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Chapter 12

BUS 393 Chapter Notes - Chapter 12: Canada Labour Code, Wrongful Dismissal, Fiduciary

Business Administration
Course Code
BUS 393
Richard Yates

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Chapter 12 - Employment
What is Employment?
The Control Test
Traditional method: assess degree of control exercised by person paying for
Person who is told what to do AND how to do it is an employee
Independent contractor agrees to do a specific job, not to enter a general
service relationship
Independent contractor works for himself, while employees work for their
The Organization Test
When there is little direct control, individual is an integral part of the
organization, working only for that company and subject to group control =>
likely an employee
When person is free to offer services to others and bears risks of profit/loss if
work not completed in timely manner => likely an independent contractor
No legislated definition of employment – must turn to precedent
Agents - act on behalf of a principal; can be both independent contractors or
The Law of Master and Servant
Main responsibility of employer: provide safe workplace and good working
conditions, and payment of wages/salary
Obligations of employee: must possess skills claimed and exercise them in
reasonably competent and careful manner, follow reasonable orders of
employment, treat property of employer carefully, be honest/loyal/courteous,
be punctual and work for time specified; may also have fiduciary duty
(usually only on senior execs)
oFiduciary duty: act in good faith, make full disclosure, not take
corporate opportunities for own benefit
Restrictive covenants must have reasonable time and area, and must be the
most appropriate way of protecting the employer’s interests
Can occur by either party giving reasonable notice, paying in lieu of notice, or
immediately with just cause
Wrongful dismissal – dismissal without cause and without proper notice
Reasonable Notice
Courts consider length of service, type of job, age of employee,
qualifications, availability of similar employment, bad-faith conduct
Just Cause
Includes serious absenteeism, consistent tardiness, open disobedience,
habitual negligence, incompetence, harassing other employees,
drinking on the job, immoral conduct that reflects poorly on employer
Must ensure accusations are accurate with firm evidence
No requirement to give any notice
Disabled Workers
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If serious illness prevents employees from performing their job, can be
discharged without notice – frustration of contract
However, must accommodate disabled workers still able to work – does
not apply if will cause the employer undue hardship
Disobedience and Incompetence
These actions justify dismissal – employer should inform employees of
Running out of work or encountering financial difficulties is NOT just
cause => reasonable notice is required
Wrongful Leaving
Employees must give reasonable notice to leave, unless there is
breach of employment contract
Constructive Dismissal
Employer breaks contract when nature of job is changed without
consent, if employee is demoted or terms of employment are changed
Remedies for Wrongful Dismissal
Damages awarded based on what would have been received if proper
notice had been given
Employee has obligation to mitigate losses (eg. try find another job)
Liability of Employer
Employer is vicariously liable for torts committed by employees while on the
In BC, owner of motor vehicle is variously liable for torts committed by person
driving the vehicle with owner’s consent
Employment Standards
Notice periods may be set out to be less than common law standard,
but must be more than minimum statutory requirement or else will be
void and must apply common law notice period
Employment standards legislation controls min. wage, hours of work
and overtime, termination, child labour, maternity/parental leave
Canada Labour Code – termination entitlements determined by length
of service
Issue Estoppel
If dismissed employees file a complaint under employment standards
legislation and it is found that there was cause for dismissal, may
prevent them from suing later on for wrongful dismissal
Human Rights
Employers must not discriminate in hiring and employment practices,
and also actively ensure basic rights are protected
Employers may also be liable for harassment committed by employees
Reverse discrimination or affirmative action is authorized
Mandatory retirement at 65 is permitted, but not required
Workers’ Compensation
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