Many disputes are rooted in, and later resolved on the basis of, policy. Or at least they should be. This applies in law as much as it does in life: Our courts do not always decide employment cases based on what is reasonable or just, but rather, on what makes for the best policy.
What are the policies that define the beginning, middle and end of the workplace relationship?
• Where there is no signed employment agreement, employers are held to a number of implied terms. These include the implied rule, from which constructive dismissal arises, that the contract’s fundamental terms will not be altered without the employee’s consent; the rule, from which discrimination claims arise, that human rights and other employment standards legislation are automatically included as a term of employment; and, not least, the requirement that gives rise to wrongful dismissal claims, that employees must receive reasonable notice of their dismissal.
• If there is a written contract, it must also meet a number of tests. The employee must, at least, be given the opportunity to negotiate the terms, or those that are punitive may not be enforced later on. This rule applies during the course of employment, except that something of greater value must also be offered, such as a raise or a promotion. Otherwise, the courts have reasoned, an employer could unilaterally impose new terms, and an employee would be left without the leverage to negotiate.
• Where an agreement departs from fairness and morality, courts will intervene. This most often occurs with terms surrounding termination. If those terms amount to something far less than what the employee would have otherwise received, the courts can turn to a number of exceptions (and in law there is always an exception) to provide a better level of protection.
• During the course of employment, where management’s conduct causes an employee to simply pack up and leave, it is not a true resignation but a dismissal and therefore, entitled to severance.
• Dismissal for cause, known as capital punishment in employment law, must be based on only the most serious forms of misconduct. If a contract can be terminated at an employer’s discretion then employers could simply allege cause in order to avoid paying severance, the courts have argued. As a result, even dishonesty or incompetence may have to be tolerated or it might be second guessed by the courts.
• There is an obligation to fire employees “nicely.” In its Wallace decision, the Supreme Court found the defendant’s conduct in handling a dismissal was so cruel that normal employment law damages, which indemnify lost salary only, would not adequately compensate Wallace for his distress. With the stroke of a pen, the duty of good faith then became the law of land.