Legislation is passed in the legislature by a vote from elected officials; policy is written by unelected public servants.
If you break a policy, there are no legal/criminal consequences; if you break legislation, you are potentially liable for criminal or civil damages.
Policies flow from laws and legislation. Legislation is the what ("children are legally required to attend school") and policy is the how ("because children are legally required to attend school, schools must be built in every town and city.")
Here is the order of laws/policies, from most broadly influential to most specific:
International Law
Federal Law/Legislation
Provincial or State Law/Legislation
Regulation
Municipal By-Law
Policy
Procedure
Standard Operating Procedure
Each layer can influence every layer below it, but no layer above it. Provincial legislation must be compliant with existing federal legislation; procedures must adhere to what their policies propose. What we might observe is that the lower into the structure we go, the more focused the scope and the more granular the work. It would be inappropriate for federal legislation to state how many windows a classroom must have, but that does not mean that it is not a topic worth codifying and discussing, possibly in a standard operating procedure.
To use an extreme example, if international law states that torture is illegal– and it does– it is illegal for Canada to sanction torture within its borders. However, it would be just as illegal for Infrastructure to develop a policy that involves torture, because policies must be compliant within all the legal structures that support their governments.
WHAT A GREAT ANSWER THAT IS!!! Thank you....Mine is not quite so great, but here's a little snippet.
In many political systems (mostly the democratic ones), government (the proposer of most policy) can change the law if it gets in the way. The overall aim is to balance things to promote relative peace and prosperity.
But even here there are limits. We have a rather neat one here in the UK. The courts may find against policies and/or their required legislation holding something like this: "it's unreasonable because no reasonable authority could be reasonably supposed to have created it". So it can't be allowed! That's not entirely the correct wording, but you get the idea....
To clarify, are you referring to administrative policies (as excellently explained by Lisa above!) or are you referring to 'policy' in the sense that 'it is government policy that we will require every student to attend school, because we believe it benefits society'. In the latter case, policy influences legislation. Government policy decisions will be made usually in Cabinet, with legislation one mechanism used to implement these decisions. The other mechanisms identified by Lisa are some other ways government policy might be implemented.
Part of Policy process is legitimization of the policy. This is done in the legislature. in this case, the legislature can make input into the policy, pass the policy into law for implementation or reject the policy.