Business Law Lecture: Employment, Labour, Agency, and Corporate Law
Employment Law Foundations
Definition of an Employee: Employees enter into a contract of employment with an employer, offering their labour in exchange for wages, benefits, and other relational returns. They are considered subordinates to their employers.
Definition of an Independent Contractor: These individuals enter into a commercial contract, offering their services in exchange for revenue. They possess autonomy and are presumed to watch after their own interests as they run their own businesses.
Importance of Status Determination:
Regulatory Requirements: Application of employment standards depends on the status.
Vicarious Liability: Employers are vicariously liable for employees but generally not for independent contractors.
Tax Treatment: Different rules apply for income tax and payroll deductions.
Worker Protection: Employees require protection from unreasonable employer actions, whereas contractors do not receive the same statutory protections.
Legal Tests to Determine Employment Status
The Control Test: An age-old test assessing how much control the employer has over the worker. While essential, control alone is no longer the decisive criterion.
The Organization or Integration Test: Evaluates the extent to which the worker is integrated into the employer's business and whether the work performed is core to the business rather than peripheral.
The Fourfold Test: Articulated in by Lord Wright in Montreal v. Montreal Locomotive Works. It looks at four main criteria:
Control over the worker by the employer.
Ownership of tools required for the work.
Chance of profit for the worker.
Risk of loss for the worker.
Note on Labeling: The label given by parties to the relationship is not decisive; courts look at the actual nature of the work.
Implied Terms in Employment Contracts
Employer Conduct:
Provide a reasonably safe work environment.
Compensate employees for work performed.
Provide reasonable notice of termination.
Duty of good faith performance, including treating employees with decency, respect, and dignity.
Act in good faith and with decency when terminating employees.
Do not impede an employee's ability to perform assigned work.
Employee Conduct:
Obey lawful orders of the employer.
Be honest.
Provide reasonable notice of resignation.
Advance the employer’s economic interest and serve faithfully.
Perform work competently and safely.
Do not compete against the employer.
Do not harass others.
Employment Standards (ES)
Nature of Standards: These are minimum standards that employers cannot derogate from to the employee's disadvantage. Compared to Europe, Canadian standards are considered weak.
Jurisdictions:
Federal: Canada Labour Code, Part III.
Saskatchewan: SK Employment Act, Part II.
Core Components:
Minimum wage.
Paid vacation and paid holidays.
Standard hours of work and overtime pay.
Pay on termination/severance.
Notices for termination of employment.
Maternity and parental leave.
Other unpaid employment leaves.
Human Rights Law (HRL)
Scope: Exists at both federal (Canadian Human Rights Act, 1985) and provincial levels (The Saskatchewan Human Rights Code, 2018).
Objective: Prohibits discrimination to ensure equal employment opportunity. It does not prohibit discrimination based on performance, seniority, experience, or education.
Enforcement: Cases are heard by Human Rights Commissions/Tribunals, not the courts.
Prohibited Grounds in Saskatchewan:
Religion and Creed.
Family status and marital status.
Sex and sexual orientation.
Disability.
Age.
Colour.
Ancestry, nationality, and place of origin.
Race or perceived race.
Receipt of public assistance.
Gender identity.
Specific Protections: Prohibits discrimination in employment applications, advertisements, and by trade unions. Protects against intimidation for filing a complaint.
Termination of Employment Agreements
Methods of Termination:
Expressed Term: Fixed contract duration or expressed termination clause.
Implied Term: Employer terminates with reasonable notice.
Resignation: Employee gives expressed notice or reasonable notice.
Frustration: Performance becomes impossible due to an unforeseen event.
Summary Dismissal: Termination without notice for a serious breach.
Constructive Dismissal: Employee claims the employer repudiated the contract.
The Bardal Factors (Reasonable Notice): Based on Bardal v. Globe & Mail Ltd.. Notice depends on cases-specific circumstances:
Years of Service (YOS): More years roughly equate to more notice.
Age: Older employees (especially ) typically receive more notice.
Employment Type: Managerial positions traditionally receive more notice (though this factor is diminishing).
Availability of Similar Employment: Harder economic times or specialized skills increase the notice period.
Inducement: If the employee was lured away from a secure job.
Summary and Constructive Dismissal
Summary Dismissal: Known as the "capital punishment of employment law." Requires a high standard of fundamental breach.
Grounds: Gross incompetence, dishonesty, insubordination, severe safety violations, off-duty conduct, (threats of) violence, and breach of faithful service.
Consequences: Damaged reputation, lost UI eligibility.
Constructive Dismissal: A legal construct where significant employer breaches allow the employee to treat the contract as terminated.
Triggers: Changes in compensation/benefits, relocation, change in job duties, unpaid suspension, harassment, or temporary layoffs.
Threefold Test:
Was there a breach of an implied or expressed contract term by the employer?
Would a reasonable employee conclude the conduct was a substantial breach (objective test)?
Did the employee treat the contract as terminated (no condonation)?
Introduction to Labour Relations (LR)
Union Status: Unions represent employees; currently, approximately of Canadian workers are covered by Collective Bargaining Agreements (CBAs).
Employer Obligation: Once a union is certified, the employer must negotiate in good faith.
Schools of Thought:
Business Unionism: Focuses on worker rights and working conditions within the firm.
Social Unionism: Aims to influence broader government social and economic policies.
Legal Framework:
Federal: Canada Labour Code, Part I.
Saskatchewan: The Saskatchewan Employment Act, Part VI.
Key Principles: Right to join, negotiation in good faith, no strikes/lockouts during a CBA, minimum CBA life of year.
Union Certification and Grievances
Certification Methods: Card-check (Federal), Vote (Federal and SK), Voluntary Recognition, and Automatic/Remedial Certification.
Grievance Process: The most common way to resolve CBA disputes. Types include Individual, Group, Policy, and Employer grievances.
Note on Control: The union, not the individual employee, decides whether to settle, withdraw, or arbitrate a grievance.
Labour Arbitration: Meant to be a speedy alternative to courts. Decided by a single arbitrator or a panel. Decisions are final and binding, subject only to judicial review (not appeal) by courts.
Arbitration Remedies: Damages (wages/benefits), aggravated damages, removal of discipline, reinstatement, or awarding a denied job.
Duty of Fair Representation (DFR): Unions must not act in a way that is discriminatory, arbitrary, or in bad faith toward employees. Most complaints involve grievance handling.
Industrial Conflict
Strikes: Regulated in SK under SK Employment Act, section .
Legality in SK: Requires unionization, no CBA in place, failed negotiations, successful strike vote, failed conciliation, a -day cooling-off period, and hours notice.
Lockouts: Regulated under section . Mirrored requirements to strikes but requires a motive to compel employees to agree to terms.
Alternatives: Voluntary interest arbitration, mandatory interest arbitration (for essential services), back-to-work legislation, and first contract arbitration.
Law of Agency
Core Relationship: The Agent is authorized by the Principal to bind them in contracts with Third Parties. The Principal remains liable; the agent is not personally liable if the third party is informed.
Creation of Agency: By contract, by statute (e.g., partners as agents of a firm), by appointment (officers), by conduct (apparent authority), and by necessity (emergencies).
Obligations:
Agent: Good faith, reasonable care, act in the best interest of the principal, confidentiality, obedience to lawful instructions, keeping funds separate, and no sub-agency without permission.
Principal: Good faith, payment for services, and indemnification for expenses.
Agency Types and Liability:
Disclosed Agent: Identity of both known; Principal liable.
Undisclosed Agency: Identity unknown to 3rd party; Agent liable.
Disclosed Agent, Undisclosed Principal: Principal identity hidden (e.g., auctions); Principal liable.
Fictitious Agency: Principal does not exist; Agent liable.
Ratification: Principal can approve an unauthorized act within a reasonable time; must be for the entire transaction.
Sole Proprietorships and Partnerships
Sole Proprietorship: Simplest form, no separate legal entity, unlimited liability. Profits are added to owner's income.
General Partnership (GP): A relation between persons carrying on business in common with a view of profit (The Partnership Act, 1978).
Liability: Joint and several liability for all partnership debts incurred in the ordinary course of business.
Fiduciary Duty: Partners must act in utmost good faith, not compete with the firm, and account for benefits derived from firm property.
Limited Partnership (LP): Requires at least one general partner (unlimited liability) and one limited partner (liability limited to investment; must not manage business).
Limited Liability Partnership (LLP): Hybrid for professional firms (lawyers, accountants). No limitation for the LLP itself, but partners have limited liability for the negligence of others.
Corporate Law: Nature and Incorporation
Constitutional Powers: Federal corporate law (CBCA, 1985) allows operation across Canada; provincial law (SKBCA, 2021) regulates companies within boundaries.
Separate Legal Entity: A corporation can own property, sue, be sued, and contract. Shareholders (SH) only have a property-like interest in shares.
Piercing the Corporate Veil: Exceptions where the separate entity status is ignored: to prevent injustice, for fraud, or when the corp acts as a mere agent.
CBCA Incorporation Process:
Restrictions: Incorporators must be , not bankrupt, and have capacity.
Requirements: Articles of Incorporation, Registered Office Address, First Board of Directors, Name-search report, and a fee (online).
Articles of Incorporation: Define name, office, classes/number of shares, number of directors, and transfer restrictions.
Corporate Governance and Structure
Hierarchy: Shareholders elect Directors; Directors appoint Officers; Officers handle day-to-day operations.
Shares: A bundle of rights including voting, receiving dividends, and receiving property upon dissolution.
Common Shares: Usually voting, residual claim on dissolution.
Preferred Shares: Priority on dividends and capital return; often non-voting.
Dividends: Declared by directors; can only be paid if the corporation passes financial solvency tests. Consigning to an illegal dividend triggers personal liability for directors.
Shareholder Meetings: Annual and Special. Notice must be - days. Quorum is usually majority.
Proxies: Written authorization for someone to represent a SH. If no proxy is appointed, management nominees are the default.
Unanimous Shareholder Agreement (USA): Allows SH to restrict director powers and manage the corporation themselves.
Duties and Liabilities of Officers and Directors
Fiduciary Duty (CBCA s. 122(1)(a)): Act honestly and in good faith with a view to the best interests of the corporation. Owed to the corporation, not SH.
Conflicts: Self-dealing (must disclose material interests), taking corporate opportunities, and competing with the corporation.
Duty of Care (CBCA s. 122(1)(b)): Exercise care, diligence, and skill of a reasonably prudent person. Objective standard.
Business Judgement Rule: Courts will not second-guess reasonable business decisions made honestly and prudently on reasonable grounds.
Liability:
Tort: No automatic liability for corporate torts unless there's significant personal involvement (e.g., Berger v. Willowdale AMC).
Statutory Liability: Specifically for unpaid wages, environmental damage, or illegal dividends.
Criminal Liability: Identification theory (Common Law); broad "representative" and "senior officer" definitions under the Criminal Code.
Reference Case Study: Piercing the Corporate Veil
Case: Chris (DreamGreen Inc.) vs. Angela.
Facts: Chris owned a successful landscaping company with annual income of about . Upon divorce, he owed Angela over . He limited payouts to himself to frustrate her claims. He had previously mixed personal and business assets and called himself a "sole proprietor."
Outcome: The court pierced the corporate veil, allowing Angela to enforce the debt against DreamGreen Inc. because the company was used as a vehicle to frustrate legal support obligations.