Describe the legal framework that is provided for the employment contract free essay sample

Employment contracts are encased by many legal frameworks which significantly influence the how the contracts are interpreted and enforced. These legal frameworks include tests used by courts to determine who is an employee and how these tests were altered by the Pointe-Claire v. Quebec case trialed by the Supreme Court of Canada, and aspects of contract law which govern the establishment of employment contracts. It is critical to determine who is an employee and who is an independent contractor because not only do most protective employment statutes pertain only to employment contracts (England, 2008, p. 16), but an employee has certain obligations under various legislation including the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act, the Employment Standards Act, the Workers Compensation Act, and the Labour Relations Code 9or the Canada Labour Code if the employee is regulated federally). Employees are also protected by the â€Å"reasonable notice† of termination of employment entitlement under the common law unless the employment contract includes an express provision regarding termination (Flanagan, Ravary Boyd, 2005, p. 1). Courts within Canada establish employee status by using a variety of tests; however three components are commonly exercised when coming to a decision. Courts conclude that an employer must demonstrate a high level of bureaucratic control over employment in regard to the where and when it occurs; a worker must be economically reliant on an employer; and a worker cannot be an entrepreneur operating a business, but must form a portion of the employer’s organization. The demonstration of control is essential to the employment relationship due to the subordination of the employee to the clout of the employer. Economic reliance showcases the central policy of protective employment legislation, which, essentially, shelters susceptible employees. The requirement of an employee being an integral part of the employer’s business operations, rather than being an entrepreneur is required since protective employment statutes and common law severance requirements are intended to protect employees from possible mistreatment by employers (England, 2008, p. 19). The most popular formulation, however, is Lord Wright’s â€Å"fourfold test†. This test is commonplace because it is believed that a single test does not accurately consider complicated conditions of modern day industry, leading to the development of more intricate means of determining if a party is an employee or in business for themselves. A fourfold test would be more appropriate is cases involving the level of control demonstrated by the party over the scheduling and conduct of work performance; whether the party possesses the tools, supplies, or equipment used to perform the work; whether the party has an opportunity to profit; and whether the party could experience a loss. These elements determine the employment relationship by formulating if the party is performing the work for their own behalf or for a superior. Lord Denning’s business integration test is another widely used formulation. This approach believes that under a service contract, a party is employed as part of the business and their work is performed as an important part of the business. Under a contract of services, a party’s work only assists the business rather than being an integral part of operations. Many factors are assessed under this method to determine whether the party is an employee or an independent contractor. Ownership of tools and equipment insinuates independent contractor status if the party has made a generous investment in tools and equipment, and implies employee status if only a small amount of capital was invested. The possibility of economic gains and losses is also considered, meaning a party with a considerable investment in the business (beyond their labour) is generally considered to be an independent contractor rather than an employee. The regularity of employment is another key factor since if a party works solely for one employer, the party is considered to be an employee whereas if a party habitually works for various employers, the party is considered to be a contractor. An employee typically performs work personally, while an independent contractor may possibly appoint the work to employees or, in some cases, outside subcontractors. The legal status of the worker is taken into account because if the worker as incorporated their own business and carries out the contract under the business name, the worker would more than likely be viewed as an independent contractor. In consideration of public image, the relationship will bear a resemblance to employee status if the worker’s impression to their coworkers and the general public is reflective of a regular employee. In regard to official contractual portrayals of employment relationships, courts look at the â€Å"economic realities† of the relationship in use. Additionally, there is no Canadian law that prevents any parties employed part time, casually, at home, or through an employment agency from being viewed as an employee (England, 2008, pp. 20-22; Filsinger, 2010, p. 78; Flanagan, Ravary Boyd, 2005, pp. 1-2). It is argued that the tests currently used to determine employee status are insufficient because they do not include many of the workers who require the protection of the legislation due to their susceptibility to employers. Current tests assume a broad understanding that can depict the majority of relationships of vulnerability; however some level of flexibility is not only inevitable, but also enviable. A more productive approach may be to add a new category of â€Å"dependent contractor† and stipulate which statutory and common law privileges are and are not appropriate for this new category (England, 2008, pp. 22-23). The 1997 Supreme Court of Canada case, Pointe-Claire v. Quebec, had great influence over the tests used in the determination of an employment contract, especially in the situation of determining who the employer is in a tripartite setting. In the case, Pointe-Claire hired an employee through an employment agency. The employee’s wages were paid via the agency, but the employee worked under the supervision of a city manager. The court determined that the most suitable approach for this case was to consider the factors relevant to the employer-employee relationship, which led to the resolve that the employee was in fact an employee of the city of Pointe-Claire (Foster, n. d. , Lesson 4). In short, the Supreme Court of Canada held that the core of a worker-employer relationship in a tripartite situation is control over working conditions, which requires deliberation of which party has control over the selection, hiring, remuneration, discipline, training, evaluation, assignment of duties, and working conditions of the worker. The degree to which the worker is incorporated into the business as well as the worker’s tenure was considered as well. One of the most critical aspects of this case is the knowledge that even if an employee is placed through an employment agency, the employee may still be considered an employee of that employer. In this case, the employee was predominantly viewed as an employee of the City because of the control it exercised over the employee – more so than the employment agency. However, elements such as remuneration, stipulations of equipment, work obligations, hours of work, income tax deductions, and the assignment of work were also considered to establish who the employee’s employer truly was (Foster, n. d. , Lesson 4). The Supreme Court of Canada concluded that the City was the employee’s employer since the City performed many of the conventional aspects of an employer, and because the employee had the same conditions of work as the City’s other employees – ultimately, the employee performed her work within a system created by the City rather than the employment agency (Pointe-Claire v. Quebec, 1997, p. 1029-1030). Employment contracts tend to be vague, resulting in the need for routing of fundamental terms and conditions to deter ambiguity in the future. When negotiating an employment contract, the terms included cannot breach minimum statutory standards, must not be viewed as imbalanced and are required to truthfully exhibit the type of work performed (Foster, n. d. , Lesson 7). Terms typically included in employment contracts include the following: job description, remuneration, employment term, termination clause, probationary period, relocation expectations, benefits, restrictive covenants (including non-disclosure, non-solicitation, and non-competition clauses), ownership of intellectual property clauses, choice of law, corporate policies, entire agreement clause, inducement, independent legal advice, severability clause, and golden parachute (Filsinger, 2010, pp. 96-105). A written employment contract is more advantageous than an oral agreement for many reasons. A written contract lessens the risk of any misunderstandings, speaks to any litigious issues early on in the relationship, and limits the amount of uncertainty (Filsinger, 2010, p. 89). Since there is no way in which to include every possible occurrence over the course of the relationship, employees and their council must make certain that the contract is unambiguous and should pay tribute to how the terms within the contract may be interpreted (Foster, n. d. , Lesson 7). When a dispute arises regarding an issue not addressed in a contract, a court introduces â€Å"implied terms† into the agreement, meaning the court deems which terms would likely have been included in the contract if the parties had negotiated the disputed issue and regards those terms to be included in the employment contract (Filsinger, 2012, p. 90). If a party is unsatisfied with the terms included in their employment contract, they are able to question the contract’s enforceability by claiming the contract entailed a lack of consideration, inequality of bargaining power, obsolesce, the failure to abide by minimum statutory standards, or the use of ambiguous language. Consideration is typically given by the pledged exchange of payment for work performed, which results in issues if an employee begins work before the contract is settled. To avoid this situation, employers should ensure the employment agreement is concluded before the employee is scheduled to begin work. Employment contracts can be questioned if a party feels an inequality of bargaining power existed during contract negotiations. To decrease the risk of this problem, employers should make certain the contract terms demonstrate a realistic balance between both parties’ interests, present the candidate with a copy of the anticipated contract for review, incorporate a condition outlining that the candidate had the chance to obtain legal advice upon signing the contract, and make the candidate aware of key terms and have the candidate initial them to demonstrate understanding and acceptance. If the contract no longer reflects the employee’s actual responsibilities, the contract can be challenged on the ground of obsolescence. Employers should bring up to date the employment agreement when necessary. If the contract does not meet the minimum statutory standards, the contract terms will be deemed null and void. Lastly, if a court finds the contract terms to be ambiguous, it may apply the contra proferentem rule, meaning the ambiguous language may be construed against the party who created the contract since the party could have eluded the issue by using more clear language (Filsinger, 2010, pp. 91-95).