Chapter 1: Overview of Legal Framework
Sources of Employment Law
Statue Law – Legislation passed by the government, it is passed because the government decides that employees require protections or
rights beyond those that currently exist.
- Statutory requirements, ESA, minimum employment standards, anti-discrimination, health and safety laws
- What causes the statute law to change?
o Demographic shifts in society, changing social values, changes in technology (privacy protection laws), shifts within
economy and the nature of work,
- Statutory interpretation
o Mischief rule: examine the problem or mischief that a statute was intended to correct and apply the corrective rationale to
o Internal aids
o External aids
- Key Ontario employment statutes
o Employment standards act
o Human rights Code
o Labour Relations Act
o Occupational Health and Safety Act
o Workplace Safety and Insurance Act
o Pay Equity Act
Common Law – it is a judge-made law. Common law is part of the law that has developed over the years through court decisions. It is applied
where there is no statue covering a particular area or where a governing statute is silent on a relevant point.
- Common-law rules of decision making
o Under the common law, cases are decided by judges on the basis of precedent (what previous courts have decided in
cases involving similar circumstances and principles.
o A decision is considered persuasive, rather than binding, when a court is persuaded to follow a precedent from another
jurisdiction or from a lower court, although it is not bound to do so.
o When a court decides not to follow a pervious decision from a higher court in the same jurisdiction, the case is
distinguishable. The facts or other elements in the previous case are so different from those of the current case that the
legal principle in the previous decision should not apply.
- Wrong full dismissal
Two branches of Common Law that affect employment
- Contract Law
o The common law of contracts is fundamental to employment law because the legal relationship between an employer and
a non-union employee is contractual.
o The general principles of contract law determine whether an employee-employer relationship exists and what remedies
apply to a breach of the employment agreement.
o All employment contracts, whether written or oral, contain an implied term that an employee is entitled to reasonable
notice of dismissal, or pay of lieu of notice, unless the dismissal is for just cause (very serious misconduct).
- Tort Law
o A tort is a wrong for which there is a legal remedy.
o Tort law is a branch of civil law and covers wrongs and damages that one person or company causes to another,
independent of any contractual relationship between them.
o A tort can be either a deliberate or a negligent action.
Negligent tort: the plaintiff must show that (1) the defendant owed the plaintiff a duty of care, (2) the defendant
breached that duty, and (3) the plaintiff suffered foreseeable damages as a result.
Deliberate tort is committed when an employer deliberately provides an unfair and inaccurate employment
reference for a former employee
Page 1 of 9 Judicial Framework
Supreme Court of Canada
Federal Court of Appeal
> Federal Court
Ontario Court of Appeal
→Court of Ontario
> Ontario Court of Justice
> Superior court of Justice
> Small Claims Court
> Divisional court
Chapter 3: Common Law issues
Independent Contractors versus Employees
An independent contractor isa self-employed worker engaged by a principal to perform specific work.
Obligations employers have to employees but not to contractors:
- Providing statutory benefits
- Paying premiums for workplace health and safety insurance
- Providing reasonable notice of termination or pay in lieu
- Remitting appropriate health and income taxes, and contributing to and remitting Canada Pension Plan and employment insurance
- Assuming liability for an employee’s deliberate or negligent acts during the course of employment
There are tax benefits available to the self-employed: deducting expenses against income, no withholding of income tax at source, and fewer
Common Law Test to establish an employee-employer relationship
1) Control: how much control doe the organization over the worker and their time. When the control of the worker is greater, the
worker is more likely to be an employer
2) Risk: does the individual bear any financial risk. The greater the risk they have the more likely they will be an independent
3) Organization: the more involved in the organization, or bring more value to the organization is more likely to be an employee,
rather than the worker being a independent contractor.
4) Durability and exclusivity: durability is how long lasting have the worker been with the company. The longer they have been with
the company the more likely they will be a employee. Exclusivity is when a worker is workingfor only one company. When the
worker works for more than one company, they are more likely to be an independent contractor.
5) Tools: when a worker has their own tools, they are more likely to be an independent contractor.
Case Belton v. Liberty Insurance Co
- An insurance company who’s sale agents were considered independent contractors and even had signed agreements on it. The
company was bought over by another company and the new management introduced a new compensation agreement for the sales
agents. They refused to sign the new agreement and they were fired they sued for wrongful dismissal.
- Issue: where the plaintiffs employees or IC
- Decision: the sales agents were considered employees on the basis of the facts of the case and not the terms of the contract.
Case: Christie v. York Corp
- A coloured man was refused to be served alcoholic beverages at a bar because the “house rules” was not to serve coloured persons.
The plaintiff sued claiming $200 for humiliation that he suffered. The defendant countered by stating that it was just protecting
their business interests and was free to serve whomever they chose.
- Issue: whether it is illegal to refuse to serve an individual in public establishments on the basis of race.
- Decision: it was legal to refuse service to an individual on the basis of race.
Areas of Common Law Liability
- Misrepresentation by Job Candidates
Page 2 of 9 - Courts have held that misrepresentations made by employees before they are hired may justify dismissal I the
misrepresentations go to the root of their qualification for the job.
- If a false statement related to qualifications or work experience has a significant impact on hiring decision, an employer
can terminate an employee as a result of that misstatement, even if the employee is performing the job satisfactorily.
- Cornell v. Rogers Cable system: employee lied about still being employed by his previous employer during an interview
but was rather dismissed by his former employer at that time. His termination can be justified for this reason.
- Wrongful hiring: Negligent Misrepresentation
- Misrepresentation by an employer
- If an employer makes a misrepresentation that is relied on by a prospective employee and that employee suffers
damages because of it the employer may have to compensate the employee.
- Case: Queen v. Cognos
o During an interview for a new job in Ottawa, Queen was told that the hiring individual will have a
secure job for 2 years since they will be managing a project for those 2 years. But the interviewer did
not mention that the project was not approved by the senior management yet and the project was
dependent on the funding to be approved. Queen accepted the job and moved from his secure and well-
paying job from Alberta to Ottawa. The funding was not approved and Queen was dismissed soon.
Queen brought on an action for negligent misrepresentation in hiring.
o Issue: whether the employer was liable for negligent misrepresentation
o Decision: the employer and its representative breached the duty of care owed to Queen during the
hiring process. The court found that to establish a negligent misrepresentation, the following test must
a. There myst be a duty of care based on a special relationship between the party making the
representation and the candidate.
b. The representation must be untrue and inaccurate and misleading
c. The party making the representation must have acted negligently in making the
d. The candidate must have reasonably relied on the negligent misrepresentation
e. The reliance must have caused harm to the candidate
- Inducement: Aggressive Recruiting
- A tort known as “inducement”, “allurement”, or “enticement” occurs when an employee is lured from her current position
through aggressive recruiting or inflated promises.
- Aggressive recruiting requires a significant degree of pursuit, such as repeatedly contacting the candidate and
encouraging her to leave her current job.
- Case : Egan v. Alcatel
- An employee was induced by her colleagues to join their company. They never told her about the $800 they
would receive for recruiting her, but never the less, she left her secure job at bell Canada, and joined the other
company alcatel. Less than 2 years later she was let go as a part of mass termination and was given 12 weeks
severance pay. Egan in turn sued alcatel for more severance pay, alleging that she was entitled to receive
enhanced common-law reasonable pay in lieu of notice because she had been “lured” from her previous secure
- Issue: whether the employee’s common-law notice period should be extended to reflect the manner in which she
had been recruited.
- Decision: her common-law reasonable notice period should be extended.
- An employer that overstate the features of a job may find that it has also committed the tort of negligent
misrepresentation. Inducement and negligent misrepresentation are separate torts, but they can both arise from the same
- Restrictive Covenants
- It is a promise not to engage in certain types of activities during or after employment
- Written employment contracts that restrict the ability of employees to compete with their former employer, to solicit
employees or customers, or to use the former employer’s confidential information.
- Anticipatory Breach of Contract
- Occurs when one party rejects the employment contract – through either its statements or its conduct – before
- To be successful in an action for anticipatory breach of contract the hired employee must show:
- An offer of employment was made
- The offer was accepted
- The contract was then repudiated by the employer
Page 3 of 9 - The employee suffered damages as a result
o Such damges include leaving secure positions, relocation etc.
- Background Checking: Negligent Hiring
- The cost of a bad hire can include potential liability for negligent hiring if that employee latercasues forseable harm to a
third part .
- Reference checks: get reference from a variety of sources such as past supervisors, co-workers, and teacher to get a well-
rounded picture of the job candidate.
- The more a job exposes others to the risk of harm, the stronger the employer’s duty to investigate becomes
- The standard of care (the level of diligence one is expected to exercise) imposed on employers is the common-law duty of
reasonable care – the level of diligence that is reasonable under the circumstances.
Different Types of Employees
1) Permanent full-time employees
2) Permanent Part-time Employees
3) Temporary Employees
4) Casual Employees
5) Agency employees or temps
Chapter 4: The Employment contract
An employment relationship isbased on a contract either written or oral. Under the common law, three things are necessary to create a
1) An offer
2) Acceptance of the offer
3) Consideration (something given or promised in exchange)
Written Employment Contracts
Advantages of a written employment contract are:
- Reduces risk of misunderstanding
- By specifying the rights, obligations and expectations of bot the employer and the employee, a written contract reduces
the risk of misunderstandings that could lead to disputes and lawsuits later on.
- Addresses contentious issues early
- A written contract encourages the parties to deal with the potentially contentious issues early in their relationship, when
they are usually positively disposed to one another.
- Reduces uncertainty
- A written contract provides the court with a clear record of terms and conditions of employment.
Implied Terms - When an issue in dispute was not addressed in an oral contract, or was left out of the written contract, a court imports
implied terms into the agreement. The court determines what terms the parties would likely have agreed on had they put their minds to the
issue; it then deems those terms to be part of the contract.
Enforceability and Interpretation of Written Contracts
A party who is unhappy with the terms of an employment contract may challenge the contracts enforceability by raising one of the issues
1) Lack of Consideration
- Consideration is the promised exchange of payment for work performed.
- Case: Francis v. CIBC
- The employee had already accepted the employment and had started to work with the bank before signing the
bank’s contract. CIBC came with a new contract that had a 3 month notice clause. The court found that this was
an invalid contract because there was no new consideration for the added term. (the oral contract preceded the
written one because of the lack of consideration)
2) Inequality of Bargaining Power
- Written contracts can be challenged on the basis of the arties’ alleged inequality of the bargaining power at the time that
the contract was negotiated.
- Case: Stephenson v. Hiliti (wrongful dismissal
- This was an action for damages for wrongful dismissal. The plaintiff was 61 when dismissed. Fearing inability to
meet his financial obligations, he signed a release and accepted three and a half months’ wages plus certain
improvements in his pension. The plaintiff was not sophisticated in business and had no legal advice.
Page 4 of 9 - Decision: the plaintiff was entitled to damages in lieu of 11 months’ notice. The release was unconscionable
- The terms of the contract no longer reflects the realities of an employee’s position within the organization.
- Case: Lyonde v. Canadian Acceptance Corp
- The employee had been promoted over a 24-year period from a juior position to a VP of administration. The
court refused to enforce a termination provision that provided no notice of termination. It found that his
position within the organization had changed so dramatically that the essence of the employment contract was
now fundamentally different. he was awarded 21 months’ notice of termination.
4) Failure to meet Minimum Statutory Standards
- Employers must ensure that the terms of the employment contract at least meet the minimum statutory standards.
Otherwise the contract term that addresses the same issue will be null or void.
- Case: Matchtinger v. HOJ Industries
- Natchinger was entitled to 4 weeks’ notice or pay in lieu for the length of his service but in his contract it stated
it was only two weeks. He sued for common law damages for pay in lieu of reasonable notice. the judge ruled
that the contact was void and that the plaintiff be awarded reasonable notice of pay of 7 and half months.
5) Use of Ambiguous Language: Contra Proferentem Rule
- When preparing an employment contract, employers should use clear and unambiguous terms.
- If a court finds that the terms of a contract can bear two possible interpretations, it may apply a rule called contra
- Ambiguous language may be interpreted against the party who drafted the agreement because that is the party
who could have avoided the problem by being clearer.
Common Contractual Terms
1) Job Description
- Setting out the job duties clarifies the expectations of both parties and reduces the potential for misunderstandings. An
employee can refuse to perform duties that fall outside the original agreement unless the contractual language allows the
employer to modify the responsibilities.
- If an employment contract is to cover a fixed period of time or a particular task, it must state the term or task, otherwise
the contract is considered to cover an indefinite period.
- The terminations clause should be clearly expressed because clear language is required to rebut the common-law
presumption that an employee is enti