CHAPTER : THE CONTRAC T OF EMPLOYMENT
The principles of contract law assume that the terms of the parties’ bargain will reect
their actual intentions, express or implied. The role of the courts is traditionally limited to
enforcing the terms of the bargain; that role does not extend to imposing on the parties
obligations of the courts’ own making. In the employment context, however, judges have
fashioned a series of obligations implied by law to give content to the employment contract.
Those obligations reect judges’ views of what a fair employment relationship involves and
have changed over time, having regard to what they see as the “natural” content of the
employment relationship and the dictates of prevailing social values, whether those be fair-
ness between the parties or the requirements of ecient human resource management.
At the core of the employment relationship is the managerial prerogative — the employ-
er’s right to control the day-to-day functioning of the workplace. To give eect to this manag-
erial right, the courts deploy a series of implied rights to impose substantive obligations on
employees to respect and obey their employers, many of which are holdovers from feudal
employment regulation systems. In this sense, it can be argued that the courts have infused
a “status” element into the employment relationship, despite the predominantly contrac-
tual basis of that relationship. On the other hand, it can also be argued that, in recent years,
Canadian courts have made an eort to gradually move the common law of the contract of
employment in a direction that is more mindful of employee rights and interests, and have
crafted new implied terms to do so.
If the managerial prerogative is at the core of the employers’ rights, the right to reasonable
notice of dismissal, absent cause, is the primary measure of job security for employees. In other
words, at common law, an employee holds no contractual right to their job, but only a right to
be dismissed with reasonable notice, which they lose if they engage in misconduct constituting
cause. The common law model of dismissal is therefore a “reasonable notice” model. As will
be explored in Chapter , some Canadian jurisdictions have also developed statutory “just
cause” models of dismissal. A “just cause” model of dismissal oers higher job security and
dismissal protections to employees. Conversely, such a model decreases employers’ exibility,
because it is more dicult to terminate employees and shift the composition of the workforce.
The “just cause” model is the predominant model of dismissal in the United Kingdom. The
United States operates under the most exible or employer-friendly model of dismissal, which
is referred to as “at-will employment.” Under this model, employees are hired at will, and, with
some exceptions, either party may terminate the relationship at any time and for any reason.
The employment relationship is therefore understood at common law as a creature of
contract, although one with some special features. For some, the employment contract is
viewed as a relationship of freedom, because its creation and content is based on the indi-
vidual choice and agreement of the parties. Even if employees enjoy less bargaining power
than their employers, they are not obligated to enter into any particular employment rela-
tionship — they can choose between employers, and therefore still enjoy freedom over their
work choices. Others take a dierent view, and understand the employment contract as
creating a relationship of subordination, pointing to the illusory nature of “choice” in the
context of economic scarcity, high unemployment, and bargaining power imbalance. For an
overview of these two positions, see Claire Mummé, “Property in Labour and the Limits of
Contract” in Ugo Mattei & John Haskell, eds, Research Handbook on Political Economy and
the Law (Cheltenham, UK: Edward Elgar Publishing, ) –.