Employment Law: Statute, Constitutional & Common Law

Sources of Employment Law

• Statute law is created by Parliament and legislatures
• Constitutional law includes the Canadian Charter of Rights and Freedoms
• Common law is based on written judge decisions

Statute Law: How it is Made

• Public Bills are introduced by a Cabinet minister (first reading)
• Bills are debated (second reading) and voted on, and if passed, details are reviewed by a legislative committee (clause by clause discussion)
• A final vote is taken (third reading) and if approved, the bill receives royal assent by the lieutenant governor and becomes a statute
• Private Members' Bills (Bills introduced by private members of the legislature rather than Cabinet ministers; often deal with non-public matters) have lower chances of becoming a statute

Statute Law: Acts and Regulations

• Statutes set out the basic requirements for laws; Regulations provide specific details that can be changed without amending the statute
• Together, statutes and regulations are called legislation

Statute Law: Jurisdiction and Interpretation

• Judges and administrative tribunal members interpret legislation within court cases and other processes
• Jurisdiction, established by the statute, includes who can adjudicate the case, what issues can be adjudicated, and where the statute applies geographically
• Multiple statutes may apply to a single situation

Statute Law: Rules for Interpretation of Statutes

• Mischief Rule: Understanding the problem the statute was meant to address
• Internal Aids: Examining the preamble and definitions in the statute to understand its intent
• External Aids: Consulting scholarly articles or dictionaries

Authority to Pass Legislation

• The Canadian Constitution Act (1867) describes the division of legislative authority between the federal and provincial governments.
• Provincial governments manage approximately 90% of employment matters.
• Federal government governs about 10% of employment, such as in national industries (banking, shipping, broadcasting).
• Municipalities can create bylaws, by delegated authority from provincial legislation, relating to employment.

Key Employment Statutes

• Alberta (AB) Employment Standards Code, Human Rights Act, Labour Relations Code, Occupational Health and Safety Act & Regulation, Workers' Compensation Act, and Personal Information Protection Act.
• British Columbia (BC) Employment Standards Act, Human Rights Code, Labour Relations Code, Occupational Health & Safety Regulation, Workers' Compensation Act, and Personal Information Protection Act.
• Key Federal Statutes: Canada Labour Code, Canadian Human Rights Act, Employment Equity Act, Personal Information Protection and Electronic Documents Act (PIPEDA), Canada Pension Plan, and Employment Insurance Act

Canadian Charter of Rights and Freedoms

• Passed in 1982, it sets out various rights
• Applies to government activity
• It is "supreme law" and can override inconsistent legislation/government actions

Canadian Charter of Rights and Freedoms (cont'd)

• Section 15(1): Guarantees equal protection and equal benefit of the law for all individuals without discrimination based on various protected grounds (race/nation/colour/religion/sex/age/mental /physical disability).

Vriend v Alberta

• A teacher was terminated for being gay, despite consistent positive reviews, due to his sexual orientation not being a protected ground in provincial law.
• The question was whether the omission of sexual orientation as a prohibited ground of discrimination violated Section 15 of the Charter.

The Charter's Effect on Employment Law

• Employment laws may be challenged if they violate Charter rights.
• Infringements on individual rights may be permissible if the infringement is reasonably limited in a democratic society.
• Notwithstanding clause: Allows authorities to temporarily override the Charter in specific circumstances.

The Common Law

• Judge-made law, separate from statute law, is regarded as "residual" law.
• Common law decisions are based on precedent.

Principles of Common Law

• Stare decisis: Adherence to previous judicial decisions
• Binding: Precedent that courts must follow
• Persuasive: Precedent that courts may consider
• Distinguishable: Cases that differ from precedent
• Watershed decisions: Landmark cases that establish legal principles

Common Law and Employment

• Contract Law: Agreements require offer, acceptance, and consideration; Damages can repair breaches of contract.
• Tort Law: Remedies for civil wrongs such as defamation, negligence, or assault; provides compensation for losses from these wrongful acts

Hierarchical Court System

• Supreme Court of Canada
• Court of Appeal
• Superior Courts
• Special Jurisdiction Courts
• Administrative Tribunals
• Specialized commissions and boards handle much employment statute administration, with tribunals interpreting and applying these statutes

Locating Employment Laws

• Government websites: http://laws.justice.gc.ca, canlii.org, www.qp.alberta.ca/laws online.cfm, www.bclaws.ca
• Other sources: Digests, textbooks, loose-leaf reporting services, and newsletters

Twin Pillars of Individual Employment Law

• Common Law and employment-related legislation ("floor" rights and enforcement mechanisms)
• Legislation is either provincial or federal

Areas of Common Law Liability

• Misrepresentation by Job Candidates,
• Wrongful Hiring (negligent misrepresentation),
• Inducement (aggressive recruiting),
• Restrictive Covenants (non-competition, confidentiality, non-solicitation),
• Anticipatory Breach of Contract,
• Background Checking (negligent hiring),
• Inducing Breach of Contract

Misrepresentation by Job Candidates

• Job candidate misrepresentation can lead to dismissal if it seriously prejudices the employer or shows material untrustworthiness.
• Minor misstatements, even if deliberate, don't generally justify dismissal.

Misrepresentation: Wrongful Hiring

•  Negligent misrepresentation: Where one party has superior knowledge, the failure to exercise due care in making a false statement can lead to liability if another party relies on that information to their detriment.
• Fraudulent misrepresentation: Intentional false statements lead to liability if harm results.

Use of Executive/Recruitment Firm Misrepresentations

• Employers remain liable for misrepresentations made by the recruitment firm acting on their behalf, if it induced employment or breached a contract.
• Risk reduction involves carefully choosing search firms, setting firm boundaries and expectations, and getting indemnities

Inducement (Allurement, Enticement)

• Aggressive recruiting techniques with promises leading to new employment contracts can be considered a tort (allurement).
• Damages can include longer termination periods and additional damages to compensate for lost income, moving costs, or home purchases.

Restrictive Covenants

• Restrictive Covenants (common in employment contracts) prohibit certain activities by employees after leaving their position, for instance, when they are working for competitors or using sensitive information and trade secrets learned during their employment.
• Validity depends on whether the activity to be restrained is legitimate and necessary for the employer's interests and is not contrary to public interest; reasonable and appropriately applied in duration and geographic scope.

Restrictive Covenants (cont'd)

• Examples: Confidentiality, Non-compete, and Non-solicit of clients/employees
• The balance between employer, employee, and public interest has to be considered

Restrictive Covenants: Three-Way Balance

• Public interest favors free competition and labour market mobility.
• Employee interests include securing employment and utilising knowledge, skill, and expertise.
• Employer interests involve safeguarding business assets

Restrictive Covenants (cont'd)

• Any restrictive covenant is void for being against fair trade if the conditions are not met.
• The covenant must protect the legitimate proprietary interest of the employer.
• It needs to be reasonable in terms of duration and geographic scope.
• It shouldn't contradict public interest or be overly restrictive or broad

Restrictive Covenants (cont'd)

• The onus is on the employer to prove the reasonableness of restrictive covenants.
• Any doubts are interpreted in favor of the employee.
• An otherwise valid restrictive covenant loses effect if an employee is dismissed unfairly

Anticipatory Breach of Contract

• Either the employer or employee can violate a contract if there is a breach before employment starts
• Liable if circumstances change and the position or job agreement is no longer possible

Anticipatory Breach of Contract (cont'd)

• A valid offer and acceptance (written or oral) is required. No valid offer and acceptance, or valid cause for withdrawing the offer can be asserted to cancel anticipatory breach claims.
• The breach isn't allowed if it's due to frustration.

Background Checks (Negligent Hiring)

• Background checks should be proportionate to prevent harm to third-parties.
• Due diligence includes checking employment references, credentials, credit, police records, and online information.

Defining the Relationship: Tests for Determining Status

• This section discusses legal tests to determine whether a worker is an employee or an independent contractor.

Employee vs Independent Contractor

• Growing trend of independent contractors
• Protective employment legislation (e.g., standards, minimum wage) applies to employees and not independent contractors.
• Human rights and occupational health laws apply to both employees and contractors.

Independent Contractor (IC)

• ICs engage in tasks independently; are not employees; an integral distinction between employees and ICs exists to avoid confusion and misuse of the employment standards legislation
• IC relationships are increasingly employed as an alternative to hired employees

Independent Contractor (cont'd)

• Advantages to employers: No required statutory remittances, don't need to be accountable to employment standards protections, no liability for wrongful dismissal

Independent Contractor (cont'd)

• Advantages to independent contractors (ICs): Tax benefits and more flexibility.

Methods/Tests for Determining Status

• Control test: Determining who controls the 'when' and 'where' of work
• Risk test: Examining the financial investment of the worker in the business (opportunity for profit/loss)
• Organization test: Determining if the services provided are integral or ancillary to the business
• Ownership test: Determining who owns the tools used in performing the work

Methods/Tests for Determining Status (cont'd)

Organization test: Whether the services provided are integral/ancillary to the business. Ownership test: Ownership of tools used in performing the work, which is instructive, but not definitive.

Some Steps to Minimize Risk of IC Being Deemed an Employee

• Clear written contract: Defines the IC status explicitly.
• No statutory deductions: Avoids ESC standard implications.
• Indemnity clause: Protects the employer from liability for IC issues.
• Allowing contractors to work for others: Maintains flexibility for both parties
• Avoiding fixed work hours: Maximizes independence.
• Purchase of insurance by the contractor
• Limited performance reviews and integration

Use of Temporary Employment Agencies

• "Leasing" of individuals is an increasing trend affecting multiple sectors.
• Adaptations are driven by advancements in technology and outsourcing.

Liability of Client Organization

• The ultimate source of remuneration—who is responsible for payment—determines liability to the courts.
• Important factors for determining liability include daily control, hiring responsibility, and dismissal processes

Types of Employees

• Traditional employee types (Full-time, Part-time, temporary, casual, and agency) are defined based on work hours.
• A lack of formal legal distinctions exists in practice concerning hours of work.

Explore the sources of employment law, including statute law created by Parliament and legislatures, constitutional law such as the Canadian Charter of Rights and Freedoms, and common law derived from written judge decisions.