Spring 2010Individual Employment Law CANCooperwilliams & Tyler
INDIVIDUAL EMPLOYMENT LAW CAN – LAW 419C
Steve Patterson
University of British Columbia
Matthew Cooperwilliams & Grady Tyler
Spring 2010
PART ONE – FUNDAMENTAL OF EMPLOYMENT CONTRACTS: OFFER AND ACCEPTANCE
I.Introduction to Employment Law………………………………………………………………………4
II.General Principles of Contract Law Governing Employment Contracts…………………..4
1.Offer and Acceptance…………………………………………………………………………………………………….4
2.Express and Implied Terms…………………………………………………………………………………………..5
Machtinger v. HOJ Industries (1992 SCC) ………………………………………………………5
III.Modifying the Terms of the Employment Contract………………………………………………6
1.Fresh Consideration…………………………………………………………………………………………………………6
Watson v. Moore Corporation Ltd. (1996 BCCA) ……………………………………………7
Singh v. Empire Life Insurance Co. (2002 BCCA) ……………………………………………7
2.Mid-Contractual Changes by the Employer……………………………………………………………………7
A.General…………………………………………………………………………….………………………………………7
B.Express Contractual Provisions………………………………………………………………………………7
C.Forbearance………………………………………………………………………………………………………………7
D.Unequivocal Notice…………………………………………………………………………………………………8
Kussmann v. AT & T Capital Canada Inc. (2002 BCCA) ………………………………8
E.Terminate with Proper Notice…………………………………………………………………………………8
Wronko v. Western Inventory Service Ltd. (2008 Ont. CA)……………………………8
F.Benefits Packages……………………………………………………………………………………………………9
Duprey v. Seanix Technology (Canada) Inc. (2002 BCSC)……………………………9
PART TWO – THE COMMON LAW OBLIGAITONS OF EMPLOYEES
I.Introduction to Implied Terms…………………………………………………………………………..9
II.The Employee’s Implied Contractual Obligations…………………………………………………10
1.Duty of Fidelity…………………………………………………………………………………………………………………10
2.Duty to Follow Lawful and Reasonable Directions…………………………………………………………10
3.Duty to Report to Work and Be Punctual…………………………………………………………………………10
4.Duty to Be Honest……………………………………………………………………………………………………………10
5.Duty to Report to Work Sober…………………………………………………………………………………………11
6.Duty to Perform Duties Competently………………………………………………………………………………11
7.Other Duties……………………………………………………………………………………………………………………..11
III.Liability to Third Parties by Employees………………………………………………………………11
1.Limited Liability Clauses…………………………………………………………………………………………………11
London Drugs Ltd. v. Kuehne & Nagel International Ltd. (1992 SCC)…………12
IV.Obligation Not to Wrongfully Exploit or Abuse Employer’s Business Interests………….12
1.General……………………………………………………………………………………………………………………………12
2.Fiduciary Obligations………………………………………………………………………………………………………13
Canadian Aero Services v. O’Malley (1974 SCC) ……………………………………………13
Frame v. Smith (1987 SCC) ……………………………………………………………………………14
PART THREE – THE COMMON LAW OBLIGATIONS OF THE EMPLOYER
I.Introduction……………………………………………………………………………………………………14
II.An Implied Duty of Fairness?……………………………………………………………………………14
III.Other Implied Duties on the Employer………………………………………………………………15
1.Duty to Pay for Work Done, Gratuities, and Employee Expenses………………………………15
2.Duty to Give Reasonable Notice of Termination……………………………………………………………15
3.Duty to Provide Work Opportunities and Job Satisfaction……………………………………………15
4.Duty to Prevent Personal Harassment and Intimidation………………………………………………15
5.Duty to Provide a Reasonably Safe Workplace………………………………………………………………15
Jacobsen v. Nike (1996 BCSC) ………………………………………………………………………16
IV.Vicarious Liability of the Employer in Sexual Abuse Cases……………………………………16
1.Sufficiently Connected Conduct…………………………………………………………………………………….16
Bazley v. Curry (1999 SCC) ………………………………………………………………………….16
Jacobi v. Griffiths (1999 SCC) ………………………………………………………………………17
PART FOUR – EMPLOYMENT CONTRACTS v. INDEPENDENT CONTRACTORS
I.Introduction……………………………………………………………………………………………………18
II.Status as an “Employee” …………………………………………………………………………………18
1.General……………………………………………………………………………………………………………………………18
2.Factors in Classifying the Business Relationship……………………………………………………………19
3.Performing Business On Their Own Account? ………………………………………………………………20
Montreal (City) v. Montreal Locomotive Works Ltd. (1946 PC)………………………20
Wiebe Door Services Ltd. v. Canada (M.N.R.) (1986 Fed. CA)………………………20
671122 Ontario Ltd. v. Sagaz Industries Canada Inc. (2001 SCC)………………21
III.Employment Law v. Labour Law Relationships……………………………………………………21
PART FIVE – THE EMPLOYER’S STATUTORY OBLIGATIONS TO ITS EMPLOYEES
I.Introduction to Employment Standards……………………………………………………………..22
1.General……………………………………………………………………………………………………………………………22
2.Procedure…………………………………………………………………………………………………………………………22
II.Coverage of the British Columbia Employment Standards Act……………………………….23
1.Protected Employees………………………………………………………………………………………………………23
2.Exceptions………………………………………………………………………………………………………………………23
III.Major Substantive Rights Conferred Under the Act………………………………………………24
1.Wages………………………………………………………………………………………………………………………………24
A.Minimum Wage…………………………………………………………………………………………………………24
B.Payment of Wages……………………………………………………………………………………………………25
C.Wage Deductions………………………………………………………………………………………………………25
2.Payroll and Record Keeping……………………………………………………………………………………………26
3.Hours of Work…………………………………………………………………………………………………………………26
A.Breaks………………………………………………………………………………………………………………………26
B.Minimum Daily Hours………………………………………………………………………………………………26
4.Overtime…………………………………………………………………………………………………………………………27
A.Entitlement………………………………………………………………………………………………………………27
B.Rates…………………………………………………………………………………………………………………………27
C.Maximum Hours…………………………………………………………………………………………………………28
D.Payout of Overtime……………………………………………………………………………………………………28
E.Averaging Agreements………………………………………………………………………………………………28
5.Statutory Holidays……………………………………………………………………………………………………………28
A.Definition…………………………………………………………………………………………………………………28
B.Entitlement and Payment…………………………………………………………………………………………29
C.Substitution………………………………………………………………………………………………………………29
6.Annual Vacations………………………………………………………………………………………………………………30
7.Leaves of Absences…………………………………………………………………………………………………………30
A.Pregnancy Leave………………………………………………………………………………………………………30
B.Parental Leave…………………………………………………………………………………………………………31
C.Family Responsibility Leave……………………………………………………………………………………31
D.Bereavement Leave…………………………………………………………………………………………………32
E.Compassionate Care Leave……………………………………………………………………………………32
F.Duties of the Employer……………………………………………………………………………………………32
8.Termination of Employment……………………………………………………………………………………………33
A.Individual Employees………………………………………………………………………………………………33
B.Group Employees……………………………………………………………………………………………………33
C.Exceptions to the Notice Requirement……………………………………………………………………33
9.Variances…………………………………………………………………………………………………………………………34
Shore v. Ladner Downs (1998 BCCA) ……………………………………………………………34
Macaraeg v. E. Care Contact Lens Centers Ltd. (2008 BCCA)………………………34
IV.Employment in the Federal Jurisdiction………………………………………………………………35
Actton Transport v. BC (Director of Employment Standards) (2008 BCSC)…35
PART SIX – TERMINATION BY THE EACT OF THE EMPLOYER
I.Introduction……………………………………………………………..………………………………………35
II.Common Law Requirements Regarding Notice to Terminate…………………………………36
1.General……………………………………………………………………………………………………………………………36
2.Express Notice of Termination Clauses……………………………………………………………………………36
3.Implied Terms Reflecting the Parties’ Factual Intention of the Notice Period………………37
III.“Reasonable” Notice of Termination at Common Law…………………………………………..37
Bardal v. Globe & Mail Ltd. (1960 Ont. SC)……………………………………………………………38
Ansari v. BC Hydro and Power Authority (1986 BCSC)…………………………………………38
IV.Summary Dismissal or Cause for Termination……………………………………………………..39
1.Introduction……………………………………………………………………………………………………………………39
2.What Degree of Misconduct/Incompetence is Required for “Just Cause”……………………39
A.General……………………………………………………………………………………………………………………39
B.Proportionality…………………………………………………………………………………………………………39
McKinley v. BC Tel (2001 SCC)………………………………………………………………………………40
V.Unjust Dismissal of Federal Employees………………………………………………………………41
1.General……………………………………………………………………………………………………………………………41
2.Eligibility…………………………………………………………………………………………………………………………41
3.Remedies…………………………………………………………………………………………………………………………41
PART SEVEN – TERMINATION BY THE ACT OF THE EMPLOYEE
I.Constructive Dismissal……………………………………………………………..………………………42
1.General……………………………………………………………………………………………………………………………42
2.Quitting for Cause……………………………………………………………………………………………………………42
Farber v. Royal Trust Co. (1997 SCC)……………………………………………………………………43
Farquhar v. Butler Brothers Supplies Ltd. (1988 BCCA)………………………………………43
Robertson v. West Fraser Timber Co. (2009 BCSC)…………………………………………….44
II.The Employee’s Duty to Mitigate…………………………………………………………………………45
1.Constructive Dismissal……………………………………………………………………………………………………45
Davies v. Fraser Collection Services (2008 BCSC)…………………………………………………45
Michaels v. Red Deer College (1975 SCC)………………………………………………………………46
Farquahar v. Butler Brothers Supplies Ltd. (1988 BCCA)………………………………………46
2.Wrongful Dismissal……………………………………………………………………………………………………………46
Evans v. Teamsters, Local 31 (2008 SCC)………………………………………………………………46
Neilson v. Vancouver Hockey Club (1988 BCCA)……………………………………………………47
PART EIGHT – COMMON LAW REMEDIES FOR WRONGFUL DISMISSAL
I.Introduction……………………………………………………………..……………………………………..48
II.Financial Compensation……………………………………………………………..………………………48
1.Remuneration During the Notice Period…………………………………………………………………………48
A.Objective of Financial Compensation………………………………………………………………………48
B.Wage Increases, Commissions, and Bonuses…………………………………………………………48
C.Fringe Benefits, Pension Rights, and Other Benefits………………………………………………48
Prince v. T. Eaton Co. (1992 BCCA)………………………………………………………………………49
2.Damages for Psychological Harm……………………………………………………………………………………49
A.General……………………………………………………………………………………………………………………49
B.Independently Actionable Wrongs…………………………………………………………………………49
Wallace v. United Grain Growers Ltd. (1997 SCC)………………………………………………49
C.Aggravated Damages Flowing From Breach of the Employment Contract……………50
Fidler v. Sun Life Assurance Co. of Canada (2006 SCC)……………………………………….50
Honda Canada Inc. v. Keays (2008 SCC)………………………………………………………………51
III.Pursuing Other Claims: The Tort of Negligent Misrepresentation……………………………52
Queen v. Cognos Inc. (1993 SCC)…………………………………………………………………………52
IV.Deductions From Damages Under the Duty to Mitigate………………………………………….52
V.Deductions From Damages Under the Collateral Benefits Rule……………………………….52
Sylvester v. British Columbia (1997 SCC)……………………………………………………………53
VI.Punitive Damages…………………………………………………………………………………………….53
PART NINE – RESTRICTIVE COVENANTS AND POST-EMPLOYMENT COMPETITION
I.Introduction……………………………………………………………..…………………………………….53
II.Express Restrictive Covenants……………………………………………………………..……………54
1.General……………………………………………………………………………………………………………………………54
2.Enforceability…………………………………………………………………………………………………………………55
Aurum Ceramic Dental Laboratories Ltd. v. Hwang (1998 BCSC)………………………55
Valley First Financial Services v. Trach (2004 BCCA)…………………………………………56
Jordon v. Pacific Sign Group Inc. (2007 BCSC)……………………………………………………57
3.Severability……………………………………………………………………………………………………………………57
Napier Environmental Technologies Inc. v. Vitomir (2002 BCSC)………………………57
Shafron v. KRG Insurance Brokers (Western) Inc. (2009 SCC)…………………………58
III.Implied Restrictive Covenants?……………………………………………………………………….58
RBC Dominion Securities v. Merrill Lynch Canada (2008 SCC)……………………………59
PART TEN – HUMAN RIGHTS AND EMPLOYMENT
I.Prohibited Grounds of Discrimination…………………………………………………………………59
Seneca College of Applied Arts v. Bhaduria (1981 SCC)………………………………………60
II.The Proscribed Conduct: What Constitutes “Discrimination”?……………………………….60
1.The Duty to Accommodate to the Point of Undue Hardship…………………………………………60
British Columbia v. BCGSEU (The “Meiorin Grievance”) (1999 SCC)……………………61
Renaud v. Central Okanagan School District (1992 SCC)……………………………………62
2.Sexual Harassment…………………………………………………………………………………………………………62
Robichaud v. Canada Treasury Board (1987 SCC)………………………………………………62
Janzen v. Platy Enterprises Ltd. (1989 SCC)………………………………………………………63
PART ONE – FUNDAMENTALS OF EMPLOYMENT CONTRACTS: OFFER AND ACCEPTANCE
I. INTRODUCTION TO EMPLOYMENT LAW
- In this document: ER = employer; EE = employee; CL = common law; K = contract
- Employment law: the rules that govern the relations between private ERs and individual EEs
- Sources of these terms and conditions of employment include:
a) Negotiations – ER-EE negotiations become incorporated as express terms of the K
b) Unilateral decisions of ER – can be given effect through express or implied terms of K
c) Customs – Industry standard practices can be given effect as implied terms of the K
d) Case law – gives meaning to standardized terms in K, ie: “reasonable” notice of termination
e) Legislation – provides statutory floor of minimum labour standards
- Defining features of employment law:
a) Application of general principles of contract law to the contract of employment
- “Freedom of contract” designed to facilitate the operation of relatively free markets
- However, courts and legislation have attempted to redress power imbalances of ER v. EE
b) Theory v. practice
- Many rights the EE enjoys under the employment K are unobtainable because the high cost of civil litigation is available only to high-level EEs
- Therefore, most case law deals with senior managers, professionals, and technicians
- Low and middle-level EEs must rely on minimum standards in the Employment Standards Act
c) Jurisprudence changes with economic and political developments
- While this feature is prevalent throughout the CL, it’s particularly relevant in employment law
- Last 15 years has put increasingly intense pressure on Canadian ERs to minimize labour costs to stay competitive internationally, so some courts have reformulated many rules of the employment K in order to reduce labour costs rather than advance EE rights
______
II. GENERAL PRINCIPLES OF CONTRACT LAW GOVERNING EMPLOYMENT CONTRACTS
1) OFFER AND ACCEPTANCE
- General rule: all EEs have an employment K, established based on the fundamental principles of offer and acceptance, even if there is nothing in writing
- However, the form and terms of employment K’s vary markedly
- Common to have a signed K
- However, most day-labour and entry level positions only receive a simple declaration of work and pay; all other duties are imposed by the CL courts as implied terms of employment
- Therefore, for a valid employment K, there must be:
a) Offer
- One party – usually the ER – must communicate to the other party a firm and unequivocal commitment to enter into an employment relationship
- Offer can be made either orally or in writing
b) Acceptance
- Whether an offer is made verbally or by a letter of appointment, the employment K will not be created until the acceptor has communicated to the offeror unequivocal and unconditional assent to all the terms of the offer
- Therefore, the moment the person accepts the job, the employment contract crystallizes and the express and implied terms of employment are set
- From this point, the employment K cannot be modified to a party’s prejudice unless that party receives fresh consideration for the modification
c)Certainty
- Under general contract law principles. all contracts must be certain
- If there is uncertainty, courts use doctrine of contra proferentum and interpret to benefit of EE, as agreement is often drafted by the ER
- Once acceptance has been communicated by the offeror, the employment K crystallizes and its terms become set, even though the parties may postpone the date when work will commence
- This means that the employment contract often begins before a person starts working
- Offer and acceptance may be:
a) Express
- EE signs document communicating acceptance of terms/conditions of employment
b) Inferred
- Offer and acceptance inferred from the conduct of the parties, either through:
i) Standard practice – ie: ER of seasonal workers continually recalls an EE every season without interruption for many years creates an employment K
ii) Condition precedent – K begins once a certain event takes place, such as when a Board of Directors must ratify a K by a certain date
- Note: at CL, valid employment K’s need not be in writing
______
2) EXPRESS AND IMPLIED TERMS
- For most EEs, the express terms of their employment K will only cover matters such as:
a) Job title
b) Basic wage rates
c) Basic hours of work
d) Possibly vacations and holidays
e) Incorporate by reference terms and conditions contained somewhere else (ie: policy book)
- Other than these skeleton express terms, many employment K terms are implied, not express
- Most litigation is over what the implied terms are, and the implied terms often do not reflect the actual intention of the parties when the employment relationship is first established
- General approach: courts give effect only to the unexpressed intentions of the parties regarding the matter in issue to ensure that freedom of contract is respected
- However, the process of implying terms into employment Ks is strongly influenced by judicial policy-making, so the “factual intention of the parties” can be ruse to cloak policy preferences as to what the parties’ rights and obligations ought to be
- Examples of policy-driven nature of standardized terms that will be implied into employment Ks in the absence of express, enforceable K language to the contrary:
a) Reasonable notice of termination
- Principle: CL will imply a term in an employment K (in the absence of an express K term) that every EE is entitled to reasonable notice of termination unless there is cause (ie: misconduct)
- Cause: EE misconduct that is so serious that it irreparably damages the employment rel't
- Pay in lieu of notice can depend on the nature of employment, age, length of service, and available of alternative employment
- Machtinger: EE was not not fired for cause, so he was entitled to a 7 months notice period which included all the salary/benefits owed to him within that 7 month period
- See Machtinger and part five on reasonable notice of termination
b) Other duties
- Includes the duty to follow lawful directions, duty of loyalty, duty of confidentiality, ect…
- Policy: dominant policy driving development of the implied term is to expand the rights of the vulnerable EE
- Remember: the parties can always expressly contract-out of any standardized implied term so long as the express terms do not violate the minimum standards in the BC Employment Standards Act (“ESA”) or the Federal Canada Labour Code (“CLC”)
- The next case is a good summary of the basic freedom of contract principle behind employment law…
Machtinger v. HOJ Industries Ltd. (1992 SCC)…All employment K terms must meet provincial ESAs
F:- Machtinger was a credit manager and his buddy a sales manager for a car dealer from 1978-1985
- 7 years later, he signed an employment K for an indefinite period which contained a clause allowing his ER to terminate employment without cause and without any notice, which was contrary to the minimum 4 week notice period he was entitled to under the Ontario ESA
- After his ER fired him, he was paid the equivalent of 4 weeks notice/salary, the statutory minimum
- At trial, Machtinger as plaintiff was awarded damages for wrongful dismissal, as TJ found he and his buddy were entitled to a reasonable notice period of about 7 months
- Ontario CA reversed it, holding that the K notice period was null and void because there was evidence of the intention of the parties to allow termination without reasonable notice
I:- Was the payment of 4 weeks salary in lieu of notice sufficient? Or were they entitled to the 7 months salary in lieu of notice they were entitled to at common law?
J:- For P…notice periods were shorter than the statutory minimum, making the termination clauses null and void and rendering them useless in determining the intent of the parties
A:- General rule: freedom of contract never displaces the statutory minimum
- Here, the terms in the employment K clearly fell below the 4 week minimum notice period
- However, ER argued if they fell below the floor, EEs were only entitled to the statutory minimum
- Iacobucci J. disagreed, as the termination clauses that are null and void cannot be used as evidence of the parties intention
- Therefore, P's entitled to the 7 months notice at CL
- Policy: if the only sanction which ERs potentially face for failure to respect the minimum notice periods is an order to comply with the Act, they would have little incentive to make K's with their EEs that meet the minimum standards
R:- Express terms that fall below the statutory minimum are null and void and cannot be used as evidence of the parties’ intention when construing implied terms of the employment K
______
III. MODIFYING THE TERMS OF THE EMPLOYMENT CONTRACT
1) FRESH CONSIDERATION
- Once the employee accepts a job offer, the offer is set and the ER can't wedge anything in after-the-fact
- However, ERs often want to change employment Ks with EEs due to changing economic realities
- ie: reduce length of working week, reduce severance entitlements, reduce compensation, substantially change EE job duties or place of employment, ect…
- Contract law: any amendment to the terms of a K must be supported by fresh consideration flowing from the promisee to the promisor over and above the performance of existing contractual obligations
- Therefore, the EE is required to provide something of value in return in order to render the ER’s variation of the term legally enforceable
- Examples: offer EE a promotion, a fresh job opportunity, increase compensation, ect…
- Note: policy documents given to new EE after they have accepted the employment K aren't binding and would not constitute fresh consideration
- Moore: an existing employment K can’t be modified to a party’s prejudice unless that party receives good consideration for the modification, and continued employment, without more, is not sufficient
Watson v. Moore Corporation Ltd. (1996 BCCA)…Amendments mid-contract must be bargained for
F:- The EE, Watson, was employed by her ER, Moore, the defendant, in various capacities for 25 years, but had no written employment K for the first 13 years
- In 1989, her ER forced her to sign an agreement with a harsh termination clause; the clause stipulated that she could be terminated without cause upon payment in lieu of the minimum notice required under the BC ESA, plus one week's salary for every two years of completed service
- The clause would've given her 20 weeks of pay in lieu of notice, which was considerably less than she could’ve been entitled to at CL given her 25 years of service
- TJ held for ER, finding that EE’s continued employment, or alternatively ER’s forbearance from terminating the EE constituted fresh consideration for the new agreement
I:- Was the new agreement invalid due to inadequate consideration for the termination clause?
J:- Yes, for P…continued employment (without more) could not amount to consideration
A:- General rule: continued employment, without something more, could not amount to fresh consideration, especially in the circumstances of this case
- Here, CA overturned both of the TJ’s findings:
a) No fresh consideration
- Here, the EE was already employed and remained employed for 25 years
- Nothing of value flowed from ER to EE in consideration of the ag’t she could be discharged without cause with less notice or payment in lieu of than she was already entitled to
b) No evidence of forbearance
- Nothing in the record to suggest ERintended to dismiss EE if she didn’t sign the agreement
- Therefore, it was speculative to suggest that the ER’s hypothetical forbearance from discharging the EE could constitute fresh consideration for the agreement
- Therefore, the BCCA awards the EE a reasonable notice period of 18 months due to circumstances
- Factors included the EE’s 25 years of service, old age, fact that a substantial portion of her salary consisted of commission which couldn't be duplicated in another employment, and D's conduct in leading her to believe she was bound by a restrictive covenant