The Importance Of Written Employment Contracts

The Supreme Court of Canada (SCC)

has written about the importance of work in our society1

in several leading employment cases over the past few years. Its

analyses conclude that because employment is so important in terms

of an individual's status and self-worth, the contract of

employment (while a contract and thus subject to the laws governing

contracts) is also deserving of special treatment. Accordingly, the

SCC has endeavored to balance what it obviously views as the

disparity of power between an employee and an employer. This view

has given rise to what many perceive as the pre-disposition of the

courts to "make the employer pay".

COURT RULINGS TEND TO FAVOUR

EMPLOYEES

This approach is easily demonstrated

in the determination of the reasonable notice period. The 24-month

ceiling originally reserved for those with extended periods of

service (mostly senior employees at the highest end of the scale)

is now not infrequently ordered for former employees with

significantly less service. Further, the curve is often adjusted to

award more than proportional damages to shorter-term former

employees. Former employees with relatively short terms of service

are typically awarded damages based on quite disproportionate

notice periods.

Dishonesty and/or theft ?

once considered slam-dunk causes for dismissal ? now

require a more contextual and proportional approach.2

Theft or dishonesty may not be cause for dismissal. At the same

time, the courts cling to the conclusion that there is no principle

such as 'near cause' which might reduce the notice period.

Nor is there a right to impose lesser discipline by way of a period

of unpaid suspension. The employee's action or inaction is

either cause or not cause for dismissal and the location of the

goalposts is often not clear.

Most employers have become familiar

with the 'Wallace bump'. This is the amount awarded to

former employees who, at the time of dismissal, were not treated

fairly by the employer. In the precedent-setting Wallace

case3, the SCC refused to recognize a duty of good faith

restricting the right of an employer to decide to terminate the

employment. The court did conclude, however, that when an employer

acted in a high-handed or callous manner at the time of dismissal

(such as wrongly alleging cause or not being straightforward and

honest about the reason for dismissal), the employee should be

compensated by way of an extra period of notice. Notably, the SCC

has recently gone out of its way to observe in passing that this

extra award is not subject to mitigation.4 In the very

recent Keays5 decision, the SCC has revisited

the awarding of Wallace damages...