Module 6: Employment Law

Lesson 1: The Employment Relationship

There are 4 main topics to Employment Law:
1. The employment relationship
2. Termination of employment
3. Other employment laws
4. Collective bargaining

The Employment Relationship:

- Treating employees fairly, with dignity, and respect can provide real benefits for employers:
● If employers treat their employees fairly, with dignity, respect, → much less likely to get involved
in legal disputes
● Could be more successful in business;
○ Can drive a workforce of people who are proud to work for them
○ Employees believe that there is a strong culture, a sharing of values across the
organization
● Every employment relationship → is a contractual relationship
○ Whether the contract is written or not
● Significant changes in the Labour Landscape:
○ 1) Development of the Middle Class
■ After WW1
■ Ordinary people started to have disposable income
○ 2) Involvement of Women in Politics
■ Women had no significant presence in politics until about 100 years ago
● Women tended to gravitate towards causes that: protected the vulnerable
(workers and children)
○ 3) Introduction of Labour Unions
■ Or trade unions
■ Started by threatening the viability of businesses by speaking on behalf of Labour
with a Unified voice
○ Through these factors and other, labour laws changed dramatically
■ Lots of legislation now that covers:
● Health and safety legislation
● Human rights legislation
● Pay equity laws
● Social safety net that protects people
● Employment contracts is linked to both contractual relationships AND human dignity, human
rights and public policy
Distinguish between an EMPLOYMENT and INDEPENDENT CONTRACT
● 1) Vicarious Liability
○ Employers are vicariously responsible for the actions of their employees
● 2) Employment Legislation
○ If we have an employment contract, then we have to abide by all the employment laws:
■ The Employment Standard Act
■ The pay equity
■ Health and safety
● 3) Income Tax Deductions
○ Employer is required to take a certain amount of money out of your paycheck
■ CPP, federal income taxes etc
How to determine between an EMPLOYMENT CONTRACT or an INDEPENDENT CONTRACT:
● 1) Control test
- Most important factor is determining if there is an employment relationship
○ Who controls the work that is done?
○ Who decides when the work will be done?
○ Where will it be done? Etc
○ If the person that controls that work, is the person for whom the work is being done for,
■ → more likely gonna be an employment relationship
○ If the person who controls the work that is done, is the person doing the work
■ → more likely to be an independent contractor
● 2) Organization test
○ How critical is the person to the organization?
○ More critical the person is to the organization,
■ more likely they are an EMPLOYEE
○ The more peripheral they are, the less connected they are to the organization
■ → more likely to be an INDEPENDENT CONTRACTOR
● 3) All Other Factors
○ Whether the person doing the works has a risk of loss
○ Whether they own their own tools
○ Whether they have an agreement
■ A written agreement saying they are an employee or not
○ There is no one determinative factor

Obligations of Employers:
● Pay salary or wages
● Honour employment contract
● Provide safe working conditions

Obligations of Employees:
● Work competently
● Be on time
● Be loyal
● Fiduciary duty (maybe)
Lesson 2: Termination of Employment
● Termination of employment can we either with or without a cause
● When terminated with cause, an employee is not entitled to any notice of termination or
severance pay
○ Employee can be terminated on the spot immediately
○ → like a breach of contract by the employee that is sufficiently serious enough that it
allows the employer to treat the employment contract as over
○ Causes may be based on:
■ Serious misconduct
■ Dishonesty
■
■ Chronic absenteeism
■ Sexual harassment
■ Conflict of interest
■ Breach of fiduciary duties
■ Criminal behaviour
○ Test for a cause of termination:
■ To amount to “cause”, the misconduct has to arise to the degree that:
● Violates an essential condition of the employment contract
● Breached the trust/faith that is inherent in the working relationship
● Is fundamentally inconsistent with the employee’s obligations to the
employer
● Termination of employment without cause must be in good faith
○ → must be for business reasons
○ Can be done anytime
○ Termination without
○ cause creates 2 sets of obligations on the employer:
■ MUST comply with the Employers Standards Act
■ MUST provide ESA notice and severance
■ MUST provide “reasonable” notice of the termination
● If there is a written contract with amount of notice employee will receive
is set out in the contract, then that will govern what is provided at least
what is required by the Employment Standards Act
● Obligations under ESA
○ ESA Notice: 1 week/year, max 8
■ Employer is required to provide one week notice PER year of employment to a
maximum of 8 weeks
■ EX: if employee worked for 2 years, they are entitled to 2 weeks notice
■ EX: worked for 12 years (or over 8) → entitled to 8 weeks notice
■ Or they can be given a check worth the amount of weeks of notice, and the
employment will end immediately
■ OR a combination of the 2
● Employment ends in 4 weeks, and at the time you receive a check
representing 4 weeks of pay
 ○ ESA Severance: 1 week/year, max 26
■ (if annual payroll for all employees is GREATER THAN/EQUAL TO $2.5
million and 5+ years employment)
● Both conditions met? → employee is entitled to 1 week of severance pay
PER year of employment, to a maximum of 26 weeks
● Ex: 12 year employee is being terminated without cause, then they are
entitled to 8 weeks of notice under ESA AND 12 weeks of severance if
employer has a total payroll of $2.5 million+
■ Severance pay can only be made in a lump sum payment on termination
● Cannot be paid overtime
● Obligations under Common Law
○ “Reasonable” notice is based on:
■ Age
■ Seniority
■ Skills, training, education
■ Ability to find alternative employment
● Wrongful Dismissal is:
○ Failure to provide reasonable notice (usually this)
○ Termination on bad faith
○ Discrimination
○ Type of damages employer will receive if wrongfully terminated → Bardel Damages
■ Employees are awarded damages = to the notice of termination that they should
have received and didn’t
■ Wallace damages:
● Termination of contract by humiliation
● Constructive Dismissal:
○ When the employer fundamentally changes the nature of the job without the employee;s
consent, causing the employee to resign
○ Considered a Breach of condition by the employer
○ Employee is entitled to treat the contract as ended
○ Employer does this when they don’t want to pay severance and they want to let an
employee go, so they make it unpleasant for the employee
○ Damages employee is entitled too:
■ Same as if they were terminated without cause (reasonable notice)

Lesson 3: Other Employment Laws

Employment Standards Act
- Minimum standards an employer cannot be contracted out of or waived
- You can agree to more standards, but you cannot agree to less
● Minimum wage
● Hours of work, overtime, breaks
● Vacation
 ○ Minimum vacation days is 2 weeks a year
○ Can agree they can be entitled to more, but not to less
● Pregnancy and paternal leaves
● Equal pay
● Termination, layoffs, severance
○ Layoffs: employers not entitled to layoffs unless its written in the employment contract

Human Rights Legislation

● Prohibits discrimination
● Requires accommodations
● Prohibits sexual harassment
● May result in fines, reinstatements
● Applies mostly to 3 spheres:
○ Employment
○ Government services
○ Accommodations
■ They are particularly harmful in these 3 areas
■ Code requires accommodations for disabilities
■ Prohibit sexual harassment
Other Employment Legislation:
● Health and safety
● Pay equity
● Employment insurance
● Workers compensation
● BIA, WEPA, etc.
○ Bankruptcy Insolvency Act → provisions relating to unpaid wages when an employer
goes bankrupt
○ Wage Earners Protection Act → provisions that ensure employees receive something in
the event the employer goes bankrupt

Lesson 4: Collective Bargaining

- Idea that when employees speak with ONE voice collectively, they have more bargaining power
- When Unions were first introduced to the workplace,
- Employers responded with violence
- Unions are protected by Law in Ontario, and collective bargaining is protected too
Important Concepts:
● Organization and Certification
○ There are 3 ways where a Union can be certified as the bargaining agent for employees:
■ 1) more than 50% of employees join a labor union (registration by membership
cards) → union is certified to be the bargaining agent for all employees
■ 2) vote, and more than 50% of votes are FOR the Union;
● Union is certified as bargaining voice for employees
■ 3) Employer engages in illegal practices
 ● Ex: threatening discipline for being a member of Unions
○ Union is AUTOMATICALLY certified as bargaining agent
○ Union has right to negotiate for employees
○ Employees lose their right to negotiate individually with their
employer
○ Union becomes the AGENT (agency relationship)
○ Employees become the PRINCIPLES
● Bargaining (based on agency)
○ Once a union is certified as a bargaining agent for a group of employees
■ They have exclusive authority to bargain on behalf of the employees and the
parties
● Both the employer and union must bargain in good faith
● Negotiations not successful → both sides can apply to have a mediator
appointed
● Often, mediation is mandatory to a strike or a lockout
● Collective Bargaining Agreement (CBA)
○ Usually parties negotiate and maybe go on strike or lockout until they arrive at a mutually
agreeable CBA
○ CBAs become binding when both sides approve of the agreement
○ CBA must have a term of 1 year
■ Prohibit strikes on part of the employees and lockouts on part of the employers
■ Usually retroactive to the date of expiry of the most recent CBA
■ Must provide grievances will be settled by binding arbitration
■ Always set out the other terms of the relationship
● Conditions of work
● Rates of pay
● Vacation ‘termination
○ It becomes an employment contract between the employer and the employees
● Labour Disruptions and Disputes
○ strikes/lockouts during CBA term → ILLEGAL
○ Strikes can only be used as part of the negotiation and bargaining process
○ CBA buys you Labour Peace
○ Strikes are the most potent way weapon Unions have
○ Lockouts → employer can lockout employees and say “unless you agree to these terms,
we’re not letting you in
○ Unions must be democratically run and must represent all