Startup Edmonton: Employment Law Primer

Alison Walsh

Agenda

1. Employment Relationship:• Employment Contracts.• Employment Standards Code.• Common Law.

2. Termination of Employment.

3. Human Rights.

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Employment Relationship

• Employment Relationships are governed by a variety of sources:• Contract;• Statute; or• Common law.

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Employment Relationship: Employment Contract• Employment Contract:

• The relationship between an employer & employee is a contract.• Can be:

• In writing (formal or informal); • Oral; or• Combination of both.

• Terms can be express or implied.

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Employment Relationship: Employment Contract• Typical clauses in an employment contract include:

• Probationary period;• Term of length of the contract;• Salary and benefits;• Job description;• Termination provisions;• Confidentiality provisions;• Non-competition and non-solicitation provisions; and• Intellectual property provisions.

• Terms of contract must adhere to the minimum standards set out in the Employment Standards Code.

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Employment Relationship: Employment Standards Code

• In addition to the employment contract the employment relationship is governed by employment standards legislation.

• In Alberta provincially regulated employees, which is most employment relationships, are governed by Employment Standards Code:• Sets out minimum obligations of employer;• Cannot contract out of the ESC; and• Covers a variety of matters regulating the employment relationship, e.g. hours of work, overtime,

vacation, minimum notice periods, etc.

• Federally regulated employees are governed by the Canada Labour Code.

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ESC: Vacation Leave Standards

• After 1st year of employment, employee is entitled to vacation leave.• 2 weeks after each of the first four years of employment. • 3 weeks after five consecutive years of employment.

• Employers must give, and employees must take vacation in the 12 months after employees are entitled to vacation.

• Vacations must be given in one unbroken period.• Exception: employee may take shorter period at their request, must be at least 1 day long.

• If employers and employees cannot agree on vacation date, employers can give 2 weeks’ notice of employees’ vacation time.

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ESC: Vacation Pay

• Most employees, including part time, are entitled to vacation pay and vacation leave.

• Employee entitled to vacation pay upon hiring.

• Exempt = Listed in Regulations (Salespersons, Realtors, etc.)

• Calculating Vacation Pay:• Monthly employees: Divide monthly pay by 4 1/3.• Other than monthly: 4% (1-4 years of employment) to 6% (5+ years of employment) of their wages.• “Wages" does include salary, money paid for time off instead of overtime pay or commission.• “Wages,” does not include overtime earnings, general holiday pay, vacation pay, termination pay,

discretionary bonuses, tips and gratuities, or expenses and allowances.

• Must be paid out at least 1 day prior to vacation, or next regular pay day, if not regularly paid.

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ESC: Overtime Standards

• Generally, overtime is triggered where employee works:• > 8 hours per day; • > 44 hours per week; or• Which every is greater.

• Overtime rate = 1.5 of the employee’s regular wage.

• ALL employees are entitled to overtime (including salaried employees) except:

• Supervisors;• Managers; • Employees dealing with confidential information; and• Whose duties does not, other than in an incidental way, consist of work similar to that performed by

other employees who are not so employed.

Also exempt:• Salespersons, Professionals and Others.

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ESC: Overtime Agreements: Time Off in Lieu of Overtime • Banking time or “pay in lieu” of overtime requires an overtime

agreement.

• Elements of a valid overtime agreement include:• In writing;• Time off with pay will be provided at the employee’s regular wage rate;• Time off must be provided and taken within three months;• If time off is not provided and taken as required, the employee must be paid overtime of at least 1.5

times the employee’s wage rate for the overtime hours worked; and• 1 months’ written notice to terminate or amend the agreement.

• When employee is terminated, any unused time in lieu is forfeited or paid at regular wage rate.• Any unused OT must be paid at 1.5 the wage rate upon resignation/termination.

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ESC: General Holidays and Holiday Pay

• If general holiday falls on a day the employee would have been working they must be paid at least their average daily wages.

• If employee works on a general holiday, the employer must:• Pay at least the average daily wage of the employee, plus pay an amount that is at least 1.5 times

the employee’s wage rate for each hour of work; or• Pay the employee at least the employee’s wage rate on each hour of work that the employee worked,

plus provide the employee with one day of holiday no later than the employee’s next annual vacation.

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ESC: Other Provisions

• Record keeping;

• Payment of wages;

• Minimum wages;

• Rest periods;

• Maternity leave;

• Parental leave;

• Reservist leave;

• Terminations; and

• Employment standards complaint process, etc.

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Employment Relationship: Common Law

• Common Law:• Law that has been made by judges over the years.• Common law requirements are above and beyond what is required by Employment

Standards Code.• Imposes a duty of good faith and fair dealing on all employers when dealing with their

employees.

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Termination of Employment

• Dismissal of employees:• Three sources:

1. Employment Standards Code2. Common Law3. Employment Contract

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Termination of Employment: Employment Standards Code• Termination for cause:

• No obligation to provide notice or pay in lieu of notice; and• Cause not defined in the ESC.

• Termination without cause:• Code sets out minimum obligations of employer based on employee’s length of service:

Employee Service Notice Required3 months but < 2 years 1 week2 years but < 4 years 2 weeks4 years but < 6 years 4 weeks6 years but < 8 years 5 weeks8 years but < 10 years 6 weeks10 or more years 8 weeks

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Termination of Employment: Common Law

• Termination for cause:• No obligation to provide the employee with notice of termination or pay in lieu of notice;• Generally “cause” equates to serious misconduct, habitual neglect of duty, incompetence or willful

disobedience;• Downsizing an operation does not constitute cause;• Performance problems usually will not be sufficient unless there is progressive discipline; and• To determine if cause exists, the court will look to see if the employee’s conduct irreparably damaged

the employment relationship.

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Termination of Employment: Common Law

• Termination without cause:• Employers are obligated to provide reasonable notice or salary and benefits in lieu of

reasonable notice;• Failure to do either (or combination) may result in action for wrongful dismissal; and• In determining reasonable notice, courts decide each case on its own merits and

generally consider: • Length of service;• Responsibilities of employee/position; • Age;• Remuneration; and• Availability of similar work.

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Termination of Employment: Employment Contract

• Employer & employee can agree by contract on notice period when termination without cause.

• Cannot agree on notice period less than minimum requirements, under the Employment Standards Code.

• Does not preclude employee from commencing wrongful dismissal action.

• Usually contracts are used to offset common law and provide certainty of terms.

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Practicalities• No cause terminations – pay in lieu vs. written notice.

• Can be preferable to have an employee removed from the job site; employee has a greater opportunity to look for work.

• Lump sum payment greater than employment standards minimums.• Should be a reasonable settlement that will make an employee seriously consider the offer; and• Should also take into consideration an employees duty to mitigate his damages by getting a new job.

• Release:• If an employer provides a lump sum payment above the employment standards

minimums, they should get a release.

• Combination of working notice and payment.

• Salary continuance.

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Human Rights

• Alberta Human Rights Act prohibits discrimination in workplace based on the protected grounds:• Race, religious beliefs, colour, gender, physical disability, mental disability, age, ancestry, place of

origin, marital status, source of income, family status, gender identity, gender expression or sexual orientation.

• Prohibits discrimination in terms of hiring, firing and other terms and conditions of employment.

• Limitations on protected grounds may be allowed in workplace if employer can show a BFOR.

• Alberta Human Rights Act also imposes duty on employers to accommodate employees to point of undue hardship.

• Prior to dismissing an employee with a disability the employer should seek legal advice.

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Social Media and the Law

• Regulating and/or disciplining employees in relation to social media and other electronic communications touches numerous legal issues:• Off-duty conduct; • Harassment and bullying; • Discrimination and human rights legislation; and• Privacy.

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Social Media and The Law

Introduce a Social Media Policy:

• Clear statement that employees should not engage in certain types of conduct:• Disclosure of company confidential information;• Workplace gossip;• Posting racially or sexually offensive language or graphics, etc.; and• Disparaging co-workers, vendors or customers.

• Policy should:• Encourage responsible use of social media;• Promote use of privacy settings / controls;• Outline what to do in the event of a complaint; and • Describe consequences and possible dismissal where social media is improperly used in the

workplace.

• Obtain employee acknowledgement and acceptance of terms of policy.

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Other Relevant Legislation

• Occupational Health & Safety:• Legislation sets and enforces the mandatory minimum safety standards in the workplace.• Alberta: Occupational Health & Safety Act, Regulations and Code.

• Workers’ Compensation:• Legislation provides mandatory no fault insurance for workers injured on the job.• Alberta: Workers’ Compensation Act and Regulations.

• Privacy:• Governs the collection, use and disclosure of personal information and personal employee

information.• Alberta: Personal Information Protection Act.

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Additional Resources

• Dentons Venture Beyond• www.dentonsventurebeyond.com

• Patent Support for StartupsJay Haugen:• Registered patent agent in both Canada and United States.• Services include:

• A patentability opinion on the startup’s technology;• Preparation and filing of a US provisional patent application; and• A Freedom to Operate opinion to determine if the technology can be freely

commercialized.

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