Employment Law: Contract Types & Legal Sources

Sources of Employment Law

• Statute law is created by Parliament and legislatures.
• Constitutional law, such as the Canadian Charter of Rights and Freedoms, is also a source.
• Common law is derived from written decisions of judges.

Statute Law: How it is Made

• Public Bills are introduced by Cabinet ministers.
• First reading involves introducing the bill.
• Second reading includes debating the bill's principles and voting.
• If passed, a legislative committee examines the bill clause by clause.
• Third reading is the final vote by the legislature.
• Royal assent, after being signed by a lieutenant governor, makes the bill a statute.

Statute Law: How it is Made (cont'd)

• Private Bills cover non-public matters (e.g., changes to corporate charters).
• Private Members' Bills (also called Members' Bills) address public matters.
• A private member of the legislature (MLA) introduces a private member's bill.
• The chances of private members' bills passing are generally low.

Statute Law: Acts and Regulations

• Statutes (also called Acts) contain the main rules of law.
• Regulations detail requirements that can be altered without amending the statute.

Statute Law: Jurisdiction and Interpretation

• Judges and administrative tribunals interpret legislation in cases.
• Jurisdiction is defined by the statute, including who can adjudicate and the issues covered.
• Geographic scope is also determined by the statute.
• Multiple statutes can apply to a single case.

Statute Law: Rules for Interpretation of Statutes

• Mischief Rule: examines the problem the statute was intended to address.
• Internal Aids: looks at the statute's preamble and definitions.
• External Aids: consults scholarly articles and dictionaries.

Authority to Pass Legislation

• The British North America Act (now the Constitution Act, 1867) divides legislative power between federal and provincial governments.
• Provinces generally govern about 90% of employees.
• The federal government governs about 10% of employees in industries like banking, shipping, broadcasting, and certain trans-provincial operations.
• Municipalities can also create bylaws that affect employers and employees.

Key Employment Statutes (Examples)

• Individual provinces have specific employment standards codes, human rights acts, labor relations codes, occupational health and safety acts, and regulations.
• Federal employment legislation exists including the Canada Labour Code (CLC), Canadian Human Rights Act, Employment Equity Act, PIPEDA (Personal Information Protection and Electronic Documents Act), Canada Pension Plan, and Employment Insurance Act.

Canadian Charter of Rights and Freedoms

• Passed in 1982, it guarantees a broad range of rights, including equality rights.
• It applies only to government actions.
• It's "supreme law," meaning it can overrule any inconsistent legislation or government actions.
• Section 15(1) states that everyone is equal before and under the law, with equal protection and benefits, and freedom from discrimination based on several characteristics.

Vriend v Alberta

• Vriend, a teacher, was terminated after the Christian college learned of his sexual orientation.
• His claim was rejected because sexual orientation was not a protected category in Alberta's human rights legislation.
• The court had to decide if this omission contradicted Section 15 of the Charter.

The Charter's Effect on Employment Law

• Employment laws can be challenged if they violate Charter rights.
• Infringements of individual rights can be permissible if they are reasonable limits in a free and democratic society.
• The notwithstanding clause (s. 33) allows governments to override Charter rights.

The Common Law

• Judge-made law, separate from statute law, is residual in nature.
• Common law decisions rely on precedents.
• Principles of common law:
  • Stare decisis (following precedent).
  • Binding precedent.
  • Persuasive precedent.
  • Distinguishable decisions.
  • Watershed decisions.

Common Law and Employment

• Two common law branches affect employment:
• Contract Law. Requirements for a valid contract, including offer, acceptance, and consideration.
• Tort Law. Remedies for civil wrongs; examples of torts include defamation, negligence, and assault. Damages are awarded for losses caused by conduct.

Hierarchical Court System

• The hierarchy of Canadian courts ranges from specialized/administrative tribunals to superior courts, appellate courts to the Supreme Court of Canada.
• Specialized commissions and boards administer employment statutes.
• Tribunals interpret and apply employment legislation.

Locating Employment Laws

• Websites for locating employment laws include the Federal Department of Justice website (laws.justice.gc.ca) and canlii.org.
• Other resources are available in digests, textbooks, and legal reporting services.

Twin Pillars of Individual Employment Law

• Common law and employment-related legislation together form the foundations of individual employment law.
• Employment-related legislation sets a minimum level of rights and enforcement mechanisms, while common law provides further protections.

Areas of Common Law Liability in Employment

• Several areas of common law liability exist, including misrepresentation by candidates, wrongful hiring (e.g., negligent misrepresentation), inducement (e.g., aggressive recruiting), restrictive covenants (e.g., non-compete, non-solicitation), anticipatory breach of contract, background checks (negligent hiring), and inducing a breach of contract.

Misrepresentation by Job Candidates

• Misrepresentation by candidates can be grounds for dismissal in certain cases if it seriously damages the employer or implies untrustworthiness.
• Minor misstatements (even deliberate ones) are not always grounds for dismissal if they do not influence the hiring decision.

Misrepresentation: Wrongful Hiring

• Negligent misrepresentation arises when a party with superior knowledge makes a false statement, and the other party relies on it to their detriment after not exercising reasonable care to verify the information.
• Fraudulent misrepresentation occurs when one party makes a knowingly false statement of fact, and the other party relies on that statement to their detriment.

Use of Executive/Recruitment Firm Misrepresentations

• Employers can be liable for misrepresentations made by recruitment firms acting on their behalf.
• Employers mitigate this risk by carefully selecting recruitment firms and demanding adherence to legal standards.
• Employers may contract with recruitment firms for indemnity.

Inducement (Allurement, Enticement)

• Inducement can occur when employers use aggressive recruiting tactics that lure employees away from other employment.
• Damages, including costs of moving and lost income, can result from such practices. Longer termination periods can be part of the remedy.

Restrictive Covenants

• Restrictive covenants prevent former employees from engaging in specific activities that might harm the employer's interests.
  • Examples include confidentiality, non-compete, and non-solicitation.
• To be valid, covenants must protect a legitimate proprietary interest of the employer, they must be reasonable in duration and geographic scope, and they must not be contrary to the public interest.

Restrictive Covenants: Three-Way Balance

• Covenants must balance the employer's right to safeguard its business interests, the employee's right to earn a living and use their skills, and wider public interests (e.g., protecting competition).

Restrictive Covenants (cont'd)

• Courts will decide the validity of a restrictive covenant based on conditions, including that it: protects a legitimate proprietary interest; is reasonable; doesn't violate the public interest; and isn't too broad.
• The onus of demonstrating reasonableness is on the employer.
• Any doubt will benefit the employee.

Anticipatory Breach of Contract

• An anticipatory breach of contract occurs when either party indicates, before the contract's stipulated start date, that they will not perform as agreed.
• This can make the other party liable for any loss as if a complete breach had occurred.

Background Checks (Negligent Hiring)

• Employers must conduct background checks relevant to the role and foreseeable harm to ensure they are not liable for negligent hiring.
• References, education, and credentials, credit reports, and potentially police records and social media information should be considered.

Defining the Relationship: Tests for Determining Status

• This section discusses the means for determining if an employment or contractor relationship exists.

Employee vs Independent Contractor

• Independent contractors are different from employees. There are legal and practical considerations.
• Protective employment legislations are usually only applied to employers/employees relationships.
• Some laws apply to both.

Independent Contractor (IC)

• Independent contractors are self-employed workers contracted to work on specific tasks, often not viewed as part of the company. The legal distinction is significant to avoid misunderstandings.

Independent Contractor (cont'd)

• Advantages for employers using ICs include avoidance of statutory remittances and employee protections, and avoiding common law claims, like wrongful dismissal.
• Advantages for ICs include tax breaks and more flexibility regarding job assignments.

Methods/Tests for Determining Status

• Determining if someone is an employee or IC depends on several tests and factors.
• Employers can consider these criteria to minimize the risks of misclassifying workers.

Methods/Tests for Determining Status (cont'd)

• The "Control Test" examines who controls the employee's work schedule and location.
• The "Risk Test" assesses the worker's financial investment in the business, which indicates their risk of profit or loss.
• The "Organization Test" determines if the worker's services are integral to the business or not.
• The "Ownership Test" assesses who owns essential tools or equipment.

Some Steps to Minimize Risk of IC Being Deemed an Employee

• Creating clear contracts, avoiding deductions for employer-related expenses, ensuring the worker is not entitled to typical worker benefits and rights, ensuring the worker can freely work for others, and not defining fixed working hours, avoids difficulties.

Use of Temporary Employment Agencies

• Temporary employment agencies increasingly handle employee relationships, cutting across various sectors.
• Increased use of temp agencies is driven by outsourcing needs, technology, and business model changes.

Liability of Client Organization

• Courts consider who bears the financial liability for paying employees when using temporary agencies to identify potential liabilities.
• Factors include who controls daily tasks, who decides employment details like hiring, firing, and other employment decisions.

Types of Employees

• Organizations often categorize employees by hours worked and how they are classified, but there is no fundamental legal difference.
• Categories include full-time, part-time, temporary, casual, and agency.

Explore legal strategies for using independent contractors and temporary employees, focusing on risk minimization and factors influencing liability. Differentiate between public and private members' bills and the 'second reading' stage in statute law creation. The material also covers sources of employment law.