Canadian Employment Law Today

with Colin Gibson Ask an Expert Harris and Company VancouVer Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com Canadian HR Reporter, a Thomson Reuters business 2015 2 | January 7, 2015 Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com Canadian HR Reporter, a Thomson Reuters business 2015 Answer: Employers should be careful when using fixed-term employment contracts, because they can give rise to unexpected li- abilities. Fixed-term contracts are designed to be used in situations where an employee is hired for a defined period of time or a spe- cific project. At common law, the employ- ment relationship ends on the expiry of the fixed term, and unless the contract provides otherwise, the employer does not need to give the employee any advance notice of dismissal or severance compensation. Similarly, employers are often exempted from having to provide statutory notice or severance compensation to an employee whose employment terminates on the ex- piry of a definite term employment con- tract. An example can be found in s. 65(1) (b) of the British Columbia Employment Standards Act. In some cases, however, this exemption will only apply if the term of the contract was 12 months or less: see, for example s. 2(1) of Ontario's Termination and Severance of Employment regulation, and s. 55(2)(c) of the Alberta's Employment Standards Code. Where a fixed-term employment con- tract is used, it is prudent to include a clause that allows the employer to dismiss the employee without cause before the ex- piry of the fixed term, by providing a speci- fied amount of working notice or severance compensation (which must meet or exceed the employee's entitlement under the appli- cable employment standards legislation). Otherwise, if the employer terminates the contract early without cause, it will be re- quired to pay the employee until the end of the term, less any mitigation earnings. Another area of potential difficulty is the situation where an employee works under a series of successive fixed-term employ- ment contracts. Here, the court may rule that the employment relationship is in sub- stance one of indefinite duration, thereby entitling the employee to reasonable notice of dismissal at common law. In Ceccol v. Ontario Gymnastics Federation, for exam- ple, the employee worked under a one-year employment contract, which was renewed annually. After 16 years of employment, the employer notified the employee her contract would not be renewed for another term. e employee sued for wrongful dis- missal. e court ruled that she was effec- tively employed for an indefinite period, despite the fact that she had a fixed-term contract. Accordingly, the employer was ordered to pay her damages in lieu of 16 months' notice of dismissal. e situation asked about here can also be problematic for employers. If an employee who has a fixed-term employment contract continues working beyond the contract's expiry date without a new agreement be- ing concluded, the term of the employ- ment relationship will become indefinite, and the employer will need to provide the employee with notice of dismissal or sev- erance compensation in accordance with the employee's common law and statutory entitlements if it decides to dismiss the em- ployee without cause. is can expose the employer to significant liabilities, which could have been avoided if the employer had paid closer attention to the expiry date of the contract. Where a fixed-term contract expires and the employee continues to work, the other material terms of the employment relation- ship will usually remain the same as those contained in the expired contract. In Mitch- ell Energy Corp. v. Canterra Energy Ltd., for example, the employee kept on working after the expiry of a fixed-term employ- ment contract. e court noted that the parties had continued to behave as though the contract was still in effect, and ruled the implied terms of their employment relationship were accordingly the same as those that appeared in the expired contract. e result may not be the same, however, if the employer wants to rely on a termina- tion clause or restrictive covenant that was contained in the fixed-term employment contract. e enforceability of those provi- sions may be called into question if the term of the contract has expired. Unless there is good reason to hire an employee under a fixed-term contract, em- ployers are often well advised to use an in- definiteterm employment contract instead, with a carefully drafted termination clause. Handling suspicious workers' compensation claims Question: How should an employer handle a situation where it suspects that an injured worker who is off work and receiving workers' compensation benefits is not being honest about the extent of his injury? Answer: Employees who make work- ers' compensation claims are expected to be honest and forthright in their dealings with their employer and with the applicable workers' compensation tribunal. In some situations, however, an employer may feel it has grounds to challenge the veracity of an employee's workers' compensation claim. For example, the employer may feel the employee's injury was not suffered at work or at all, the employee is exaggerating the extent of the injury, or the employee is secretly working on the side while claiming compensation benefits. In most jurisdictions, an employer is given the opportunity when a workers' compensation claim is filed to express any concerns or objections about the claim. In British Columbia, for example, when an employee suffers or claims to have suf- fered a workplace injury, the employer is required to file with WorkSafeBC a Form 7 "Employer's Report Of Injury Or Oc- cupational Disease." Among other things, this form asks the employer to describe the circumstances of the injury, and to indicate whether or not the employer objects to the claim. ere is also a space where the em- ployer can provide an explanation for any objections. When a claim is filed, the workers' com- pensation tribunal will need to determine whether or not to allow the claim. If the claim is allowed, there will also be a vari- ety of other decisions made on the claim, such as the rate at which benefits will be paid and the duration of benefits. Such de- cisions must be made based on the avail- able evidence, the applicable statutes and regulations, and any relevant policies and procedures of the tribunal. If the employer disagrees with the decision – for example, where the employer has good reason to believe the employee has not been forth- right in the information she has provide to the tribunal – the employer may appeal the claim or request that it be reviewed, in accordance with the mechanisms set out in the applicable statute. In British Colum- bia, for example, an employer may request within 90 days of a decision on a claim to have the decision reviewed internally by Status after expiry of fixed-term contract Question: If a worker on a fixed-term contract continues to work after the end date of the contract, does the employment continue under the same terms of the original contract? Is the contract considered renewed for the same term or does the worker become permanently employed? sUspECTEd on page 6»

• Cover