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

AuthorGeoffrey England
Pages84-103
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.

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