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Chapter 20

BU231 Chapter 20

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Wilfrid Laurier University
Keith Masterman

1 READING NOTES CHAPTER 20 – Contract of Employment Relationship of Employer and Employee • Relationship of employer and employee is established by a contract that gives one party, the employer, the authority to direct and control the work of another party o Additional terms are implied relating to  Common law (termination, notice)  Statute (Statutory minimums, worker’s rights…)  Never start in position of strength as employee, laws are designed to protect you o Terms of Contract  Job Description (from HR) • Provides standard against which to evaluate your performance  Rate of Pay  Term – Option to terminate (discussed later) • Compare with Independent Contractor o If an individual is found to be an independent contractor rather than an employee then the relationship is governed by the terms of the contract and the general principles of contract law o How recognize difference in assessing relationship?  Control of employee by employer  Ownership of tools of production  Use of time (by the hr.) vs. Delivery of result (complete project)  Risk of profit or loss (full liability for contractor)  Exclusivity and duration • Employees can only work for one business, often for an indefinite time, contractors are gone when contract is complete  Source deductions and expenses • Employer takes of EI, CPP o Contract may state nature of relationship o Distinction is important as it affects agency and vicarious liability  When a firm undertakes work as an independent contractor, any liabilities that it incurs are almost entirely its own  Small exceptions in that a firm may have responsibility to see that contractor takes reasonable precautions to avoid endangering third parties Amending Terms of Employment Contracts • The ability of an employer to amend the terms of the employment contract will be impacted by the terms of the contract • A unilateral substantial change to an important term (I.e. salary, job position…) can result in constructive dismissal o Constructive dismissal - an employee claims wrongful dismissal based on the unilateral change of the terms of employment which amounts to repudiation of the employment contract 2 Employer’s Liability • Liability in Contract o Employers are held responsible for improper work done by employees just as a promisor is liable for work that it subcontracts • Liability in Tort o A business is vicariously responsible for damages to any third party for the consequences of any tort that an employee commits in their course of employment o All the injured party need establish is that the employee caused the damage while engaged at their work (ie. on-delivery etc…) o Employers can still sue the employee if it deems it worthwhile Notice of Termination of Ind. Employee Contracts • First off, when an employer has hired an employee for a stated period of time, and that time has elapsed, no notice of termination is required o Considered probation • If the hiring is general or indefinite reasonable notice depends on the circumstances of employment o In most provinces the minimum length of required notice is specified by statute, any attempt to undermine this is void  Often 1 wk / year of employment o Allowed to have an option to terminate, “terminate you at any time provided you give me $###,###.00 • Employees leaving voluntarily also owe the same obligations to employers o Employees can leave without notice if work conditions are unsafe or if ordered to do an illegal act • Note: An employer is not in breach of the employment contract when dismissing someone without notice if it tenders an additional amount of pay for period required of reasonable notice o Often you’re better off to pay someone to leave, then keep them after you fire them so they can poison the rest of your employees Grounds for Dismissal Without Notice (For indefinite employment) • The Contractual Basis o An employer need not give notice when it can show that the employee was dismissed for cause (ie. when an employee’s conduct amounts to breach of the contract of employment) … o Employer then becomes discharged from any further obligations • Accepted grounds for ‘cause of dismissal’ o Misconduct  Anything illegal or immoral that would bring business into public disrepute, and or cause employer financial loss o Disobedience  Willfully disrespecting reasonable chain of command, boss’ wishes 3  Whistle-blowing offers interesting new vantages, lots of protection o Incompetence  Number one killer!  Need to prove that you warned the person, tried to fix you and that you were still lousy…ie. “You will be fired if this doesn’t change”  Depends on the representations made by the employee when seeking the job and the degree of skill required, if they lied during interview its easier  Cause for dismissal becomes more difficult to justify the longer an employee is hired for o Illness  You c
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