Kent t Employ oyment ent Law Law TRICKS OF THE TRADE: A look at Employment Law from Employment Contracts to Terminations Donovan Plomp, McCarthy Tétrault LLP Simon Kent, Kent Employment Law McCarthy Tétrault LLP / mccarthy.ca
Introduction 2 ¬ We have all heard the old expression “An ounce of prevention is worth a pound of cure”. ¬ This sentiment is particularly applicable to the question of whether to have a written employment agreement. ¬ When terms and conditions and conditions of employment are not clearly recorded in a contract, costly litigation can ensue. McCarthy Tétrault LLP / mccarthy.ca
Introduction cont’d 3 ¬ Challenging to implement this as HR professionals ¬ “Slow to hire quick to fire” often has merit. ¬ Lawyers and HR Professionals are more likely to hear “Hire this flawless person yesterday.” ¬ Time pressure + rose tinted glasses= $$ and problems in the future. McCarthy Tétrault LLP / mccarthy.ca
Introduction cont’d 4 ¬ This presentation will review: a) The status quo: What do you have without a contract? b) Key issues such as hours of work, overtime and termination provisions. c) How to protect confidential and business information/interests. d) Employment Litigation: The process and key issues. McCarthy Tétrault LLP / mccarthy.ca
What Do You Have Without A Written 5 Contract? Liability on Termination ¬Usually the biggest liability for employers without a written employment contract are the common law obligations that arise when the employment of an employee is terminated without cause and without notice. ¬The statutory requirements are found in the Employment Standards Act . These are relatively modest, topping out at eight weeks. McCarthy Tétrault LLP / mccarthy.ca
What Do You Have Without A Written 6 Contract? cont’d ¬ Based on the employee’s length of service, age, type and character of position and the availability of suitable alternative employment, the common law notice requirement can be 24 months and higher. ¬ For any executive position, you can expect common law notice will be at least six months for even young and short-service employees. McCarthy Tétrault LLP / mccarthy.ca
What Do You Have Without A Written 7 Contract? cont’d ¬ A major difficulty with the common law implied term to give reasonable notice is that it generates a range of possibilities. ¬ The range of notice is assessed on a case-by- case basis, so it is difficult to predict the exact range of reasonable notice a court may award. McCarthy Tétrault LLP / mccarthy.ca
What do you have without a Written 8 Contract? cont’d The duty to mitigate ¬While employees have a “duty to mitigate” by attempting to find other work, the onus is on the employer to prove alternative employment exists. ¬In areas without detailed job postings, practical difficulties: competitors don’t want to swear affidavits or testify to help defend you. McCarthy Tétrault LLP / mccarthy.ca
What Do You Have Without A Written 9 Contract? cont’d Litigation costs ¬The vast majority of cases involving claims for reasonable notice are settled before trial. ¬However, lawyers are usually involved once litigation is commenced, and costs are incurred in drafting pleadings, disclosing documents, attending discoveries, and in undertaking negotiations. McCarthy Tétrault LLP / mccarthy.ca
What Do You Have Without A Written 10 Contract? cont’d ¬ Plaintiffs have a significant degree of leverage in pressuring an employer into settling because: a) the onus of proving that an employee can find other work rests on the employer; and b) the Summary Trial Procedure under the Rules of Court allows the employee to obtain a speedy court date (within a few months) and have the matter adjudicated entirely on affidavits, which reduces the amount of time and cost an employee must incur. McCarthy Tétrault LLP / mccarthy.ca
What Do You Have Without A Written 11 Contract? cont’d ¬ If the termination is without cause, unless the employee mitigates completely the very next day, they are assured of receiving at least some money from the employer in a litigation action. ¬ Accordingly, unless the Employer tenders a formal offer which is better than what they recover, they will usually be awarded costs. McCarthy Tétrault LLP / mccarthy.ca
12 What Do You Have Without A Written Contract? cont’d ¬With an enforceable written employment contract, all of this time and expense is eliminated. ¬The employer simply pays out in accordance with the terms of the agreement and both parties get on with their lives. McCarthy Tétrault LLP / mccarthy.ca
What do you have Without a Written 13 Contract? cont’d Uncertainty arising from recruitment process ¬Be cautious of the direct and indirect representations ¬Negligent misrepresentation: Khan v. Vernon Jubilee Hospital (2008,BCSC) ¬ Dr. Khan was recruited to join Vernon Jubilee Hospital to practice thoracic surgery. ¬ Had his own successful practice in Owen Sound, Ontario for 30 years. ¬ Agreed to move to Vernon in 2002. Was assured he could practice there until retirement. McCarthy Tétrault LLP / mccarthy.ca
What do you have without a written 14 contract? cont’d ¬ Contract terminated after 2 years because thoracic surgery program moved from Vernon. ¬ Interior Health authority knew but did not disclose during negotiations. ¬ Income until retirement awarded ($243,500) ¬ Duty of care to provide accurate information about the job when employer knows employee will rely on it. ¬ “Entire Agreement” clause in employment agreement is a good precaution. McCarthy Tétrault LLP / mccarthy.ca
What do you have without a written 15 contract? cont’d ¬ Inducement: Wallace v. United Grain Growers (1997, SCC) ¬ Reasonable notice may be increased if employee was induced to leave secure employment ¬ Not all inducements will carry equal weight when determining the appropriate period of notice ¬ Enforceable termination clause specifying severance in employment agreement eliminates this issue. McCarthy Tétrault LLP / mccarthy.ca
What do you have without a written 16 employment contract? cont’d Confidential information and restrictive covenants ¬Employers are often surprised to learn that employees, subject to certain limited and uncertain exceptions for fiduciary employees, are entitled to quit their job and begin competing with their employer the very next day. ¬The employer may be able to claim some damages for its losses resulting from the employee’s failure to give notice of their resignation, but cannot obtain an injunction preventing competition without a written agreement. McCarthy Tétrault LLP / mccarthy.ca
What do you have without a written 17 contract? cont’d ¬ RBC Dominion Securities v. Merrill Lynch 2008 SCC 54 ¬ Cranbrook RBC Dominion Securities Manager helped coordinate move of himself and almost all investment advisors to Merrill Lynch. ¬ Did not inform his supervisors and blindsided them with departure of entire branch. McCarthy Tétrault LLP / mccarthy.ca
What do you have without a written 18 employment contract cont’d ¬ Case went all the way to SCC ¬ $225,000 awarded against advisors for unfair competition at trial was overturned. Without non-compete, free to start competing the moment after they leave. ¬ Award against advisors was $40,000 total for failure to give reasonable notice of resignation (2.5 weeks). McCarthy Tétrault LLP / mccarthy.ca
19 What do you have without a written employment agreement? cont’d ¬ Absent a written employment agreement, an employee still has an obligation to hold an employer’s confidential information in confidence and not disclose it following the employment. ¬ However, the question of what constitutes “confidential information” is something that would have to be decided by the court. ¬ Doubt or disagreement in this regard can lead to substantial time and litigation costs. McCarthy Tétrault LLP / mccarthy.ca
The Contract of Employment-Key 20 Terms and Issues Date of signing ¬Ensure agreement is signed before employee starts work. If after, reflect that in the draft ensure some nominal payment or consideration is given to confirm enforceability. Parties ¬Identify the parties using the correct legal name of the employer. ¬Address situations where employees will perform work for groups of companies. McCarthy Tétrault LLP / mccarthy.ca
The Contract of Employment-Key 21 Terms and Issues cont’d Pre-Conditions ¬State explicitly any conditions that must be met before employment begins, such as: ¬ a satisfactory criminal records check; ¬ a certificate of fitness for the duties of the position; or ¬ completion of a course of study. McCarthy Tétrault LLP / mccarthy.ca
The Contract of Employment-Key 22 Terms and Issues cont’d Term ¬Is the agreement for a definite or indefinite term? ¬If for a definite term, is there automatic renewal or termination in absence of notice? McCarthy Tétrault LLP / mccarthy.ca
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