BU231 Chapter Notes - Chapter 18: Independent Contractor, Wrongful Dismissal, The Employer
The Contract of Employment
Development of the Law Governing Employment
• The principles of modern employment law are derived from the common law rules defining the
relationship of master and servant
o Relationship of master and servant - the contractual relationship between an employer and
an employee
• There are two main changes to the employee relationship:
o Employee welfare legislation has established minimum standards for safe and fair working
conditions
o Labour law or the law of collective bargaining governs the relationship between employers,
trade unions, and their members
Relationship of Employer and Employee
Compared with Agency
• An employee contract gives one party, the employer, authority to direct and control the work of
the other party, the employee; the employee will often also serve as an agent
• Unlike agents, who cannot take action against a principal who terminates the agreement without
notice, employees may be able to seek damages for wrongful dismissal
• Both principals and employers are vicariously liable for torts committed by their agents and
employees, respectively
Compared with an Independent Contractor
• A contract between an independent contractor and another party does not form an employment
relationship because the contractor is not under the supervision and control of the other party, he
just has to produce the end result
Employment Relationship at Common Law
• Responsibilities include:
o The employer's liability to third persons
o The notice required to terminate the relationship
o The limited reasons an employer could terminate the relationship without notice
o Assessment of damages for wrongful dismissal
The Employer's Liability to Third Persons
Liability in Contract
• The promisor (i.e. the corporation) will be liable for breach of contract should its own employee
do improper work
Liability in Tort
• The employer is vicariously liable for any torts committed by its employees while they are carrying
out the employer's work
Notice of Termination of Individual Employment Contracts
Express Term of the Contract
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• When an employee is hired on a fixed term, no notice of termination is necessary on the part of
either party
o Fixed term - a contract of employment with defined start and end dates
• Alternatively, an employment contract may contain an option to terminate, which describes the
necessary process and usually specifies a required amount of advanced notice
Implied Term of Reasonable Notice
• Notice is usually required before termination because most employment contracts do not say how
or when they will end
o Notice - advanced warning that the employment relationship will end
• Employers will often regard the employment as a general or indefinite hiring
o Indefinite hiring - a contract of employment for an undetermined length of time, with no
expectation of termination or described end date
Length of Reasonable Notice
• Reasonable notice - the acceptable length of notice of termination considering the nature of the
contract, intentions of the parties, circumstance of the employment, and characteristics of the
employee
• What notice is reasonable depends on the specific circumstances of the employment
o For weekly hiring, the reasonable notice is one work week
o For monthly hiring, the reasonable notice is one work month
o For indefinite hiring, the reasonable notice usually varies between three and six months,
and occasionally as long as one year or more; it also depends on a variety of factors
• If an employer wants to dismiss an employee immediately, he must provide payment in lieu of
notice
o Payment in lieu of notice - payment of the amount of compensation the employee would
have earned during the reasonable notice period
• An employee who decides to leave voluntarily is usually required to give two weeks' notice, as
employers would rather pay an employee in lieu of giving notice
• An employee is justified in leaving without giving the usual notice if he can show he was "forced to
quit"
• If an employer substantially changes an employees job (for example, a demotion), the employee is
not obliged to accept the change; it amounts to constructive dismissal, and the employee is
entitled to receive reasonable notice
o Demotion - transferring an employee to a job with less responsibility and/or income
potential
o Constructive dismissal - a substantial change to an employee's job that amounts to
termination of the existing employment
Dismissal Without Notice
• Dismissal for cause - dismissal without notice or further obligation by the employer when the
employee's conduct amounts to breach of contract
Misconduct
• Misconduct may be a crime associated with employment (for example, embezzlement), or it can
be dismissal for cause related to conduct outside employment (for example, when an employee is
guilty of immoral conduct that could harm the business financially or dampen its reputation in the
eyes of the public)
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Document Summary
Employment relationship at common law: responsibilities include, the employer"s liability to third persons, the notice required to terminate the relationship, the limited reasons an employer could terminate the relationship without notice, assessment of damages for wrongful dismissal. Liability in contract: the promisor (i. e. the corporation) will be liable for breach of contract should its own employee do improper work. Liability in tort: the employer is vicariously liable for any torts committed by its employees while they are carrying out the employer"s work. Indefinite hiring - a contract of employment for an undetermined length of time, with no expectation of termination or described end date. Dismissal without notice: dismissal for cause - dismissal without notice or further obligation by the employer when the employee"s conduct amounts to breach of contract. Job description - a description of the responsibilities of a position, including objectives, qualifications, and supervisor.
