EMPLOYMENT LAW Introduction The employment relationship goes back to antiquity. It is certainly traceable to fourteenth century England when legislation was passed to regulate the wages of employees. The problem was that, because of the plague (Black Death), labour shortages created the risk of higher wages. The Master Servant Act of 1867 (later adopted by Canada) placed limits on the length of time a contract bound the parties, and defined relationships between the parties. Workers’ Compensation legislation was established in Great Britain in 1897 and later extended to Canada. Apart from this legislation, the Common Law (judge-made law) determined the relationship between the parties. While commercial contracts are based on the idea of equal parties, employment contracts have never attained such a form. Indeed, the legal concept of employment embodies “control” by the employer. There is also an obligation on employers, that of vicarious liability for the legal wrongs of their employees, in the course of their employment. More recently, statute law has placed more legal obligations on employers and employees. Such statutes (mainly provincial, except for those industries under federal jurisdiction) include human rights, employment, standards, occupational health and safety, and workers’ compensation. The Employment Relationship The common law contract of employment requires the essential elements of consensus, consideration, legality and intention to create legal relations. An employment contract usually involves the payment of wages in exchange for services, but may involve other remuneration instead of, or in addition to, wages. Such other remuneration may include food, shelter, shares in the company, contributions by the employer into a pension plan etc. The law distinguishes the employment relationship from that of the independent contractor, which also involves the exchange of services for remuneration. An example of the latter is an individual with a window cleaning business who contracts with various home owners or businesses to clean their windows once a month in exchange for remuneration. The relevance of the distinction between an employee and an independent contractor lies in the different legal responsibilities imposed on the 1 respective parties by both the common law and statute law. The distinction is sometimes unclear. In the earlier part of the 20th Century, the test used by courts to distinguish the employee from the independent contractor was that of “control”. The party that decided what work was to be done, and where, when, how and by whom it was to be done, was typically viewed as an employer and his workers employees. As work became more complex, the “control” test did not resolve all uncertainty about whether an employment relationship existed and courts came to examine factors other than the presence or absence of control of the work. The fourfold test described by the court in City of Montreal v. Montreal Locomotive Works Ltd. et al. [1947] 1 D.L.R. 161 includes the statement: In earlier cases a single test, such as the presence or absence of control, was often relied on to determine whether the case was one of master and servant, mostly in order to decide issues of tortuous liability on the part of the master or superior. In the more complex conditions of modern industry, more complicated tests have often to be applied. It has been suggested that a fourfold test would in some cases be more appropriate, a complex involving (1) control; (2) ownership of the tools; (3) chance of profit; (4) risk of loss. Control in itself is not always conclusive. More recently, courts have recognized the limitations of their fourfold test and are attempting to develop an organization test. This focuses on the relationship of the provider of services to the business itself. The latter test considers whether the services provided are an integral part of the business or is adjunct or accessory to the normal activities of the employer. See Cooperators Insurance Association v. Kearney (1964), 48 D.L.R. (2d) 1; Armstrong v. Mac’s Milk Ltd. (1975), 7 O.R. (2d) 478. In Mayer v. J. Conrad Lavigne Ltd. (1979), 27 O.R. (2d) 129, the plaintiff sold television time for the defendant on a straight commission basis. He was required to attend regular sales meetings of the defendant each day and file sales reports. Some direction of the plaintiff’s activities was carried out by the sales manager, but this was generally limited to where and to whom to sell. When the defendant failed to pay the plaintiff salesman vacation pay, he instituted legal proceedings. The relationship passed both the control and the organization test. 2 Modern cases have generally less to do with vicarious liability and more to do with the distinction between employees and independent contractors. A significant difference is that, in matters not specified in the contract, an independent contractor has the right to exercise his/her discretion on how, when etc. the work is done. However, even this distinction has become blurred. One reason for the blurring is that professional or expert employees frequently exercise significant discretion with respect to when, where and how their work is done in the course of their employment. In such cases, the organization test is necessary but not necessarily sufficient to determine the status of the relationship. The Employer’s Duties The common law provides implied contractual duties of an employer. These include the duty to (a) pay wages; (b) provide a reasonably safe workplace; (c) reasonable notice of termination of employment without cause. However, many more duties have been imposed on employers by legislation through the late 19th and early 20th centuries. (a) Occupational Health and Safety Legislation requires the employer to create and administer safe workplace practices, safety equipment and clothing, provide training in safety practices and knowledge of risks to health and safety from dangerous noise levels, chemicals and other substances, physical injuries, workplace bullying and harassment. Breaches of occupational health and safety legislation can lead to fines against the employer. Liability is strict, that is, the employer’s only defence is that it exercised “due diligence” to avoid the breach. See for example the case The Queen in Right of Ontario v. London Excavators & Trucking Limited (1998), 40 O.R. (3d) 32. A sub-contractor was excavating a construction site and was informed by the general contractor that no services were buried in the area. The sub-contractor’s back-hoe struck concrete encasing a hydro duct causing an explosion. The sub-contractor was convicted of breach of the provincial occupational health and safety legislation and fined. Reliance on the general contractor’s advice was insufficient to prove due diligence. 3 Note that conviction of individuals or corporations under the Criminal Code is possible, though unusual. The difficulty here is proving that the individual charged had a guilty mind – that is that he intended to perform the act or omission that caused injury to another or that he was reckless or grossly negligent. Note that now directors of corporations can be liable under the Occupational Health and Safety Legislation or Criminal Law for failure to meet the standards of conduct imposed by the law. The corporation may itself be liable for breaches of the law caused by the combined actions of directors, managers and workers of the corporation. (b) Employment Standards Legislation Each province and the federal jurisdiction have legislated minimum standards of hourly wages and overtime pay, public holidays, vacations, vacation pay, leave of absence (unpaid) for parents of new-born or adopted children. Laws also place a daily or weekly ceiling on hours worked. These differ among jurisdictions. (c) Human Rights legislation Provincial and federal human rights law prohibit discrimination by employers in their hiring practices and in the employment contract on grounds of age, race, creed, colour, place of origin, sexual orientation, sex, nationality, physical or mental disability, ethnic origin, and in some jurisdictions (e.g. Quebec) criminal record. The discrimination may not necessarily be on grounds of the employee’s race or creed. An employer refusing to hire a qualified individual because of his wife’s or partner’s race would be in breach of the legislation unless it could establish a defence to the charge. Grounds in Alberta are race, religious beliefs, colour, gender, physical disability, mental disability, age, ancestry, place of origin, marital status, source of income, or family status of that person or of any other person. Sexual orientation is also prohibited in view of the Supreme Court of Canada decision in the Vriend case. Age applies only to persons over 18. There is no upper limit on age in the Alberta Act but an employee’s employment may be limited by the terms of an employer’s pension plan. Ontario has a ban on mandatory retirement on grounds of age. The courts have established that discrimination under human rights 4 legislation need not be intentional on the part of the employer. That is, the act may be breached by an act, rule, policy or standard imposed by the employer that has the effect, but not the intention, of discriminating against an employee or job applicant on grounds of religion, disability, sex etc. A defence that an employer may have to its alleged breach of the Act is that the job requirement or standard that cannot be met by the employee is a bona fide occupational requirement (BFOR). The burden is on the employer to establish that a BFOR exists. For example, an employee’s job may require her to drive a motor vehicle for 10 hours a week. If the employee becomes legally blind, the employer can show that it is a BFOR that a higher level of vision is required for the job than that possessed by the employee. That is, the requirement of a certain level of vision is required of the employee for reasons of safety and efficiency. For example, the employer can show that there is a rational connection between that standard of vision required and the nature and purpose of the job. In the past, the establishment of a BFOQ would normally entitle the employer to dismiss the employee because of her inability to perform an important function of her job. Since the Meiorin case (on the class website), an employer has a further burden beyond demonstrating a BFOR of the job. The employer must also demonstrate that it would be undue hardship for it to accommodate the disabled worker by, for example, assigning her other work, modifying the job description and requirements, providing technology to assist the employee in performing certain tasks of the job, etc. A human rights tribunal will take into account the resources available to an employer in determining whether accommodation would be an undue hardship. Accommodation may be required in circumstances beyond disablement. An employer might have to organize a worker’s shifts to allow him to attend religious ceremonies, or to allow her as a single parent to avoid working night shift. Undue hardship depends substantially on the financial cost or the level of organizational disruption that accommodation would cause within the workplace. In Ontario (Ministry of Community and Social Services) v. O.P.S.E.U. (2000), 50 O.R. (3d) 560, the employer had a policy of religious accommodation of employees that allowed absence from work for two paid days, and a rescheduling of work to permit one additional day in a three week work cycle period. An employee who was required to observe 11 holy days asked permission to take all eleven days without pay. 5 The employer refused but offered various other work schedule options in an attempt to accommodate the employee. The employee lodged a grievance alleging discrimination on grounds of creed. The Court of Appeal held that the employer’s suggested accommodation was sufficient to meet its legal duty of accommodation, short of undue hardship. Human rights tribunals typically view addiction to drugs or other substances as a disability. This raises at times the legal propriety of mandatory random drug testing of employees, and of the dismissal of employees for failing to submit to a drug test or for testing positive in such a drug test. In certain jobs involving relatively high risk to the safety or life of oneself and others, such as a firefighter, bus driver, police officer etc., an employer may argue successfully that submission to mandatory drug testing is a BFOR. However, employers have to establish that the results of the test prove impairment of the employee, not always an easy task. Further, the duty to accommodate an employee with a disability may make it necessary for an employer to assist the employee in curing his addiction, even if a BFOQ is established. Harassment If an employee is harassed or bullied by supervisors, fellow employees or even clients or customers on one or more of the protected grounds, for example race, colour, sexual orientation, or disability (e.g. obesity), an employer may be liable under human rights legislation for failing to provide a workplace environment free from discrimination. Turning a blind eye to such activities is not an option for employers. Such wrongs can be remedied through occupational health and safety legislation, the human rights act, or in court for breach of contract. Where employees are covered by a collective agreement negotiated between the employer and the trade union, a grievance can be filed and ruled upon by an arbitrator if no negotiated settlement is made. Pay Equity In all common law provinces, private sector employers are not permitted to pay a female employee less than a male employee (and vice versa) when they are performing the same job. Quebec and the Federal jurisdiction also have pay equity legislation, which obliges an employer to provide equal pay for work of equal value. This is designed to ensure that pay is based on the skill, responsibility, qualifications, and degree of dangers and demanding 6 working conditions of the job, rather than traditional stereotypes that “female” work is ipso facto less valuable than that performed by males. Pay equity legislation also exists in some provinces (such as Manitoba, and Saskatchewan) for public sector workers. So the job of community health nurse employed by a local authority in such jurisdictions might have skills, responsibilities etc. equal to those of a police officer working for the same local authority. The relevance of such comparison is that typically a substantially larger proportion of nursing jobs are performed by females while most police officers are male. If the value of their jobs is equal but their pay substantially unequal, the employer is required to redress the pay inequity, including providing back pay for previous discrimination. Public sector (such as the Federal Government or Canada Post) and private sector employers (such as Telus) typically fight tooth and nail to avoid or delay payment and redress of the pay inequity. Duties of Employees The contract of employment will frequently specify certain duties of the employee. For example, workplace rules may prohibit smoking on the job, require punctuality, and specify rules for the safe performance of the job. There are also implied terms of the contract of employment, which can be replaced by specific terms but often are not replaced. There is an implied duty to obey all reasonable orders within the scope of employment. There is a duty of confidentiality of information obtained during the course of employment. The employee must work the agreed time and the employer must reap the profits of work done in that time. The employee is free to work for his own profit in his own time, provided it does not disadvantage his employer. If an employee indicates he has a special skill or ability and is hired for this, she must exercise the skill with reasonable efficiency. Failure to do so may make the employee liable for damage caused through negligence. While loyalty of all employees to the employer is implied, high level executives seem to have a higher duty of loyalty. See Helbig v. Oxford Warehousing Ltd. et al. (1985), 51 O.R.(2d) 421 where a senior executive was hired to improve profitability of a group of companies. He invented a way of improved handling of materials then engaged in a protracted legal disagreement with his employer as to ownership of the invention. The court 7 found that the employee’s fiduciary duty to the employer justified the employer’s firing of the employee. See also Canadian Industrial Distributors Inc. v. Dargue et al. (1994), 20 O.R. (3d) 574 where a senior employee and several other employees left their employer and purchased a competitor company of their employer. They solicited customers of their former employer. This broke the duty of loyalty to the employer. A higher fiduciary duty belonged to the senior exemployee, but the others were also liable for damage caused to the employer. This rules out secret profits of the employee while working for the employer. Termination of Contract of Employment There must be reasonable notice of termination without cause or pay in lieu of notice. Wrongful dismissal occurs if the employer dismisses without cause and fails to provide the notice (or pay in lieu of notice) required by the employment contract. If the contract does not explicitly specify the period of notice, the court will decide the appropriate notice if the employee brings a wrongful dismissal suit. The Bardal case outlines factors the courts take into account when determining appropriate notice. These include age, seniority, degree of difficulty in obtaining similar employment. While cases vary, a standard of around one month’s notice per year of employment is often required by courts. As the Wallace case illustrates, courts may increase the notice required if the employer has dismissed the employee in a grossly unreasonable or humiliating fashion. Very occasionally if the employer behaves in a reprehensible or malicious fashion, the court will award punitive damages. To award punitive damages, the court must find an independent wrong beyond the wrongful dismissal itself. These are not compensatory but rather an expression of the court’s revulsion at the employer’s conduct. See Keays v. Honda recently ruled on by the Ontario Court of appeal. Note that courts will not reinstate into his job an employee who has been wrongfully dismissed. Damages are the only remedy given. Reinstatement is a remedy available to arbitrators of collective agreement grievances. Human rights tribunals are also empowered to reinstate a worker dismissed wrongfully in breach of the Human Rights Act. 8 Constructive dismissal Note too that employees must provide notice of termination as required by the contract or what courts consider reasonable notice. Notice is not required if the employee is constructively dismissed. If an employee is subject to demotion, harassment, non-payment of wages, unsafe working conditions, she may treat the contract as at an end, leave her employment, stop performing her obligations under the contract and sue the employer for pay in lieu of notice. The employee must have sufficient cause to quit otherwise she may be liable for failure to provide reasonable notice of termination. Misrepresentation If an employer misrepresents the nature of employment and this induces the person to enter into an employment contract that works to the employee’s detriment, the employee may sue for fraudulent or negligent misrepresentation. See Queen v. Cognos where Queen was not informed in his interview that the funding for his job had not been approved by senior management. The result was that he was soon dismissed with notice in accordance with the contract. However he had been led to believe that the job was secure for a lengthy period of time. The employer was held liable for the misrepresentation. Damages were awarded under the law of tort. 9