Unit 3

Employment Law

\-laws and regulations that govern the management/employee relationship

\-includes contract law, and acts and regulations

Agency Relationship

\-agents represent and act on behalf of a principal in dealings with third parties

\-purpose for entering contracts

\-agent can be an employee or independent contractor

Agency Relationship: Contract

\-creates actual authority

\-expressed>written in

\-implied> principals action, job title

Agency Relationship: Estoppel

\-If a third party relies on the principal’s representation that the agent has the authority to act, the principal cannot then claim the agent had no authority. The principal will be bound to the contract

\-Creates apparent authority> reasonable person test to determine if there is apparent authority

Agency Relationship: Ratification

\-principal can ratify a contract even if the agent acted beyond both actual and apparent authority

Power of the principal to ratify

•Must be timely

•Agent must have been acting for a specific principal for ratification

•Principal must have been capable of entering into the contract

•Parties must still be able to perform the object of the contract

Agency Relationship Test

\-To determine whether a principal is bound in contract with a third party by the actions of an agent:


1. Was the agent acting within the actual authority given by the principal?


1. If yes> there is a contract
2. if no then (step 2)
2. Did the principal do anything to lead the third party to believe that the agent had the authority to act? (apparent authority)


1. if yes, and the third party relied on it, there is a contract. This is estoppel.
2. If no, then there is no contract, unless ratified by principal.

Agents Liabilities

__•To Third Party__

•Breach of warranty of authority→ tort claim

•Intentional deception on part of the agent may lead to an award of damages

•Tort remedies may be available for fraud or negligence

__•To principal__

•Principal can sue for breach of contract (as long as not ratified)

•Principal can sue for compensation when acting outside of authority or for torts committed, even when agent is also liable

Principal’s Liabilities

__•To Third Party__

•Breach of Contract

•Vicarious Liability for actions of agent

__•To Agent__

•Breach of Contract

Employee

•a person who is given direction and supervision along with the resources to do the job in exchange for money for work they do below a management level.

Employer

•a business or organization that gives direction and supervision to a person and provides the resources to do the job in exchange for money.

Independent Contractor

\-performs a service for an employer and renders an invoice or bill

•Not covered under the employer–employee relationship.  

•The service they render is dictated by a quote or contract.

•Contractors are not directly involved in the operations of the business.

Employee v. Independent Contractor Tests

1. Control test
2. Organization
3. Risk test
4. Tools test

Control Test

\-assess the degree of control exercised by the person paying for the service

\-greater over an employee than an independent contractor

\-less control over independent contractors

Organization test

\-is a person an integral part of employer’s organization? → if yes they are more likely to be an employee

Risk Test

\-examines whether the worker bears any financial risk of loss or stands to profit if work is completed efficiently? → If no they are more likely to be an employee

Tools test

\-asks “does the worker provide their own tools and equipment to do the work?” → more likely to be an employee

Union

•a collection of employees in a trade or employment organization formed to protect and further their rights and interests through the negotiation with management.

union contract

\-the focus is on the negotiation of the terms of the employment relationship

How Unions are Formed

1. Employees express an interest to form a union.


2. Membership cards are collected.


3. Significant support of the membership is shown by a legally required percentage of employees.


4. Cards are submitted to the provincial or federal labour relations board with an application for union certification.


5. Labour Relations Board may either legally recognize or require a secret ballot among employees.


6. Once the union is legally certified, the first union contract can be negotiated.

Collective Bargaining

•negotiation between a union and management to reach a union contract that outlines the rules that govern the relationship.

•Occurs after the labour relations board has approved union certification.

Union Contract or Collective Agreement

•a legal document between employees and management that outlines the rights, terms, conditions, and benefits that all employees of that union can expect for a specific period of time.

Types of Strikes

1. Legal Strike
2. Illegal strike


1. Wildcat strike

lockout

•employers do not allow employees to enter the premises to work, usually during the bargaining process.

Arbitration: Resolution

•a final resolution where both parties agree to the decision of the arbitrator.

•Once decided, the decision cannot be appealed; the decision of the arbitrator is final and binding.

Mediation: Resoltuion

•occurs when a third party helps to resolve issues between the parties and assists in developing a solution. Not used in a union–management dispute.

Employment Law: Common-law

•Comprises the contractual obligations between the employer and employee such as termination or terms of relationship.

•Example: Employment Agreement

Employment Law: Regulatory Law

•Comprises all statutes created by governments concerning employer/employee relations for example minimum wage.

•Example: *Employment Standards Code*

Employment law: Labour Law

•Deals with relationships and contracts between employers and unions.

Example: *Labour Relations Code*, Collective Agreements

Employment Standards Code

\-statutes designed to protect employees by setting minimum standards for:

•Wages; Hours of work, overtime, and rest periods; Vacation and holiday entitlements; Maternity and parental leave; Termination and severance pay

•Some also provide for bereavement and sick leave

Human Rights in Employment

\-Prevents discrimination in hiring and employment practices→ violation can incur damages via lawsuit

\-Federal and provincial codes must be consistent with charter→ focus is on discrimination does not provide all the same rights and protections as the charter

\-Tribunals hear complaints, investigate, levy fines and reinstate employees

\-discriminatory rules may be saved if the employer establishes them to bona fide (genuine) occupational requirements

\-employers have a duty to accommodate employees with disabilities and special needs

Health & Safety

\-Focuses on prevention of injury in the workplace:

→ provides safer working conditions

→ ensures safe employment practices

→ establishes programs to educate both the employer and the employee

\-Safety boards ensure regulations are adhered to:

→ Can order the problem corrected or, in serious cases, they can shut the job site down

→ some can issue tickets

Employment Contracts

\-an agreement outlining the specifics of an employer and employee’s responsibilities for a period of time

→ can be written or verbal

→ in canada, a contract for a fixed period of one year or more must be in writing

Employment Contract Contents

•Job description and title

•Salary/wage and benefits such as pension and medical

•Term of contract

•Leave(maternity, parental, educational, vacation)

•Confidentiality

•Termination terms

Restrictive Covenants

•items in an employment contract that outline conditions, promises, and restrictions of the employee with regard to the business.

•Must be reasonable or else the court will not enforce

•Example: Where a trade secret exists, the employee would have to sign an employee contract promising not to reveal the trade secret.

Non-Compete Restrictive Covenant

•Prevents an employee from competing directly against an employer during, and after, employment for a period of time and within a certain geographical region.

Non-Solicitation Restrictive Covenants

Prevents an employee from stealing clients from an employer during, and after, employment for a period of time and within a certain geographical region

Restrictive Covenant Test

1) Does the employer have a proprietary interest in need of protection?

•Confidential info, customer base, business relationships, trade secrets

2) Is the clause reasonable in terms of duration and geographic scope?

•Greater scope = shorter duration

3) Does the covenant prohibit competition generally or is it limited to barring solicitation of clients of the former employee?

•Do not want to prohibit competition

Dismissal

•occurs when an employer informs an employee that they are no longer employed at their business.

•An employee can be dismissed  for “just cause” or “unjust cause”.

Wrongful Dismissal

•occurs when an employer does not have the basis to dismiss an employee; there is no cause for dismissal under their contract or under a statute of law.

•Employee is not given proper notice

Also called *unjust dismissal*.

Employee Can be terminated:

1. By either party giving reasonable notice
2. By pay in lieu of notice: the employer giving the compensation that should have been earned in that notice period
3. Immediately with just cause

•May dismiss an employee with notice for any reason unless it violates human rights legislation

Termination Pay

•payment by the employer to the employee when an employee is fired for the time they would have been paid had they not been fired and been given notice.

•Occurs when an employer does not give dismissal notice.

Severance Pay

•where the employee is provided termination or separation pay based on the specific duration of their employment and they lose their job.

•Calculated by the employee’s salary multiplied by the number of weeks/years worked up to a specified number of weeks/years.

Reasonable Notice

1) What does the Employment Agreement say?

•Start here because that is our governing document

•Court will follow this as long as it is above ESC minimum

•If contract is blank or below the minimum, court will then go to statutory minimums as a starting point

2) What is the statutory minimum and is it appropriate in these circumstances after considering several factors?

•If yes, then court will apply statutory minimum

•If no, court will increase the amount of notice period under their common law authority

•ESC only cares about length of employment

ESC Common Law Boosters

•Length of service

•Type of job

•Age of employee

•Qualifications

•Availability of similar employment

•Bad-faith conduct

•The more common law factors that are in favour of the employee, the more notice/severance the employee will receive

Constructive Dismissal

•Occurs when the employee has not been fired but believes the employer has not complied with the terms of the employment contract.

•Terms of an employee’s employment significantly changed, or the employee’s position within the organization is made so difficult, effectively forcing the employee to quit. \\

2 types:

•Unilaterally change the nature of the employee’s position

•Create, or allow, a toxic work environment to exist 

Just Cause

•dismissal requires no notice

•Actions that are grounds for dismissal:

•Using drugs or alcohol at work.

•Being unable to do the work because of lack of skills or knowledge.

•Being dishonest.

•Disobeying a supervisor.

•Disobeying the rules of the organization.

•Having a conflict of interest.

•Being involved in an activity contrary to the employer’s interests

Layoffs

•Running out of work or employer financial problems are not just cause for termination

•Reasonable notice or pay in lieu is required

•Some collective agreements and provincial legislation provides for temporary layoffs

Wrongful Leaving

•Quitting without proper notice

•Employees must give employer reasonable notice before departing

•Employment contract may set notice

•Following serious breach of the employment contract, an employee may leave without notice

•Employees may be sued for :

•Breach of confidence

•Breach of valid restrictive covenant

•Breach of fiduciary duty (if management or executives)

Property Law

* a field of law that includes a broad range of legal rights and duties in the areas of real property and personal property

Property Determines

•An individual or organization owns an item.

\- has the right to possession of the item.

•Has the right to transfer an interest in the item.

•Has the right to stop someone else from using the item or occupying a space.

Real Property

•land, including everything attached to it.

•Includes houses, fences, and central air conditioning units.

Personal Property

\-all property that is not real property

\-intangible or tangible

Tangible Personal Property

•things that can be touched that are movable.

•Furniture, consumer goods.

•Sometimes called *chattels*.

Intangible Personal Property

•things that can’t be physically touched

•Reputation, goodwill.

•Sometimes called a *chose in action*.

Intellectual property

a type of personal property resulting from an individual’s creative activities

Fee Simple Ownership

•the most absolute form of land ownership, including the right to exclusive possession and the right to transfer the land for an indefinite period of time.

•Includes the right to buy, sell, and use land as security to borrow money, occupy, lease, or pass to another person through a will.

Life Estates

•upon the death of a life tenant property reverts back to original owner

Leasehold Estates

•land leased to a tenant for a specific period of time

Tenancy in Common

•two or more people share an undivided interest in property with each owning a designated portion of title

Joint Tenancy

•two or more people own the entire property

•With a right of survivorship

•Can be severed

Land Recording Systems

•The registry system

•The land titles system

Registry Systems

provide a public record of who owns the land as well as any encumbrances/debts that may affect title to the real property

•a system of land registration operated by provincial governments to record interests in land.

•Generally requires title to the property to be searched back 40 years for the current owner’s interest to the land to be considered clear.

Does not validate or confirm ownership.

Land Titles System

•a system of land registration under which the provincial government guarantees the accuracy of the title to the land.

•A party can file a claim for compensation if they experience financial loss due to an error in the system.

Taxes: Land

•Land ownership gives rise to certain taxes at the provincial and municipal level of government.

•Upon purchase, a land transfer tax based on a percentage of the purchase price of the property is charged. q

Mortgage

•a debt using real property as security.

•A mortgage is registered against the property under the appropriate land registration system.

line of credit

•a debt arrangement under which a lender agrees to make a maximum amount of money available to a borrower.

Acceleration Clause

•term in the mortgage agreement that permits the mortgagee to demand immediate payment of the full amount of the loan in the event of a default.

Power of Sale

•a remedy available to the lender under a mortgage allowing the sale of the real property in the case of default.

Judicial Sale

•a court-ordered and -administered sale of property after default under a mortgage.

•Funds from the sale are applied to the outstanding debt.

•The borrower is personally liable to pay any additional money towards the debt.

Fixed Tenancy

\-tenancy with a fixed end and beginning date

periodic tenancy

\-a tenancy that renews automatically at the end of the relevant rental period

4 types of commercial leases

1. Net Lease
2. Lease
3. Gross lease
4. Semi-gross lease

Net lease

•in which the tenant pays a fixed amount as rent as well as a percentage share of the landlord’s expenses relating to the operation.

Lease

•under which, in addition to the payments made under a net lease, the tenant pays for structural repairs to the premises as well.

Gross lease

\-in which the tenant pays a fixed amount as rent on a regular basis.

Semi-gross lease

•under which the landlord assumes responsibility for certain expenses under the base rent received from the tenant.

Quiet Enjoyment

•the right of the lessee to occupy and use the leased premises without interference by the landlord.

Right of Distress

•the right of a commercial landlord to seize and dispose of the tenant’s property following nonpayment of rent.

Right of Forfeiture

•the landlord’s remedy of evicting the tenant for breach of an obligation under the lease.

Periodic Lease: Termination & Rent Increase

•Weekly – 1-week notice, from the first day of the week

•Monthly – 3-months’ notice, from the first day of the month of the notice period

•Tenant – 1-month notice

•Yearly – same as monthly, but tenant must give 2-months’ notice

Fixed Lease: Termination & Rent Increase

•Cannot increase rent during lease

•Cannot terminate during lease, unless tenant is in breach or property is sold

Damage Deposit and Inspection

•Amount cannot be more than 1-month rent

•Deposited in a separate account, that earns interest

•Tenant has legal right to the interest

•Repaid within 10 days after termination

•Tenant must agree to deductions

•Must meet inspection rules to deduct for damages

•Walkthrough at move-in and move-out

•Tenant has opportunity to attend

Tenant and Landlord sign off on damages

Tenancy Breach Remedies: Landlord

•Arrears of rent

•Damages for damage to property

•Compensation for overholding tenant

•Recovery of possession

•Terminate tenancy

Tenancy Breach Remedies: Tenant

•Terminate tenancy

•Damages

•Abatement of rent

•Compensation for performing landlord’s obligations

Bailment

•the legal relationship that arises when the elements of ownership and possession of personal property are intentionally divided for a period of time.

Consignment

•the transfer of possession of goods from one person to another for the purpose of offering the goods for sale.

Sole Proprietorship

a business operated for a profit by one individual who is responsible for the debts and liabilities.

Partnership

•a legal relationship between two or more persons carrying on a business for the purpose of earning a profit.

Joint Venture

•a business activity, usually for a specific project or time period, carried on by two or more parties according to terms and conditions set out in a contract.

Equity Joint Venture

•a separate legal entity is created such as a corporation or a partnership, with each party contributing capital or assets and participating in control through an ownership interest

-Follow rules of a corporations

Contractual Joint Venture

•*-* based on written contractual arrangements in which the parties address issues such as:

•Capital contributions and financing.

•Arrangements concerning management of operations.

•Allocations of profit and loss.

•Dispute resolution procedures.

General Partnership

•The advantage of a general partnership is the simplicity and informality involved in using it to organize a business.

•A disadvantage is that a partnership may be established unintentionally by the parties, with all the responsibilities attached to being a partner.

•Unlimited Liability

•Each partner is personally liable for the debts, actions, and obligations of the other partners to an unlimited degree.

•This liability is “joint and several.”

Rights & Duties of Partners

•The right to share equally in the profits of the business.

•Equal say in management decisions.

•Partnership will automatically dissolve upon the death or bankruptcy of a partner.

•A partnership is not a separate legal entity from the partners.

•Income is allocated to the individual partners according to their percentage interest and taxed at the partner’s personal rate.

•A partner is considered an agent for the other partners. and consequently

•A contract signed by one partner is binding on all the partners.

Partnership FIduciary Duty

•A partner must disclose any conflict of interest.

•Must not compete with the partnership.

•Must not take personal advantage of information that becomes available through the partnership.

•Account for all profits

•Not use partnership property for personal benefit without consent

Partnership Agreement

•an agreement among all the partners in which such issues as management and procedures for carrying on the business, the division of profits and contributions, and dispute resolution are addressed.

Limited Partnership

•consists of at least one general partner that is liable for the debts and obligations of the partnership to an unlimited degree and at least one limited partner whose liability is limited to the amount contributed to the partnership business.

•The limited partner may not take part in managing the business.

Government registration required