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Business Law I - 2275 – Final Exam Notes

Management and Organizational Studies
Course Code
MOS 2275A/B
Philip King
Study Guide

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Business Law in Canada Final Exam
Sunday April 17, 2011 7:00 PM Alumni Hall 201
Chapter 10 Employment
Employment one person doing work for another, but not all work
o Independent contractors work for themselves and act independently
o Employee must be in master-servant relationship
The control test
o Determine whether an employment relationship exists based on whether the person being
paid for work is told how, when and where to do it
The organization test
o Supplements the control test
o When the individual is an integral part of the organization, working only for that corporation
and subject to group control
o May be an independent contractor if free to offer services and bears risks of loss
o Vicarious liability independent in some circumstances but employee in others
o No general legislated definition courts turn to precedents
o Person representing and acting on behalf of a principal in dealings with third parties
o Can be independent contractors or employees ex) sales clerk
The employment contract
o Obligations of employer:
Provide a safe workplace and good working conditions including hiring competent
Payment of wage or salary (also bonuses, benefits etc.)
o Obligations of employee:
Follow reasonable orders and treat property carefully (competency)
Honesty and loyalty
Fiduciary obligation in some cases ex) senior level employees
Act in good faith, make full disclosure, not take corporate opportunities for
one’s own benefit
o Often not formal or written (good idea though) include provisions such as rate of pay,
hours, description of services
o Consensus, consideration, capacity, legality and intention required

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o Restrictive covenants must be reasonable, specific, not be against the public interest and
fully disclosed (courts reluctant to enforce sometimes)
o Contract may provide for its own discharge or stipulate amount of notice to be given or
parties can mutually agree to bring it to an end
o Most contracts of employment for indefinite period can be terminated by:
o Either party given reasonable notice
What constitutes reasonable notice varies with circumstances
Courts consider: length of service, type of job, employee’s age, experience,
qualifications, availability of similar employment, bad-faith conduct
o Employer giving compensation that should have been earned in that notice period (pay in
lieu of notice)
o Or immediately with just cause
Dismissed without notice
Serious offences and must be substantiated and proportioned well
o Must not violate human rights ex) discrimination
Disabled workers
o Legislated duty to accommodate disabled workers who are still able to work but illness may
constitute frustration of a contract and be discharged without notice if they could no longer
perform their job legal duty does not apply when it will cause the employer undue
hardship (to deal with this most have insurance or policies in benefits packages)
Disobedience and incompetence
o Failure to perform a reasonable order grounds for dismissal without notice
o Incompetence also just cause however employers must inform employees what level of
performance is unacceptable and provide opportunity for improvement must not tolerate
otherwise can be taken as acceptance
o Running out of tasks or experiencing financial difficulties is not just cause (reasonable notice
required) even when layoff is temporary
o Ontario Employment Standards Act if laid off for a period longer than defined temporary
(13 weeks) employment terminates and employer must compensate, but period is extended
if payments made during the layoff
Wrongful leaving
o Key employees may be required to give substantial notice
o Employees can leave without notice if contract breached by employer first
o Employees may be sued for breach of duty

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o Some have fiduciary duty, non compete others may begin competing as soon as they leave
but never before
Constructive dismissal
o Employer breaks contract when nature of job is changed without consent (inadvertently or
to make the employee uncomfortable and want to leave)
o Employee sue for wrongful dismissal
o Like refusal to perform the original contract
o Employee is obligated to mitigate or even accept the position
o Can be considered constructively dismissed even when offered a comparable position ex)
commute to work, relocation etc.
Remedies for wrongful dismissal
o Damages awarded usually based on what the employee would have received had proper
notice been given
o Obligation to mitigate losses ex) look for a new job
o May also take into account damaged reputation or mental distress punitive damages
o Normally a corporation but sometimes a manager may be sued
o Employer must have clear evidence of employees misconduct or incompetence and
demonstrate that reasonable opportunity to improve was given
o More sensible to negotiate with employee
o Rare for court to order an employee be given back the job
Liability of employer
o Employer liable for torts committed by employee while on the job (vicarious liability)
o Generally must be an employment relationship for vicarious liability to apply
o Some jurisdictions have legislated the owner of a car is vicarious liable for torts committed
by the person driving with the owners consent
o Right to turn to employee for compensation usually not able to pay
o Contracting jobs out sometimes helps to avoid
o Liability insurance is advisable
o Protection of employees
o Most provinces either the Employment Standards Act or the Labour Standards Act set
minimum standards in the areas of:
Overtime, work hours and rest periods
Vacation and holiday entitlements
Maternity and parental leave
Termination and severance pay
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