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Chapter 12

Management and Organizational Studies 2275A/B Chapter Notes - Chapter 12: Independent Contractor, The Employer, Wrongful Dismissal

Management and Organizational Studies
Course Code
MOS 2275A/B
Susan Toth

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I. What is Employment
Employment involves one person doing work for another
Independent Contractors: A person working for himself who contracts to provide
specific services to another
-Doctors, plumbers and lawyers
Employee: A person working for another who is told what to do and how to do it
-Master-Servant relationship
Agency: One person acts a go-between in relationships between others
1. The Control Test
The traditional method of deterring whether an employment relationship exists is to
assess the degree of control exercised by the person paying
-A person told what to do and how to do it classified as an employee
If the person is doing the job and they can decide how to do it, then they are likely
independent contractor
Courts will also consider who owns the equipment used and who profits or runs the
risk of loss from the work performed
Employees work for an employer, while independent contractors work for
2. The Organization Test
Courts will supplement these two tests together:
A. Control Test: A test of other an employment relationship exists based now whether
the person being paid for work is told how, when and where to do it
B. Organization Test: A test used to established whether worker is a an employee or a
independent contractor
-Examines whether the worker is providing services integral to the organization’s
Even if there is little control, the person is probably an employee
Agents can be both independent contractors and employees
Liability for parties will also be determined with the relationship between them in mind
II. The Law of Employment
Common law had developed special rules to deal with problems with employment,
referred to as the “master-servant” relationship
1. The Employment Contract
The main responsibility of the employer, in addition to payment of age , it to provide a
safe work environment
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The employer is obligated to minimize the danger, usually by promoting safe work
The employee must hire competent people
The contract of employment usually includes a commitment by the employer to pay a
wage or salary, this agreement will often set out bonuses, benefits and promises to
repay reasonable expenses
The employee has obligations to fulfill
The employee has an obligation to follow any reasonable order pertaining to the
Fiduciary Obligation: An obligation to act in the best interest of the employer
-Usually only imposed on senior-level employees
For normal employees, their obligations to the employer end with termination, those
employees who owe a fiduciary obligation however, may have some duty of care that
Those who how owe fiduciary duties, act i good faith make full disclosure and not take
corporate opportunities to ones own benefit
-Applying and interviewing for a similar job at another company without telling
company A cause for dismissal
Employment contracts are often verbal and not formal or written documents
Rate of pay, hours of war and a description of services is often what is written down
Some conditions and warranties are often void by the courts afterwards because of
lack of consideration in these contracts
Restrictive Covenants: In property law, a condition imposed by the seller as to what
the purchaser can use the land for
-In employment law, a commitment not to work in certain geographical area for
designed period of time
-If to broad, they will not be enforced
Covenants must also be used to protect employers interest without affecting or being
adverse to public policy
Non-compete clauses must reasonable, the party trying to enforce it must show that
the clause is necessary to protect some business interests
The onus falls on the party trying to have the clause set aside to show that the clause
is unreasonable
2. Termination
An employment contact may provide for its own discharge or parties can mutual
agree to bring it to an end
These contracts can be terminated by
a) Either party giving reasonable notice
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b) By the employer giving compensation that should have been earned in that notice
-Pay in Lieu of Notice: An amount paid to a dismissed employee rather than notice to
c) Immediately with just cause
Reasonable Notice: Length of notice to be given to an employee to termination
employment contract of indefinite term
-Federal and provincial legislation demand there be a minimum amount of notice
B. Reasonable Notice
Reasonable notice can be quite significant (especially when long-term employees are
Things that affect reasonable notices
-Type of job
-Employee’s age
-Training and qualifications
-Availability of similar employment
Seasonable employees may require reasonable notice if they are not being brought
back for the next seasonable period
Short term employees may be entitled to extended notice periods if the employee has
been informed on which the performance will be eval’ed of they were persuaded to
leave another job for the one they were terminated from after a short time
Trade unions generally include terms of required notice
C. Just Cause
A valid reason to dismiss an employee without notice
-No requirement for an employer to give any notice
Must have been a fundamental breach of their contractual obligations
Wrongful Dismissal: Dismissal without reasonable cause or notice
D. Dishonesty and Misconduct
Courts will consider whether the behaviour violates an essential condition of the
If there are mitigating factors to go along with the situations termination can later be
reduced to a hearty suspensions
The courts wil aard significant damages for wrongful dismissal
E. Disobedience and Insubordination
Refusal to work because of dangerous conditions is acceptable, but failure to perform
a reasonable order is grounds for dismissal without notice
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