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Don’t make these common employment law mistakes

A man standing at a desk holds a box of his belongings while gazing out the window

If I demote an employee but pay them the same, is that constructive dismissal?
Firing an employee due to poor job performance is fine, right?

Jessica Barrow from Perley-Robertson, Hill & McDougall LLP/s.r.l. dispels these common employment law myths, and more.

MYTH: An employee can sign an employment contract – even after they start working

For a contract to be enforceable, one of the key ingredients is “consideration.” That’s the quid pro quo of a contract – it’s an exchange of value.

In the employment context, this means I will hire you at X salary and in exchange you’ll do Y job pursuant to the terms of Z employment contract. If you hire someone, they start a job and you then try to get them to sign an employment contract later, the quid pro quo is already done. Now you’re asking them to agree to additional terms and conditions without receiving anything additional in return.

While consideration is generally somewhat commensurate with the thing that’s being exchanged, it doesn’t necessarily have to be money. You should consult an employment lawyer to determine appropriate consideration.

MYTH: I can fire an employee because of poor job performance

We often hear of employers working toward termination with employees they deem to be poorly performing but this will likely not provide an opportunity to terminate without proper notice under the Employment Standards Act (ESA).

A determination of just cause is needed, and the test for just cause is onerous and intended to address willful conduct – which means an element of intent. An employee who is simply performing their job poorly, even when they are doing so persistently, will generally not meet the definition for willful misconduct under the ESA.

There is nothing preventing you from terminating an employee who you aren’t seeing eye-to-eye with or who is not performing effectively (assuming the Human Rights Code is not engaged); however, those employees will be entitled to termination pay and possibly severance pursuant to the ESA. Where there is no legally enforceable termination provision limiting liability, termination pay beyond ESA minimums may also be owed.

MYTH: No managers are eligible for overtime

Under the ESA, managers and supervisors do not qualify for overtime if the work they do is managerial or supervisory. The title of manager, however, is frequently overused and will not be determinative. An employee with true managerial responsibilities will manage employees and will have the authority to hire, fire and/or terminate employees under their purview. It’s again going back to the quid pro quo. True managers are typically already being compensated for the elevated responsibilities associated with manager work.

MYTH: Constructive dismissal only applies when there is a reduction in pay

When making any significant changes to the terms or conditions of employment, employers should consider whether the change may be significant enough to constitute constructive dismissal.

While pay is one of the most obvious indicators of constructive dismissal, there are many others including loss of supervisory authority, being required to report to a previous subordinate or equal, toxic work environment, relocation without consent, significant shift changes or decreases in hours of work, substantial increase of workload, refusal to accommodate, and unjustified suspensions.

Bear in mind that outside of the legal risk, is the emotional reaction an employee might have and the resultant risk to relationships in the workplace. In assessing next steps, employers should consider the value of the employee to the organization and the legal risks, and consider taking steps to remediate the relationship and limit the wider impact on the organization.

Jessica Barrow is a partner in the Litigation Law Group at Perley-Robertson, Hill & McDougall LLP/s.r.l. Jessica’s practice focuses on employment law amongst other legal areas. 

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