The Common Law Obligations of the Employer Under the Contract of Employment

• Author: Geoffrey England
• Pages: 84-103

CHAPTER 5

THE COMMON LAW

OBLIGATIONS OF THE

EMPLOYER UNDER

THE CONTRACT OF

EMPLOYMENT

The employer’s obligations to its employees derive from the express and

implied terms of the contract of employment.1 As we saw in Chapter 4,

which dealt with the common law obligations of the employee,2 express

contractual terms are generally of secondary importance in delineating

the employer’s duties. Because the parties cannot foresee at the date of

hiring all the contingencies that might occur over the course of their

future relationship, and therefore cannot bargain comprehensively and

precisely about them,3 the f‌ield is left in large measure to the standard-

ized implied terms. Typically, the express duties of the employer will

be found in its written and verbal offer and the employee’s written and

verbal acceptance of that offer; they will also be found in any ancillary

documentation that the parties expressly agree will be incorporated

into the contract, personnel manuals, works rule books, benef‌it hand-

books, and other personnel memoranda among them. In contrast, in

some countries such as Britain, legislation requires the employer to

provide the employee with a written statement describing a compre-

hensive range of contractual matters, including the legal identity of the

employer, job title, wages, vacation and holiday pay, sick pay, notice of

termination, length of vacations, pension benef‌its, disciplinary rules

1 See generally on t his topic G. England, R. Wood, & I. Chri stie, Employment Law

in Canada, 4th e d., looseleaf (Markham, ON: Lex isNexis Canada, 20 05–) c. 10.

2 See Chapter 4.

3 See the illum inating analysi s by P.R. Milgrom & J. Robert s, Economics, Organ-

ization and Managem ent (Englewood Cliffs, NJ: Prent ice-Hall, 1992) at 329–30.

84

The Common Law Obligat ions of the Employer85

and procedures, and dispute resolution machinery.4 This information

must be given to the employee within thirteen weeks of the date of

hiring and must be updated regularly thereafter. As yet, no Canadian

jurisdiction has enacted equivalent legislation, although in 2006 the

Arthurs Report recommended that it be incorporated into the federal

Code.5The report also suggested an innovative remedy for employer

violations of the provision, namely, that the employee’s recollection of

the terms of the contract shall be presumed to be accurate unless the

employer can prove otherwise.

The disparity of bargaining power between many low- and mid-

skilled workers and their employer may be ref‌lected in express con-

tractual provisions that impose harsh termination entitlements on the

employee or confer broad, unfettered discretionary powers on the em-

ployer in key areas, such as changing job duties and granting or with-

holding bonuses or other perquisites. Most courts will interpret harsh

termination clauses contra proferentem the interests of the employer.6

Furthermore, several courts have held that clauses giving the employer

a broad discretion to adversely affect the employee’s interests are sub-

ject to an implied term requiring that such discretion be exercised rea-

sonably and in good faith. For example, in one case where an express

term permitted the employer to unilaterally modify a salesperson’s ter-

ritory, it was held that the parties impliedly understood that any modi-

f‌ications would be for “good and valid” business reasons and would be

implemented “reasonably.”7 However, the Alberta courts have refused

to imply a residual proviso of reasonableness and fairness into express

discretionary clauses that permit employers to terminate the employ-

4 Employment Protect ion (Consolidation) Act 1978 (U.K.), 1978, c. 44, ss. 1–11. There

is also a directive of the European Economic Community to similar effect: “An

Employer’s Obligation to In form Employees of the Conditions Applic able to the

Contract or Employme nt Relationship,” Directive 91/533/E.C.; O.J. No.L 288/32,

18/10/91. For a criticism of thi s directive, see J. Clark & M. Ha ll, “The Cinderella

Directive? Employee Rights to Information about Conditions Applicable to Their

Contract or Employme nt Relationship” (1992) 21 Indus. L.J. 106.

5 Canada, Com mission on the Review of Federa l Labour Standards, Fair ness at

Work: Federal Labour Standards for th e 21st Century, by H.W. Arthurs (Ottawa:

Commission on t he Review of Federal Labour St andards, 2006) at 80– 84 [Ar-

thurs Report].

6 See Chapter 4.

7 Snelling v. Tenneco Canada Inc. (1992), 40 C.C.E.L. 122 at 128 (B.C.S.C.). In a

similar ve in, see Truckers Garage Inc. v. Krell (1994), 3 C.C.E.L. (2d) 157 (Ont.

C.A.); Greenberg v. Meffert (1985), 18 D.L.R. (4th) 548 (Ont. C.A.); Cohnstaedt v.

University of Regina, [1989] 1 S.C.R. 1011 at 1019. All of these cases ar e author-

ity for the principle t hat the employer’s express di scretionary powers mu st, by

implication, be e xercised in good faith and f airly.