Implied Terms in Employment Contracts: Part 2 (Employers)

Earlier this month, I blogged about certain implied contractual terms that govern employees’ conduct. (You’ll remember that an implied term is one that is not written down anywhere or explicitly agreed to by employer and employee, but still has the same legal force as does an express term.)

In today’s post, I continue my focus on implied terms, and review four key implied duties that employers owe their employees.

  1. Obligation to Provide Reasonable Notice of Termination

Perhaps the most important implied term governing employers is the duty to provide employees with reasonable notice of termination. It is this duty that forms the basis of an employee’s common law right to severance. Employers must either give employees reasonable notice that they are being dismissed or payment in lieu of that notice – aka “severance”.

As with most implied terms, employers and employees can contract out of – i.e. expressly agree not to be bound by – this duty. However, they must do so clearly and unequivocally.

Keep in mind, however, that it is NOT possible to contract out of the provisions of the BC Employment Standards Act that entitle an employee to certain amounts on dismissal as compensation for length of service. (For a review of the basics on notice and severance, read my colleague Samantha Stepney’s post here.)

  1. Obligation to Treat Employees with “Decency, Civility, Respect and Dignity”

This implied term has been recognized relatively recently by Canadian courts. In Lloyd v. Imperial Parking Ltd., (1996), 25 CEL (2d) 97 (Alta. QB), the Alberta Queen’s Bench held that it is a fundamental implied term of any employment agreement that the employer will treat the employee with civility, decency, respect and dignity.

While the standard that employers must adhere to will vary depending on the work environment, the duty imports some basic requirements to treat employees fairly. Here are some examples of employer behavior that courts have found amounted to a breach of this duty of decency:

  • bullying employees
  • failing to stop verbal harassment by supervisors
  • being dishonest with employees
  • engaging in “unrelenting criticism”
  1. Obligation to Permit Employees to Report to Work

While employers have a right to dismiss their employees, as long as a person is employed, the employer has an obligation to permit him/her to come to work. This duty stems from the more general requirement that parties to a contract must fulfill the objectives of the contract and not hinder performance of the contract.

This duty may seem trite to some employers, however, it has some important implications that may not be so obvious. For one, temporary layoffs and unpaid suspensions are in breach of this implied term. In both cases, employers are preventing employees from reporting to work. An employer who wishes to institute temporary layoffs and unpaid suspensions must make sure the power to do so is expressly included in its employees’ contracts.

  1. Obligation to Compensate Employees for Work Performed

Again, this is another implied term that may appear obvious to most employers but which has some interesting implications. Employers are obligated to pay employees for work performed under Employment Standards legislation, however, there is also a common law requirement based on the legal principle quantum meruit – loosely translated, “the amount it deserves.” This implied term may be useful for individuals who have missed the limitation period under the Employment Standards Act

A limitation period is the amount of time that one has to bring a legal claim. The Employment Standards Act sets a six-month time limit for filing complaints. It also sets a six-month limit on the time period the Employment Standards Branch can go back to see whether an employer owes money to an employee.

However, employees that are seeking compensation for services, but have missed the limitation period under Employment Standards legislation, may sue their employer at common law for breaching its implied duty to compensate the employee for work performed.

This implied term also comes in handy for employees when a specific rate of pay has not been agreed upon. Courts will infer a fair and reasonable rate of pay for the services rendered.

Have questions about an employment contract? Contact us!

 


NOT LEGAL ADVICE. Information made available on the Kent Employment Law website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action, based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. One of our lawyers would be pleased to discuss any specific legal concerns you may have.

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