from upcoming transactions with foreign investor/buyers, additional instalments to this series will be published.

This article is part of our two-part series on what foreign buyers of, and investors in, business ventures need to know about the Charter of the French language (the “Charter”) in the context of a cross-border transaction involving operations and employees in Quebec. This first instalment will focus on French language matters during the due diligence process. The upcoming second part will address the importance of language compliance during and after the deal-making process. While much has been said about the impact of the Charter on business operations and commercial activities in Quebec, we are here to tackle the Charter's crucial considerations within the realm of merger and acquisition transactions. This is a direct address to foreign dealmakers, not just those conducting business in Quebec. Lavery understands that the new Charter requirements may appear daunting and potentially deter prospective foreign dealmakers. Let us help you understand how to address French language issues in the context of a merger and acquisition transaction in this two-part series.  1. Your First Step: Initiating an Access to Information Request with the Quebec French Language Board One of the initial steps that should generally be taken is submitting an access to information request to the Quebec French Language Board (“OQLF”), which is the administrative body responsible for defining and conducting the province’s policy on linguistic matters. This allows for the uncovering of any undisclosed complaints or claims related to language matters that may have been processed by the OQLF. By making an access to information request to the OQLF, a party can also obtain information about the status of the francization procedures of the target corporation (e.g., whether it has registered with the OQLF, has obtained a francization certificate or is required to implement a francization program). Depending on the size of the workforce of the target corporation in Quebec, Charter obligations will vary. The francization process refers to the steps that must be taken by corporations to comply with Title II, Chapter 5 of the Charter. For enterprises with a workforce of at least 25 employees in Quebec, registration with the OQLF is mandatory as of June 1, 2025.1 Following registration, the enterprise must provide an analysis of its linguistic situation within a period of three (3) months. The ultimate objective of the linguistic analysis program is to obtain certification of francization confirming that French is widely used within Quebec operations. If the OQLF deems that the use of French is not widespread, the corporation will be required to develop and adopt a francization program, which may entail, for example, a requirement to translate into French various types of materials applicable to employees or relating to Quebec operations. For corporations with a small number of employees in Quebec (less than 25), there is no requirement to register with the OQLF or to demonstrate the widespread use of French in Quebec. In such cases, risks associated with language matters usually arise on a complaint basis. Depending on the scope and materiality threshold of the due diligence, a buyer/investor may elect to focus less on French language matters during the employment due diligence investigation if the corporation has a limited number of employees in Quebec. 2. Main Compliance Considerations: Employment Agreements and HR Documentation Among other requirements, the Charterentitles Quebec staff to receive written communications from their employer in French. As such, during due diligence, it is important to revise employment-related policies and documentation and inquire as to whether this documentation has been made available to employees in French. Particular attention shall also be paid to the language of employment agreements. Further to recent amendments of the Charter, employers must now generally provide employees, since June 1, 2022, with a French version of their employment agreements prior to execution. Employees may agree to be bound by the English version only if, after being provided with a French version, they specifically request to be bound by the English version. If a French version was not provided prior to execution, the enforceability of the employment agreements could be at risk (including any restrictive covenants contained therein, such as non-competition, non-solicitation and intellectual property assignment clauses). Post-closing, steps shall be undertaken to ensure that all template employment agreements that target Quebec employees are translated into French. If the dynamics of the deal allow for it, these steps can also be taken prior to closing during the deal-making process. 3. Contract Checkpoint: Analyze the Target Corporation’s Agreements and Understand Its Business Relationships As a foreign buyer/investor, it is essential to consider the nature of the target corporation’s commercial transactions, whether they involve businesses or individual consumers.  If such transactions involve the execution of contracts of adhesion, i.e., contracts predetermined by one party that are not negotiable, it is essential to ensure that a French version of these contracts exists. The reason is simple: since June 1, 2023, the Charter mandates that an adhering party must be presented with the French version of a contract of adhesion before the parties can expressly agree to be bound by a version in another language. For example, a standardized service agreement that is not open to negotiation would be subject to such requirement. If the target corporation has not complied with the above-described requirement, the adhering party may request the annulment of the agreement under the provisions of the Charter. As a consequence, the risks associated with the enforceability of contracts of adhesion must be taken into account during the due diligence process. Further, if the due diligence investigation reveals that the target corporation has not prepared a French version of its contracts of adhesion, the buyer or investor may request that such versions be prepared as part of the closing deliverables of the merger and acquisition transaction. As part of the due diligence process, a prudent foreign buyer/investor shall also carefully consider the language in which real estate agreements are drafted as well as the language of registrations made in the Quebec register of personal and movable real rights (“RPMRR”) and the Quebec land register (“Land Register”). As of June 1, 2022, contracts for the sale or exchange of residential properties—particularly those with fewer than five dwelling units or the contracts for the sale or exchange of a fraction of an immovable held in co-ownership must be drafted in French. This requirement extends to promises to contract and preliminary agreements made between the buyer (if the buyer is a natural person) and the builder or developer. While parties do have the option to draft these documents in another language if they explicitly choose to do so, if such contracts are intended for registration in the Land Register, they must be accompanied by a certified French translation. This would be the case, for instance, if they were originally drafted and signed in English. Since September 1, 2022, the Charter provides that all applications for registration in the RPMRR and the Land Register must be drawn up exclusively in French.  Applications for registration in the RPMRR are made using a prescribed form. As such, only the information required by the form (e.g., description of the property covered by a movable hypothec) needs to be translated into French. The rule applies differently for registration in the Land Register as the entire deed, in which case a summary or extract thereof must be submitted. Given this context, it is imperative to analyze the target corporation’s real estate contracts to identify any documents that may require translation. 4. Trademark Compliance Check Before the publication of the Regulation to amend mainly the Regulation respecting the language of commerce and business in its final form on June 26, 2024 (the “Regulation”), there was considerable concern regarding the use of unregistered trademarks in a language other than French. The Regulation has reintroduced the exception for “recognized” trademarks, which includes trademarks that are registered with the Canadian Intellectual Property Office and common law marks. For more information on the French language rules applicable to the use of trademarks in a language other than French as a result of the adoption of the Regulation, we invite you to refer to the following article [include hyperlink] written by our intellectual property experts. In this context, the due diligence process regarding trademarks remains unchanged. Registration of trademarks within a transactional framework remains of critical importance to protect an owner’s rights. Although the exception provided by the Charter for common law trademarks can be relied upon, it is highly recommended to proceed with the registration of such trademarks to prevent any debates as to whether a trademark qualifies as a common law mark. Post-closing, any of the target corporation’s trademarks should ideally be registered. 5. On Website Watch: Review of Target’s Commercial Documentation and Website A cautious buyer/investor will want to request that the target corporation provide all commercial publications that it makes available to the public (whether in a paper or electronic format). In accordance with the Charter, any catalogues, brochures, commercial directories, order forms and any other documents of the same nature that are available to the public must be available in French. Moreover, such documents must be equally accessible to their counterparts in another language. During the due diligence investigation, it is crucial for a buyer/investor to thoroughly review the target corporation's website to ensure compliance with the Charter. The buyer/investor shall examine if all commercial publications and relevant documents of a commercial nature are available in French. In practice, a buyer/investor may decide to completely translate the target corporation’s website. A cautious buyer/investor will also carefully analyze the French version of the target’s commercial documentation to ensure that it meets the same standards of accessibility and quality as the version in the other language. Conclusion Understanding and prioritizing compliance with the Charter is essential for foreign buyers and investors engaging in business transactions involving operations and employees in the province of Quebec. By proactively addressing the linguistic considerations outlined in the Charter, dealmakers can navigate potential challenges and ensure a smoother entry into the Quebec market. From initiating access to information requests with the OQLF to reviewing employment agreements, contracts, and commercial documentation, thorough due diligence is key to mitigating risks and demonstrating a commitment to linguistic compliance. Join us for part two of this article to learn about Charter considerations at the closing and post-closing stages. Currently, registration with the OQLF is mandatory for enterprises with 50 employees or more working in Quebec.

On June 23, 2023, major amendments to section 45 of the Competition Act1 (the “Act”) are set to come into force. Adopted in 2022 by the Parliament of Canada, these amendments are primarily designed to harmonize Canadian non-competition law with legislation in various other countries, particularly the U.S., which restricts certain business practices regarded as harmful to workers. The amendments to the Act will have an impact on employers across Canada, whether or not they operate in an area of federal or provincial jurisdiction. Beginning on June 23, 2023, the Act will prohibit “unaffiliated” employers from entering into agreements aimed at: i) fixing wages or employment conditions; or ii) restricting the job mobility of employees by means of reciprocal non-solicitation and no-poaching agreements. In this regard, it should be noted that agreements between affiliated companies (e.g., controlled by the same parent company) do not violate the Act. This bulletin seeks to provide a summary of various amendments of interest to employers in light of the official version of the related enforcement guidelines (the “Guidelines”), which were published by the Competition Bureau (the “Bureau”) on May 30, 2023.2 Although the Guidelines do not have the force of law, they set out the Bureau’s approach when interpreting applicable prohibitions and defences. AGREEMENTS FIXING WAGES AND EMPLOYMENT CONDITIONS Paragraph 45 (1.1) (a) of the Act prohibits agreements between unaffiliated employers aimed at fixing, maintaining, decreasing or controlling wages and other employment conditions. In this regard, the Bureau’s Guidelines state that “terms and conditions of employment” typically refer to any condition that could affect a person’s decision to enter into, or remain in, an employment contract. This may include “job descriptions, allowances such as per diem and mileage reimbursements, non-monetary compensation, working hours, location and non-compete clauses, or other directives that may restrict an individual’s job opportunities”. Citing an example of a problematic case in light of the Act’s new provisions, the Bureau describes a situation in which two unaffiliated employers hold a lunch meeting during which they agree to limit the annual bonuses of their employees to 5% of their gross salary. This type of agreement would, in all likelihood, be prohibited under the Act. NON-POACHING AND NON-SOLICITATION AGREEMENTS Paragraph (1.1) (b) of the Act also prohibits agreements between unaffiliated employers that could limit the prospects of their employees being hired by the other employer. This new provision concerns reciprocal non-solicitation and non-poaching agreements between employers. These agreements are found fairly frequently in commercial contracts covering mergers/acquisitions, joint ventures, partnerships, sales, procurement/supplies of goods and services, franchises, recruitment and personnel placement, etc. However, as discussed below, it should be noted that these types of agreement would only violate the Act if the parties had reciprocal non-poaching obligations in place. In other words, if the obligation is only “one-way”, i.e., only one of the parties is subject to the obligation not to solicit or poach the employees of the other employer, there is no infraction. POTENTIAL EXEMPTIONS AND DEFENCES The main defence against proceedings initiated under subsection 45 (1.1) is based on the ancillary restraints defence (“ARD”). To use it, employers must demonstrate that: The restraint is ancillary to a broader or separate agreement between the parties; The restraint is directly related to and reasonably necessary for achieving the objective of the broader or separate agreement; and The broader or separate agreement does not otherwise violate subsection 45 (1.1) of the Act (when considered without the restraint). For example, it is reasonable to expect that an agency specializing in temporarily placing personnel with its clients would want to prevent its clients from hiring said personnel for the duration of their agreement. In that case, the ARD defence could be used. The agreement, however, must be carefully drafted so the employer can demonstrate that it was reasonably necessary for achieving the desired objective. In this regard, the Bureau notes that the  duration, objective and geographical scope of the restraint, among other factors, will be examined when determining whether the agreement is in fact “reasonably necessary”. The Guidelines states that the Bureau “will generally not assess wage-fixing or no-poaching clauses that are ancillary to merger transactions, joint ventures or strategic alliances under the criminal provisions”. However, the Bureau “may start an investigation under subsection 45(1.1), where those clauses are clearly broader than necessary in terms of duration or affected employees, or where the business agreement or arrangement is a sham.” Other exemptions and defences may also apply, such as the defence based on regulated conduct3 or the exemption with respect to collective bargaining.4 APPLICABLE SANCTIONS Violations of the new subsection 45 (1.1) could lead to criminal charges. A person found guilty of an offence could be subjected to a fine at the discretion of the court or may be imprisoned for up to 14 years, or both. In addition, under section 36 of the Act,individuals (in all likelihood workers) who suffer losses or damages due to violations of provisions of the Act, including section 45 (thus including the new subsection 45 (1.1)), can claim from the person engaging in such misconduct (in this case, the employer) a sum corresponding to the amount of the losses or damages suffered. Therefore, violations of these provisions could lead to civil suits and possibly, in certain cases, to a class action suit. SPECIFICATIONS REGARDING EXISTING AGREEMENTS AND NEXT STEPS The Guidelines specify that the prohibitions set in out subsection 45(1.1) apply not only to agreements entered into on or after June 23, 2023, but also to conduct that reaffirms or implements agreements that were entered into before that date. In this respect, at least two of the parties to these prior agreements must reaffirm or implement the restraint. This may include, for example, the renewal by two or more parties of an agreement containing a prohibited undertaking. The Bureau also notes that it will be focusing on the intent of the parties on or after June 23, 2023. In that context, companies are advised to review their contract templates and to update their pre-existing agreements in the normal course of business. We therefore recommend that all companies, whether operating in an area of provincial or federal jurisdiction, examine the contracts currently in effect to which they are party and identify any clauses that might constitute violations under the new provisions of the Act. Various strategies or corrective measures aimed at limiting business risks could then be evaluated and implemented depending on the necessity and reasonableness of the undertakings in question are (e.g., renegotiating an undertaking or adopting a directive confirming that the employer will not apply an undertaking on or after June 23, 2023, etc.). Please feel free to contact the members of our teams for further details or for ad R.S.C. 1985 c. C-34, as amended by Bill C-19, Budget Implementation Act 2022, No. 1, S.C. 2022, c. 10. Competition Bureau. Enforcement guidelines on wage-fixing and no-poaching agreements on line, May 30, 2023. Subsection 45(7) of the Act. Section 4 of the Act.