Chapter 12 -Employment PDF

Preview

Summary

Download Chapter 12 -Employment PDF

Description

Employment What is Employment?  

Employment involves one person doing work for another, but not all work relationships are classes as employment. The work of independent contractors, such as doctors, lawyers, and plumbers, must be distinguished, from employment. o Independent contractors work for themselves and act independently, providing a specific service for the person they contract with, whereas an employee is said to be in a master-servant relationship, acting under the direction of the master. o In an agency, one person acts as a go-between in relationships between others.

 The Control Test  The traditional method of determining whether an employment relationship exists is to assess the degree of control exercised by the person paying for the service  A person who is told not only what to do but also how to do it is classed as an employee. But if the person doing the work is free to decide how the job should be done, the position is more likely that of an independent contractor.  Other relevant factors include whether the person is paid a wage or salary or is paid by the job.  Courts will also consider who owns the equipment used and who profits or runs the risk of loss from the work performed.  The employment relationship involves a contract in which the employee agrees generally to serve the employer, who has the right to supervise and direct  On the other hand, an independent contractor agrees to do a particular job, not to enter into a general service relationship. o Employees work for their employer, whereas independent contractors work for themselves.  The Organization Test, Risk Test, and Tools Test  The Courts supplement the control test with the organization test.  Even if there is little direct control, when the services performed by an individual are an integral part of the organization, the worker is likely an employee.  The risk test examines whether the worker bears any financial risk of loss or stands to profit if work is completed efficiently  The Courts also consider who provides the tools because if the worker is required to supply his own tools and these entail a substantial capital investment, this suggests independent contractor status.  When a court is deciding whether to impose vicarious liability or determining whether a worker was wrongfully dismissed, it turns to these tests, enunciated in precedents, to determine whether an employment relationship exists.

Employment Case Summary  Employed or Self-employed? TBT Personnel Services Inc. v. Canada Algoma Taxicab Management Ltd. v. M.N.R The minister of national revenue determined that truck drivers engaged by TBT Personnel Services Inc. were employees, despite their characterization as independent contractors in their contracts. TBT was assessed for premiums payable under the Employment Insurance Act and contributions payable under the Canada Pension Plan. When TBT appealed those assessments, the Federal Court of Appeal declared that the contracts were just one factor to consider. The other relevant factors were (1) the drivers did not provide their own truck or equipment, (2) the drivers did not bear any financial risk, (3) the drivers did not negotiate rates of pay, and (4) although the contracts stipulates that drivers could hire a substitute driver at their own cost, there was no evidence suggesting this ever done. In the Algoma case, Brouillard worked as a driver for Algoma. The contract between Algoma and its drivers entitled the drivers to use Algoma’s vehicles and dispatch services. Algoma paid for the vehicle insurance, as well as the maintenance, fuel, oil, and other supplies for the vehicles. The foregoing factors suggested employment. But Algoma did not assign drivers to work at particular times, on particular days, or in specific geographical areas. Drivers were not required to work any minimum period. They did not have to be consistently available during a shift. Drivers could have customers call them directly rather than calling the dispatcher. As compensation, the drivers paid Algoma a rental fee that varied from 62 to 70 percent of their gross receipts. The Court concluded that all of Algoma’s drivers, including Brouillard, were performing services as independent contractors.  

While a person normally cannot be an independent contractor and an employee at the same time, the same is not true of an agent. Agents can be independent contractors or employees. o A realtor selling housing is likely an independent contractor but also functions as an agent for her client.

The Law of Employment 

Today, employment law is governed primarily, by the general provisions of contract law, supplemented by these special rules as well as by a number of statutes that further define the responsibilities and obligations of the parties.

 The Employment Contract  The main responsibility of the employer, in addition to payment of wages, is to provide a safe workplace and good working conditions for the employee.  Some types of jobs are inherently dangerous, such as construction, and the employer is obligated to minimize the danger, usually by promoting safe work practices; erecting protective fences, barriers, and nets; and acquiring the use of proper safety equipment.  The employer must hire competent people. o If it can be shown that the employer hired a careless or incompetent worker who caused injury to others, the employer may be held accountable.

Employment   





Jobsite health and safety requirements are addressed by occupational health and safety legislation, whereas injuries at a jobsite are covered by workers’ compensation legislation. The contract of employment usually includes a commitment by the employer to pay a specific wage or salary. The employee also has obligations to fulfill. o The employee must possess the skills claimed and exercise them in a reasonably competent and careful manner. o The employee has an obligation to follow any reasonable order pertaining to the employment and must treat the property of the employer carefully. o With some types of job, there may also be an obligation to generally act in the best interest of the employer.  This is referred to as fiduciary obligation and is usually imposed only on senior-level employees.  For ordinary employees, unless the employment contract provides otherwise, their obligation to the employer ends when the employment is terminated. o An employee who is also a fiduciary is automatically subject to certain obligations toward an employer.  These include a duty to act in good faith, make full disclosure, and not take corporate opportunities for their own benefit. Employment contracts are often verbal and not formal or written documents. o It is however a good idea to put the contract in writing, clearly stating the provisions that are important for the parties. o Such provisions mat include rate of pay, the hours of work, and a description of what services are required and for what period. o Some employers may try to impose new, one-sided employment contracts on their employees after the commencement of employment.  When imposed after the fact, these provisions are often not binding because of a failure of consideration. When restrictive covenants are included in the original contract, committing the employee not to work in a particular geographical area or a particular industry after leaving the position, they should specify a reasonable time and area. o If they are too broad, the covenants will not be enforced. o In general, there is some reluctance on the part of the courts to enforce restrictive covenants in employment contracts because of the danger of denying the employee the ability to earn a livelihood and because of the normally weaker bargaining position of employees

Case Summary  Enforcing Promises not to Compete: Globex Foreign Exchange Corporation v. Kelcher Peters & Co Limited. V. Ward Courts have historically subjected restrictive covenants in employment contracts to rigorous scrutiny, due to the generally accepted imbalance in power between employee and employer. Such scrutiny was evident in the Globex case, where the employer sought an order to enforce non-competition and non-solicitation clauses, claiming that these three employees breaches these covenants. Maclean has initially accepted the restrictions on his ability to solicit Globex’s clients

Employment when hired; Kelcher and Oliviero agree to the restriction but received no new consideration for doing so. When Globex presented them with new employment agreements that contained even more onerous non-competition and non-solicitaion clauses, Kelcher resigned, Maclean was terminated for refusing to sign, and Oliviero resigned shortly thereafter. All three went to work for a competitor. The Court of Appeal found Kelcher’s non-solicitation covenant unenforceable because it was ambiguous and overbroad, regardless of whether or not there was valid consideration. As to the non-competition clauses, since all three employees has been wrongfully dismissed, this in itself made the restrictive covenants unenforceable. The employer’s action was thus dismissed. In the Peters & Co. case, Ward was a key and senior employee of Peters & Co who tendered his resignation on December 15. Because of concerns that Ward has accepted a job with a competitor the very next day, Peters & Co conducted an investigation and discovered that Ward has downloaded its clients list and has taken boxes of documents from the office while the rest of the staff was at a Christmas party. Peters & Co immediately started a lawsuit for breach of the restrictive covenants and breach of fiduciary duty an sought an Anton Piller Order allowing it to seize property that was taken from its premises. The Court found that Ward had downloaded or printed numerous contact lists, had removed extensive material from his office in the most surreptitious manner, and the plaintiff has good reason to believe that Ward might destroy those documents if they gave him notice of their application. Accordingly, the Anton Piller Order was granted. 

Not only must the non-competition clause be reasonable between the parties (not overly broad geographically or in terms of time), but the party trying to enforce the covenant must show that the clause is necessary to protect some proprietary interest

 Reasonable Notice  The problem for employers is that reasonable notice, especially when long-term employees are involved, can be significant  The courts impose notice periods on the bases of such factors as length of service; the type of job; the employee’s age, experience., training, and qualifications; and the availability of similar employment.  To determine whether seasonal employment is in fact employment of indefinite duration requiring notice of termination, relevant factors include the length of seasonal employment relationship, the pattern of recall or return to work, and the nature of the industry in question.  Additional damages may be awarded to an employee who is lured or persuaded to leave another job, but is terminated after a short time  Aggravated or punitive damages are reserved in cases where the employer acts maliciously or outrageously Case Summary  Bad Faith of Employer Draws Additional Damages: Honda Canada Inc. v. Keays

Employment Keays has worked for Honda for 14 years but was persistently absent due to chronic fatigue syndrome. He went on long-term disability for a period, but was terminated (wrongfully, as later determined by the Court) and he had to return to work. There followed a considerable amount of absenteeism caused by his illness. Honda required him to submit an examination by its doctor and, upon his lawyer’s advice, Keays refused “pending clarification of the purpose, methodology and the parameters of the assessment.” Keays sued for wrongful dismissal. It was clear to the judge that Honda thought Keays’s condition was “bogus” and the demand to be examined by Honda’s doctor was not made in good faith but as a pretext to fire him. Honda representatives also tried to persuade Keays to reject the advice of his own lawyer. Since these acts amounted to bad faith on the part of the employer, the judge, based on the Wallace precedent, extended the normal notice period (15 months) by an additional nine months. This amounted to an award of $150,000 for wrongful dismissal (24 months’ pay). Further, the harassment and discrimination Keays experienced and the denial of his disability benefits constituted a separate wrong. Keays was thus awarded $500,000 in punitive damages. The Court of Appeal upheld the finding of wrongful dismissal and the awarding of the extra damages because of the manner of dismissal. It did, however, reduce the punitive damages from $500 000 to $100 000. On further appeal, the Supreme Court of Canada rejected the practice of extending the notice period as a consequence of an employer engaging in bad faith in the manner of dismissal (the “Wallace extension”). The Court indicated that damages for the manner of dismissal will only be available if the employer has acted, during the course of the dismissal, in a manner that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive” (para. 57). Such damages should be awarded through an award that reflects actual damages, not by extending the notice period. The Supreme Court set aside the award of aggravated damages, on the basis that Honda’s conduct in dismissing Keays was not an egregious or outrageous display of bad faith. Further, there was no evidence that Keays subsequent disability was caused by the manner of termination. Punitive damages were also set aside, for even though they are awarded for deliberate wrongful acts that are malicious, Honda’s behaviour, although insensitive, was not deserving of punishment.  Just Cause  When there is just cause there is no requirement for an employer to give any notice. o Any major breach of contract enables the opposite party to treat the contract as discharged or terminated by that breach.  In the context of an employment contract, just cause must therefore constitute a serious or fundamental breach of the employee’s contractual obligations.  The employer may rely on such breaches when defending wrongful dismissal action, even if the misconduct is discovered after the employee has been dismissed. Case Summary  Honesty is Still the Best Policy: Dowling v. Ontario (Workplace Safety and Insurance Board) Dowling was a manager of an office of the Workplace Safety and Insurance Board. He had worked for that organization for 25 years. He was terminated for cause, with the employer claiming that Dowling had purchased a computer from one of its clients (an account he supervised), receiving a discount in the process and giving an advantage in return. It was also

Employment claimed that he had accepted a payment of $1,000 on another occasion from the same client. His employer conducted an investigation, and, in the process, Dowling made misrepresentations and provided false documents. At trial, the judge found that the dishonest conduct was not enough to justify Dowling’s termination. On appeal, however, the Court of Appeal found that the receipt of the $1,000 payment and the discount with respect to the computers amounted to a conflict of interest. The Court also went on to find that the conduct of Dowling during the investigation, in which he lied and presented false documents, constituted dishonesty and misconduct sufficient to establish a breakdown of employment relationship. This amounted to cause for termination and was characterized by the Court as giving rise to a fundamental breach of his employment relationship.  Dishonesty and Misconduct  For dishonesty or misconduct to justify dismissal, courts consider whether the behaviour violates an essential condition of the contract  Dishonesty or misconduct may not constitute just cause dismissal if mitigating factors are present. o For example, when a bank clerk was found to have stolen $2500 from her employer and then lied about it, her dismissal was overturned by an arbitrator who substituted a 22-month suspension. This decision was upheld when appealed to a Quebec Court. The clerk had an unblemished record of 25 years’ employment with the bank. She stole the money because of a pathological addiction to video poker. There was great remorse, along with expert testimony of the family about personal problems she had faced because of the addiction. These factors led the arbitrator, supported later by the Court, to decide that dismissal was too harsh in this instance. Proportionality between the offence and the punishment is the key in such decisions.  Great care must be taken when dismissing employees for dishonesty or criminal behaviour such as theft to ensure that the accusations are accurate and the evidence firm. o The courts have awarded significant damages for wrongful dismissal, augmented by punitive damages, when such charges have not been substantiated  Disobedience and Insubordination  Although an employee is entitled to refuse to work because of dangerous working conditions, failure to perform a reasonable order is also grounds for dismissal without notice.  Disobedience justifies disciplinary measures and, if significant, may justify dismissal  Insubordination is likewise grounds for dismissal, as obedience and a willingness to work collectively is implied in employment relationships.  Incompetence  Incompetence is also a just cause for dismissal; however, employers are well advised to let employees know when the level of performance is unacceptable as soon as it becomes apparent and to provide an opportunity for improvement

Employment  Illness and Disability  In the past, employees who became seriously ill, even though not “at fault,” could be discharged without notice if they could no longer perform their job.  Even today, when the employee can’t work termination is justified.  However, there is a legislated duty to accommodate disables workers who are still able to work.  Human rights commissions are very willing to rule against employers who fire workers too quickly because of illness or disability.  In enforcing the prohibition of discrimination against the disables, the courts have ruled that employers have a legal duty to take reasonable steps to accommodate an employee’s individual needs. o This legal duty does not apply, however, if the only way to resolve the problem will cause the employer undue hardship, which is hardship that is substantial in nature  Layoffs  When an employer simply runs out of work for the employee to do or runs into financial difficulties, that is not just cause for termination; reasonable notice is still required  In the absence of reasonable notice, pay in lieu, and just cause, the employee can sue the employer for wrongful dismissal.  Ontario’s Employment Standards Act, stipulates that if an employee has been laid off for a period longer than the defined “temporary layoff” (generally 13 weeks), employment terminates, and the employer must pay the employee termination pay. o However, if wages or other payments are made to or for the benefit of the employee during the layoff, the length of the temporary layoff can be extended to 35 weeks.  Constructive Dismissal  When an employer demotes the employee or otherwise unilaterally changes the nature of the job, this may constitute constructive dismissal, and the employee may be able to sue for wrongful dismissal.  From a contractual perspective, one party cannot simply impose a change in terms of a contract without first securing the consent or agreement of the other party. o In essence, the employer is simply refusing to perform the original contract when it demotes an employee  Since the employer is responsible for behaviour at the workplace, failure to address harassment or sexual harassment by management or by other employees may enable a victim to claim constructive dismissal.  When there is constructive dismissal, the employee has an obligation to mitigate, possibly to the extent of accepting a new position offered by the employer, o...