Common Law: Employment Contracts PDF

Understanding Common Law (Judge made law) January 13, 2025 9:28 AM Misrepresentation: a false or misleading statement by one person that causes another person to do something. Like enter into an employment contract that ends up causing them harm. - When a misrepresentation causes someone harm,...

Understanding Common Law (Judge made law) January 13, 2025 9:28 AM Misrepresentation: a false or misleading statement by one person that causes another person to do something. Like enter into an employment contract that ends up causing them harm. - When a misrepresentation causes someone harm, a court may find the person responsible for the misrepresentation liable for the harm. Liable: legally responsible. The common law tries to determine liability (legal responsibility) for misrepresentations that cause harm. - When a court holds a person liable for the harm caused by their misrepresentation, the person will usually have to provide the victim, this is, the person they mislead - with financial compensation (money), called damages. Misrepresentation by a job candidate - Misrepresentation made by an employee before they were hired may justify their dismissal if the misrepresentations went to the root of the employee's qualifications for the job. - If an employees false statements about their qualifications or work experience significantly impacted their employers decision to hire them, the employer will have just cause to terminate their employment. - This is the case even if the employee ends up performing the job satisfactorily Attestation clause - Employers who wish to emphasize the importance of honesty in filling out job application forms should include an attestation clause at the end of their forms. - An attestation clause states that the information provided is true and complete to the applicants knowledge; and that the applicant realizes that a false statement may disqualify them from employment, lead to disciplinary action, or be just cause for dismissal. - An employer who includes an attestation clause in their job application forms will be in a good position to demonstrate that their employees were forewarned about the possible consequences of dishonesty Misrepresentation by an employer - An employer who makes misleading or inaccurate statements to a prospective employee during the hiring process might be held liable for any resulting harm the employee suffers. - This is true even if, at the relevant time, the employer sincerely believed the misrepresentations were true - An employer has an obligation to make sure material (important) statements it makes during the recruitment process are correct. What should an employer do? - Make sure all information provided to candidates during the pre-employment stage is accurate and complete. Attempts to make the job sound attractive should be avoided if they involve misleading a candidate in any way. If an interviewer does not know the answer to a question a candidate asks, they should offer to contact the candidate later with the correct answer. - When a candidate is selected, prepare a written employment contract that sets out the terms of employment The contract should include a clause stating that all past oral representations are void on the signing of the contract (entire agreement clause) Misrepresentation by an agency - Employers should often use recruitment agencies or executive search firms to recruit job candidates - If those organizations make misleading or inaccurate statements to candidates during the process, the employer might be held liable for them. Recommendations: - An employers contract with an agency or firm should specify the position, compensation, and career potential for the job and restrict the agency or firm to providing only that information to job candidates - The contract should also include an indemnity clause stating that the agency or firm will compensate the employer for any injury or loss it is held liable for because of a misrepresentation made by the agency or firm. Inducement/Aggressive recruitment It is a well-established common law principle that an employee who: - Was induced through aggressive recruiting or inflated promises to leave a secure job and accept a new job; and - Then wrongfully dismissed from the new job is entitled to increase damages (more financial compensation) Aggressive recruiting involves more than advertising a position. It requires significant pursuit, such as repeatedly contacting the candidate and encouraging them to leave their current job. Restrictive covenants - Some written employment contracts contain a restrictive covenant - A restrictive covenant is a clause in which an employee promises not to engage in certain types of activities during or after their employment - It typically restricts an employee's ability to compete with their employer (or former employer), solicit the employer's (or formal employer's) employees or customers, and/or use their employer's (or former employer's) confidential information - A court will only enforce a restrictive covenant in an employment contract if it is reasonable Ex. It might be reasonable for an employer to restrict a former regional sales manager from competing in the same region as the employer for a short period after their employment ends, however, it would be unreasonable for the employer to restrict the former manager from competing outside the region Before hiring a job candidate, an employer should find out whether the candidate is subject to a restrictive covenant that might affect their ability to perform the new job. Anticipatory breach of contract - An anticipatory breach of contract occurs after an employment contract is entered into but before employment begins - It involves either party - that is the employee or the employer - bailing on or rejecting the employee contract - If an employer is responsible for an anticipatory breach of contract, they will have to compensate the disappointed employee LEGL 312 SB01 Page 1  - If an employer is responsible for an anticipatory breach of contract, they will have to compensate the disappointed employee - To protect itself against an action for an anticipatory breach of contract, an employer should hire with care by determining the suitability of the candidate before an offer is made. - And where the position depends on the occurrence of a certain circumstance, the employer should make the offer conditional on that circumstance occurring. Negligent hiring - Its a failure to take reasonable care during the hiring process that results in someone else suffering harm - To avoid this an employer should conduct reference and background checks on job candidates before hiring them. - Asking candidates to provide references is a common and recommended practice - Before checking a candidates references, the employer should obtain the candidates written permission to do so. - There are several types of background checks that can be conducted on job candidates. They include: education and professional credentials checks to verify a candidate's qualifications. Credit checks to review a candidates credit history. Police record checks to review a candidates past interactions with the police - An employer must obtain the candidates written permission before doing these checks. - They should only request these checks where the information sought is reasonably necessary to assess the candidates suitability for the job. - Finally they should only do the checks after making the candidate a conditional offer of employment - An employer should NOT do internet and social media searches on job candidates The employment relationship and the rise of independent contractors - The employment relationship involves a contract that requires one party - the employer - to provide remuneration (pay) to the other party - the employee - in return for work or services - Not everyone who works for, or provides services to another is an employee. The worker or provider of services may be an independent contractor - Organizations have increasingly sought the services of independent contractors to meet their needs because the relationship offers: simplicity and flexibility, fewer financial and legal obligations, the ability to manage peak workloads and obtain specialized knowledge as needed. - Individual workers or service providers often prefer this arrangement because of: tax savings, flexibility in arranging their work schedule and determining the amount of work they take on, the autonomy of being their own boss. Employee vs independent contractor - The distinction between an employee and an independent contractor is not always readily apparent, as they often work side-by-side for the same organization doing the same, or similar, work and using the same, or similar knowledge and skills - The organization and the worker may have a mutual understanding of their relationship as shown by written contracts and other behaviours - such as the issuance of invoices, the registration for GST, and income tax filings but these things are not conclusive of the relationship - An independent contractor is a self employed worker engaged (contracted) by an organization to perform specific work. Implications of an employment vs independent contractor relationship - Employees have certain rights and benefits such as paid holidays and paid overtime, and pregnancy and parental leaves that independent contractors do not have - Employers have certain obligations regarding employees, but not independent contractors. These include having to remit payroll deductions. That is, the obligation to deduct income taxes, employment insurance premiums, and canada pension plan premiums from employees wages and remit those amounts to the government. - The consequences of incorrectly characterizing a work relationship as an independent contractor relationship can include an employer having retroactive responsibility for paying benefits as well as liability for penalties and interest charges - Establishing an employment relationship is important for certain legal principles as well Ex. An employee can sue for wrongful dismissal, but this avenue is not available to an independent contractor. This is because an employee has the right to reasonable notice on termination, or pay in lieu of reasonable notice. But an independent contractor does not. - An employer is usually legally responsible for the torts an employee commits in the course of their employment but is rarely held liable for the torts committed by an independent contractor How can an employer minimize risk? Suggestions to minimize risks of what was intended to be an independent contractor relationship characterized as an employment relationship by a court: - Contract should include a statement confirming the worker's independent contractor status - Contract should be for a fixed term or project and should include a fair mutual-termination clause - The organization should not take any statutory deductions from the independent contractors pay or EI contributions on their behalf. - The organization should not give the independent contactor vacation, holiday, or overtime pay, nor health care or other employee benefit. - The organization should not give the independent contractor a uniform, business card or an office. - Contract should not restrict independent contractor from working for others. Organization should avoid reimbursing the independent contractor for expenses - The organization should avoid setting the independent contractor’s hours of work. - The independent contractor should work offsite as much as possible. - The independent contractor should have the right to accept or decline work when it is offered by the organization. - The independent contractor should buy their own liability insurance. - The contract should NOT provide for performance reviews or disciplinary measures. - The independent contractor should consider incorporating their business and should file appropriate tax returns. Types of employees Permanent full time employees: employees hired for an indefinite period. Usually between 40 and 44 hours per week Permanent part-time employees: employees hired for an indefinite period. Work fewer hours per week than permanent full time employees. Temporary employees: hired for a specific period or task rather than an indefinite period. Might work on full or part time basis. Casual employees: temporary workers who work intermittently as work is offered. Agency employees or "temps": employees employed by an employment agency who work at various organizations as arranged by the agency. Workers do not become employees of the organizations they work for; they remain employees of the agency. LEGL 312 SB01 Page 2