Employment Law

The employment relationship is a complex one that extends from pre-employment through employment to termination and post-employment.

Pre-employment

Employee or Independent Contractor?

The first of two main areas of pre-employment law is whether the relationship is one of employee or independent contractor. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account (independent contractor) or is performing them as an employee. A variety of tests exist to help answer this question, including those in Figure .

Figure: Employee or Independent Contractor?

Recruitment

The pre-employment relationship is governed by laws designed to prevent discrimination in employment relationships. The Ontario Human Rights Code (parallel legislation exists in all jurisdictions, including federally) prohibits businesses from publishing an advertisement that expresses a limitation, specification, or preference as to race, colour, ancestry, place of birth or origin, political belief, religion, marital status, physical or mental disability, gender, sexual orientation, or age (prohibited grounds) unless such limitation, specification, or preference is based on a bona fide occupational requirement (something imposed in good faith and with the sincere belief that it was imposed in the interests of adequate performance on the job).

Care must also be taken on application forms and during interviews not to ask questions that relate directly or indirectly to the prohibited grounds.

During Employment

Employees owe a number of obligations to their employees. The concept of vicarious liability has already been covered. Two other important obligations are supervision and those imposed by statutory protection.

Supervision

The risk of vicarious liability and other workplace hazards imposes a responsibility to supervise employees. In the absence of direct supervision, which is not always possible, employers can use employment policy manuals, performance reviews, promotion and other rewards, and a progressive discipline system to direct and control the behaviours of employees. The legal implications for each of these mechanisms are discussed in Figure.

Figure : Supervision Mechanisms

Statutory Protection

There are also a variety of statutes that are designed to protect employees. Most of the legislation falls under provincial jurisdiction, although there are sometimes federal equivalents. A broad summary of the most important statutes is found in Figure.

Figure : Labour Laws

Termination and Post-Employment

Employees may be terminated for cause and without cause. Employers are not required to give notice when terminating for cause. Acts that may provide cause include:

·         Absenteeism and regular lateness;

·         Substance abuse, although there is a duty to accommodate this illness;

·         Incompetence – employee lacks basic skills or qualifications;

·         Disobedience – repeated and deliberate defiance of supervisor;

·         Dishonesty if it gives rise to a breakdown of the employment relationship; and

·         Conflicts of interest – actions of employee conflict with the employer’s best interests (e.g., employee provided confidential information to a competitor).

Employers are required to give notice when terminating without cause. The Employment Standards Act179 includes statutory requirements as to the amount of notice. The courts also look at common law factors, including:

·         Employee’s age,

·         Nature of position held,

·         Length of service,

·         Salary level of employee, and

·         Employee’s likelihood of securing alternate employment.

There is an upper limit of 24 months, even for senior executives.

Wrongful dismissal arises when an employee has been dismissed for cause and the employee claims there was no just cause or when an employee receives notice of dismissal but claims it was inadequate. An employee has a duty to mitigate, to take reasonable steps to minimize losses by seeking reinstatement or new employment. Constructive dismissal occurs when an employer fundamentally changes the nature of a person’s job without the employee’s consent by reducing salary/benefits, altering job status or responsibility, or changing geographical location. Wrongful resignation occurs when an employee fails to give the employer reasonable notice. This period is not necessarily the same as the period that an employer would be required to give for dismissal.