Canadian Employment Law Today

March 5, 2014

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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March 5, 2014 2 Published by Canadian HR Reporter, a Thomson Reuters business 2014 Successive fi xed-term employment contracts QUESTION: If a one-year fi xed-term em- ployment contract with a specifi ed end date and a termination clause is renewed annually without any changes, does the termination clause remain valid? ANSWER: At common law, a contract of employment is presumed to be of in- defi nite duration and is subject to an implied term requiring the employer to give reasonable notice if it wants to dis- miss the employee without cause. However, the parties to an employ- ment relationship can create a written contract that contains different provi- sions. For example, an employer and employee can agree to an express ter- mination clause in their employment contract, as long as the clause meets or exceeds the employee's termination en- titlement under the applicable employ- ment standards legislation. The law also permits an employer and an employee to enter into a fi xed- term employment contract, with a spe- cifi c beginning and end date. Where this happens, the usual principle is that the employee's employment will end on the expiry date of the contract, and there is no requirement to give reasonable no- tice of termination. Employers must be careful in draft- ing employment contracts, however, because judges will often refuse to en- force ambiguous or outdated contracts, contracts that violate employment stan- dards minimums or ones that do not refl ect the realities of the employment relationship between the parties. Particular care must be taken when fi xed-term employment contracts are used. If an employee continues to work after the expiry date of a defi nite term contract, and no new contract is entered into, the employment relationship will become one of indefi nite duration and will be subject to termination with rea- sonable notice. Employers should be especially cau- tious when using a succession of fi xed- term employment contracts, because a court may fi nd that, in substance, this refl ects an employment relationship with an indefi nite term. In Ceccol v. Ontario Gymnastic Fed- eration, for example, the employee was employed by the organization as its ad- ministrative director for 16 years under a series of similar one-year employment contracts that were subject to renewal based on an acceptable performance re- view. The Ontario Court of Appeal ruled that while fi xed-term contracts are legal, they must be drafted in clear and ex- plicit language and any ambiguities will be interpreted against the employer's interests. The court stated that particu- lar vigilance must be exercised when an employee works for several years under a series of allegedly fi xed-term contracts when the underlying reality of the em- ployment relationship refl ects continu- ous service for many years, coupled with conduct on the part of the employer that signals an indefi nite term relationship. The employee in Ceccol was found to be entitled to reasonable notice. While Ceccol has been applied in sev- eral subsequent cases, some judges have distinguished it from where the employ- ment agreement in question was drafted unambiguously. (See, for example, Fly- nn v. Shorcan Brokers Ltd. and Carr v. Atlantic Business College Ltd.) Employment standards legislation may also affect the enforceability of successive fi xed-term employment con- tracts. Under s. 65(1)(b) the British Co- lumbia Employment Standards Act, for example, the act's termination provi- sions do not apply where an employee is hired for a defi nite term. However, s. 65(2) states that where such an employ- ee continues to be employed for at least three months after completing the term, the employment is deemed to be indefi - nite and the employee is deemed to have started at the beginning of the term. The Employment Standards Tribu- nal has ruled that s. 65(2) applies even where the parties have entered into a subsequent fi xed-term employment agreement. (See Fraser-Fort George Mu- seum Society.) In many of these cases, the employer could have avoided litigation and liabil- ity by designing a written employment contract with an indefi nite term and a carefully drafted termination clause. Off-duty misconduct QUESTION: Does an employer have a right or obligation to take action where it be- comes aware of an employee's extreme (and possibly illegal) misconduct out- side of work if the misconduct doesn't have any noticeable effect on the em- ployee's job? ANSWER: The legal rights and obliga- tions of an employer that obtains infor- mation about an employee's off-duty misconduct will depend on the type of behaviour in question, the employee's position and the nature of the employ- er's business. Generally speaking, what an employee chooses to do outside the workplace is none of the employer's business. How- ever, an employee's off-duty conduct may lead to disciplinary action or dis- charge if it affects the employee's ability to properly fulfi ll her duties, negatively impacts the employer's reputation or otherwise impairs the effi cient function- ing of the employer's operations. In Lévis (Ville) c. Côté, the Supreme Court of Canada upheld the dismissal of a police offi cer who was convicted of domestic assault and other offences. In making its determination, the top court noted the position of the offi cer and the adverse impact his conduct would have on public confi dence. Similarly, in Canada (Treasury Board - Solicitor General - Correctional Service) v. Dionne, the Public Service Staff Rela- tions Board ruled the dismissal of a cor- rectional offi cer charged with cocaine possession was justifi ed, as the charge had a harmful effect on the reputation of the employer, and the employer had proven the employee was in possession of the cocaine. In Toronto District School Board and CUPE, Local 4400 (XY), Re, on the other hand, the arbitrator considered the ap- propriateness of an unpaid suspension for a school caretaker who had been arrested for sexual interference and as- sault of a female under 14 years of age. In fi nding that the unpaid suspension was unjustifi ed, the arbitrator pointed to with Colin Gibson Ask an Expert Have a question for our experts? Email Harris and Company, Vancouver Continued on page 8 In many of these cases, the employer could have avoided litigation and liability by designing a written employment contract with an indefi nite term and a carefully drafted termination clause.

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