Employment Law Primer
Written by Ryan Morstad, JD Candidate 2024 | UCalgary Law
As news cycles debate whether Canada is or remains in a labour shortage, employers and employees alike should spend the time to learn about the rights and obligations involved in their employment relationships. Canadians may not be aware that whether or not they have a formal written employment contract with their employer, the nature of their working relationship is nonetheless contractual. A lack of written agreement may create some ambiguity in the terms of this agreement. Still, boiled down to the bare minimum, all employment agreements generally include (1) that the employee will conduct work for the employer, and (2) that the employer will pay them for this work. Other terms, such as termination provisions, will be implied into the contract if the parties do not explicitly address them.
As discussed in a recent BVC Blog post[1], one such implied term of an unwritten employment agreement is that employers cannot terminate employees without cause unless they provide adequate notice of termination to the Employee. Other implied terms include that the employer will not unilaterally change the employees' job duties, hours, or location of work and that they will not make the workplace intolerable. These implied terms are generally found to be fundamental provisions of the employment agreement. If these terms are changed, employees may claim that their work has changed so much that, even though they haven't been formally fired, they have been fired in effect. This is called “Constructive Dismissal”.
Although not a formal termination of employment, Constructive Dismissal arises when an employee claims that the nature of their employment has changed to such an extent that they should be deemed legally to have been dismissed[2]. In legal language, this might be called a fundamental or substantial breach of the employment agreement. If the employee is successful in their claim that they have been constructively dismissed, the employer will be required to provide them notice or payment in lieu of notice for termination, which, depending on various factors, can be a substantial.
The test for constructive dismissal is contextual and involves two steps, which are that:
the employer's conduct showed that they intended to be no longer bound by an express or implied term of the contract, and
the breached term was sufficiently serious.[3]
Actions which have been found to be sufficiently serious to meet this test include:
Indefinite suspension with pay[4]
Assigning the employee to a substantially different job function or job duties[5]
Requiring an employee who worked typical work hours to work evenings and weekends[6]
Reducing a full-time employee to part-time[7]
An employer requesting an employee to resign[8]
One way employers can address these issues is to ensure that employees have contracts that clearly define the terms of their employment relationship. These terms can include the employer's ability to adjust job duties, hours or schedule or temporarily layoff the employee[9].
To avoid costly or stressful legal claims, employers should ensure they have complete written agreements with their employees! Employment contracts are critical to ensure that employers and employees understand the terms of their working relationship.
Endnotes
[1] Alec Colwell, “Common Law Reasonable Notice for Termination” (March 1, 2024), online (blog): BVC <businessventureclinic.ca/blog/think-twice-before-youre-taxed-twice5050080>
[2] Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10
[3] Ibid at para 32
[4] Ibid
[5] Tymrick v Viking Helicopters Ltd, 1985 CarswellOnt 867 at para 11
[6] Merilees v Sears Canada Inc, 1988 CarswellBC 93
[7] Pulak v Algoma Publishers Ltd, 1995 CarswellOnt 277
[8] Chan v Dencan Restaurants Inc, 2011 CarswellBC 2874 at para 34
[9] See Alberta Employment Standards Code, RSA 2000, c E-9 section 62.
