The Common Law Obligations of the Employee under the Contract of Employment

AuthorGeoffrey England
An employee owes h is or her employer obligations under both the e x-
press and the implied terms of the employment contr act.1 Regardi ng
the employee’s express obligations, in Ch apter 3 we saw that employ-
ment contracts generally do not contain a detailed and comprehensive
list of the employee’s duties, except perhaps for higher echelon execu-
tives, sports stars, a nd entertainers. Usually, the contract of employ-
ment will state little about the employee’s obligations beyond providing
a brief job description and summar izing the basic pay, the basic hours
of work, and annual vacations. The most common exception is a re-
strictive covenant that prevents the employee from competing with
his or her employer within a def‌ined area and for a def‌ined time after
the employment relationship ends. We examine the law on restr ictive
covenants in this chapter. The explanation for the relative dearth of ex-
press terms in employment contracts is that the parties cannot, when
they are negotiating their contract, foresee all possible contingencies
that m ight occur over the lifetime of their relationship and deal with
them in advance. Consequently, the courts h ave had to f‌ill the gap by
implying terms into the employment contract, and the scope of t he
employee’s obligations to the employer at common law depends almost
exclusively on these implied terms.
1 For further det ailed elaboration on this topic , see G. England, R. Wood, & I.
Christie, Employ ment Law in Canada, 4th ed ., looseleaf (Markham, ON: Lex is-
Nexis Can ada, 2005–) c. 11 (II–III).
According to the general principles of contract law, terms must be
implied i nto a contract in order to give effect to the unstated factual
intentions of the parties; otherwise “freedom of contract” would be
jeopardized. In reality, courts often imply terms into contracts in order
to ref‌lect the judges’ perceptions of what the parties’ respective rights
and obligations ought to be as a matter of public policy. This has clear-
ly happened in the case of the employee’s implied obligations under
the employment contract. The courts have, over the years, developed
a standa rdized body of particula r obligations that are implied into all
employment contracts. The cornerstone of these particular obligations,
however, is an overriding residual duty of the employee to conduct
himself or herself in the best interests of the employer, usually referred
to as the “duty of f‌idelity.2 This duty is critically importa nt for employ-
ers. Because the employer cannot predict and set specif‌ic rules in ad-
vance for the myriad circumstances that can arise during the course of
a long-term employment relationship, it is essential that the employer
have the f‌lexibility to command obedience from its employees as new
circumstances arise.3 Plainly, it would be g rossly ineff‌icient if the em-
ployer had to renegotiate the ex press terms of the employment con-
tract every time an unexpected occurrence arose! The implied duty of
f‌idelity, therefore, delineates the scope of “managerial prerogative” at
common law.
Most of the ca ses on t he implied obligations of the employee ar ise
in the context of litigation over wrongful d ismissal, since t he employ-
er’s usua l reaction to a perceived breach of duty i s to f‌ire the worker
summarily without notice or wages in lieu. Consequently, the scope
of the employee’s implied obligations becomes inextricably interwoven
with the issue of whether the employer had “just cause” for summ ary
dismissal. We shall see in our examination of just cause how the rigour
of the employee’s implied duty of f‌idelity has been tempered to ref‌lect
modern notions of proportionality, equality, and fairness.4 The Charter
has ind irectly inf‌luenced the development of the common law greatly
2 The historica l antecedents of the employee’s duty of f‌idelit y can be traced to
the pre-Industr ial Revolution law of master and s ervant in England. See, for
example, A. Fox, Beyond Con tract: Work, Power and Trust Relation s (London:
Faber, 1974) at 154–59, 178–81, 184–88; D. Hay, “England, 1562–1875: The
Law and Its Use s” in D. Hay & P. Craven, eds., Masters, Se rvants and Magistrates
in Britain and the Empire, 1562–1955 (Chapel Hill, NC: Universit y of North Caro-
lina Pre ss, 2004) at 59.
3 The centralit y of this point cannot be overemph asized. See, for example, J. Go -
dard, “The Progre ssive HRM Paradigm: A Theoret ical and Empirical Re-Ex am-
ination” (1991) 46 Rel. Indus. 378 at 383.
4 See Chapter 9.
The Common Law Obligat ions of the Employee 51
in this respect. Although the Charter does not apply directly to private
contracts of employment, the courts have transposed its fund amental
values of fairness, equality, and proportionality into the contract of em-
ployment under the rubric of ma lleable contract law principles, such
as the implied duty of f‌idelity, “just cause” for dismissal, and others.5
However, an employer may sometimes sue an employee for da mages
to recoup losse s it has suf fered as a result of the employee’s breach of
implied obligations, and may seek an injunction to restrain breaches
of particular obligations, such as the duty not to compete or div ulge
conf‌idential information.
Any express terms in the employment contract regarding the employee’s
obligations to the employer will be enforced by the courts according to
their literal meaning. Only where the express terms are ambiguous can
the court s rely on ext rinsic evidence, s uch as the parties’ past practi-
ces in interpreti ng contractual language. If the contractual language is
unambiguous, however, the court normal ly applies the term inology in
question as it stands, no matter how unfair the judge might feel the out-
come to be.6 The courts will interpret contract ual langu age contra pro-
feren tem the interest s of the employer if the clause in question appears
to be unduly onerous for the employee, normally the weaker part y to
the bargain. Frequently, the employment contract will expressly state
that the employee’s obligations, along with other ter ms and conditions
of employment, are to be found in a personnel manual or in some other
documentation, in which case such documentation will be expressly
incorporated into the employment contract. Next, we examine the
most frequently litigated express term in the employment contract: the
“restrictive covenant.”
A restr ictive covenant seeks to prevent a n employee from exploit-
ing an employer’s trade secrets, conf‌idential information, or general
business goodwill, or from competing w ith the employer after t heir
employment relationship has ended. Not surprisingly, such clauses are
5 G. England, “The Impact of t he Charter on Individual Employ ment Law in Can-
ada: Rewr iting an Old Story” (2006) 13 C.L.E.L.J. 1.
6 Subject, of course, to the d octrines of unconscion ability and duress, which a l-
low unambiguous t erms to be avoided in limited c ircumstances. See C hapter 3,
Section B(3).

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