Do I need an employment contract?
There is always a contract between an employer and employee, whether it is written or not. Although an employment contract can be in the form of a written agreement, it can also be a verbal agreement, or implied by the conduct of the parties. Therefore, in most circumstances you do not need a written employment contract in order to create an employment relationship. However, there are several issues that may arise for employers who do not use written employment contracts.
Firstly, a written employment contract can set out the terms upon which the employment relationship comes to an end, and can limit the amount of notice or pay in lieu of notice that an employee is entitled to upon termination without cause. It is common for written employment contracts to specify the notice period and/or the severance in lieu of notice, payable to the employee upon termination of the employment relationship. The agreement may limit the notice to the amount that is set out in the Employment Standards Act, or it may specify an additional amount or notice or severance payable to the employee on termination. However, these terms and conditions that limit severance and/or notice, will generally only be enforceable if the agreement is properly implemented and uses clear and specific language in a written employment contract. In absence of such language, an employer will be required to pay employees who are terminated without cause an amount of notice that is reasonable under the common law, which could potentially be significantly higher than the notice requirements under the Employment Standards Act.
A written employment contract can also provide an employer with the right to make changes to the employment relationship as needed. This could include changing duties, changing compensation, business restructuring, changing policies, and any other changes that may become necessary as a result of business needs. Without a written employment contract with properly drafted language providing such a right, employers will risk being found to have constructively dismissed employees, by making certain changes to the employment agreement. A constructive dismissal is treated as a termination without notice, and will require the employer to provide pay in lieu of notice based on what is considered reasonable notice under the common law.
In addition, a written employment contract can provide employers with the ability to impose certain restrictions on employees. These are called restrictive covenants. A restrictive covenant can prevent an employee from taking trade secrets belonging to the employer, from sharing confidential information, from starting up business in competition with the employer, and from taking employees from the employer.
Finally, a written employment agreement provides a written record of the rights and obligations of both parties. This is helpful both in terms of providing clarity and certainty to both parties, and for preserving a record of the terms that were agreed to at the time the employment relationship began.
Overall, while it is not always necessary to have a written employment contract, it is always a good idea. If you currently have employees working under an oral employment contract, it is advisable that you speak to an employment lawyer about how you can implement a written employment contract with both your current and future employees.
If my employment contract changes, am I required to sign the new contract?
Due to ongoing changes in the law or industry practices, employers may wish to make changes to existing employment agreements. In such circumstances, the employer will typically ask existing employees to sign a new employment agreement. Employees are not required to sign the new employment agreement. However, if the employer provides the employee with reasonable notice of the changes; pay in lieu of reasonable notice, and the employee refuses to sign the new contract, the employment will be deemed to have come to an end.
On the other hand, if the employer does not give an employee notice or pay in lieu of notice for the upcoming changes to the employment agreement, the changes may be considered constructive dismissal. Constructive dismissal occurs when a fundamental term of the employment agreement is unilaterally altered by the employer to such extent that it constitutes a repudiation of the employment agreement. Not every change will be sufficient to trigger a constructive dismissal. The legal test for constructive dismissal is whether a reasonable person would consider the change imposed by the employer to fundamentally breach the employment agreement. In other words, if the employer makes a substantial change to an essential term of an employment agreement, the employee may be considered to have been dismissed by that change, and will be entitled to compensation. In such circumstances, an employer will be required to pay constructively dismissed employees an amount of notice that is reasonable under common law, which can be significantly higher than the notice requirements under the Employment Standards Act, unless there is an enforceable written employment agreement that limits the employee’s entitlement to notice or severance in lieu of notice.
Is it illegal not to pay minimum wage?
The BC Employment Standards Act requires that employers pay at the minimum wage rate or higher. The current minimum wage is $15.20 per hour. If an employee is covered by the Act, it is illegal to pay them less than the minimum wage set out in the Act.
However, some types of employees have different minimum wage rates. These are set out in the Employment Standards Regulations. For instance, liquor servers, live-in camp leaders and home support workers, resident caretakers, and piece rate workers are all subject to different minimum wage rates.
Additionally, there are certain types of work to which the Act does not apply. For example, babysitters are not covered by the Employment Standards Act and therefore have no minimum wage standards. Certain professions are also not subject to specific portions of the employment standards legislation
If you are unsure whether you are paying or being paid the legally required amount, check the Employment Standards Act, the Employment Standards Regulation, or seek legal advice for more information.
Am I entitled to vacation pay?
All employees are entitled to a minimum amount of vacation pay. Section 58 of the Employment Standards Act sets out the minimum vacation pay owed to employees.
Section 58 states that after 5 calendar days of employment, an employee is entitled to vacation pay in the amount of at least 4% of the employee’s annual wages for the year of employment. After 5 years of employment, this amount increases to 6%.
An employer is always free to give employees vacation pay or vacation time over and above the minimum amount. The minimum vacation pay outlined in section 58 corresponds to the minimum vacation time that is owed to employees, which is set out in section 57. If you are an employer and you are looking to provide additional vacation time to your employees, you will likely want to consider increasing the vacation pay as well. This way, you will compensate the employee at their regular wage rate for the duration of the vacation period.
Vacation pay can either be paid to an employee at least 7 days before the beginning of the employee’s annual vacation, or it can be paid on the employee’s regular paydays if it is agreed to in writing by both the employee and employer. This agreement is typically found in the employment agreement or, in unionized workplaces, the collective agreement. It is for this reason that many employees will not receive vacation pay while they are on vacation. Rather, the employee’s entitlement to vacation pay will be included on the employee’s regular paychecks.
When an employment relationship ends, regardless of the reason, the employee must be paid out the employees accrued entitlement to vacation pay.
TERMINATION OF EMPLOYMENT
What is constructive dismissal?
In facing the ongoing challenges presented by COVID-19, employers are restructuring operations in order to suit changing business needs. Such changes may require employers to make changes to its relationships with its employees. Employers should proceed with caution, as making changes to employment terms creates a risk of constructive dismissal.
Constructive dismissal occurs when a fundamental term of the employment agreement is unilaterally altered by the employer to such extent that it constitutes a repudiation of the employment agreement. The legal test for constructive dismissal is whether a reasonable person would consider the change imposed by the employer to fundamentally breach the employment agreement. In other words, if the employer makes a substantial change to an essential term of an employment agreement, the employee may be considered to have been dismissed by that change, and will be entitled to compensation.
Certain employment agreements may allow employers to make specific changes to the employment relationship without triggering a constructive dismissal. However, any changes falling outside the scope of the agreement will be at risk. Essential terms of employment agreements may include, but are not limited to:
- significant reductions in responsibilities or duties;
- decreases in salary or benefits;
- abusive treatment;
- changes in form of salary;
- changes in hours;
- transfers to new locations; and
A court will consider the nature and extent of the change to determine whether a constructive dismissal occurred. Where a constructive dismissal has occurred, an employee will be entitled to pay in lieu of reasonable notice under the common law, which can substantially exceed the notice requirements under the Employment Standards Act, unless there is an enforceable written employment agreement that limits the employees entitlement to notice or severance in lieu of notice.
Whether constructive dismissal will occur in any given circumstance is very fact specific. A legal professional can advise you on the best course of action should you wish to implement changes with your employees, or if you are an employee who has had your employment changed.
Do I need to write a resignation letter?
If you are resigning from your employment, there is generally a requirement that you give advanced notice to your employer of your resignation. In some circumstances, such notice does not need to be in writing. Whether or not notice needs to be in writing will depend on a number of factors.
Firstly, if the employment agreement (or collective agreement, in a unionized environment) specifies that a written notice of resignation must be provided to the employer, then the employee will need to provide a written notice of resignation in order for the resignation to be effective. If the employee fails to do so, they could be terminated for cause.
The amount of notice required will also depend on the employment/collective agreement. If no notice is specified, the notice provided must be reasonable. What is reasonable will depend on the nature of the employee’s position and the ability of the employer to find replacement workers. The purpose of the notice is to provide the employer with sufficient time to adjust to the employee’s departure. Higher level employees will therefore require longer periods of notice.
While it is not common for employers to sue former employees for lack of notice, employees can nonetheless be liable for failing to provide the employer with sufficient notice of resignation in some circumstances. As such, if you are an employee with significant responsibilities, or you work in a highly specialized position, it is advisable that you seek legal advice regarding the appropriate notice period.
Am I legally required to give two weeks notice when resigning?
In BC, there is no legislated requirement that employees provide notice of resignation. However, it may still be required either by contract or under common law.
Firstly, if your employment agreement states the amount of notice you are required to give upon resignation, you are required to give that amount of notice. For employers, the best approach is always to outline the required notice in the employment agreement, as it provides clarity and certainty to both parties as to what is required. If you are required to give notice by way of your employment agreement, and you fail to give the required notice, you may be terminated for cause.
If there is no notice period provided in your employment agreement, the common law requires employees to give “reasonable” notice of their resignation. Reasonable notice may be more or less than two weeks, depending on your position, responsibilities, and the availability of replacement workers. In high level positions, the notice requirement may be several months.
The purpose of the notice is to provide the employer with sufficient time to adjust to the employee’s departure. While it is not common for employers to sue former employees for lack of notice, employees can nonetheless be liable for failing to provide the employer with sufficient notice of resignation in some circumstances. As such, if you are an employee with significant responsibilities, or you work in a highly specialized position, it is advisable that you seek legal advice regarding the appropriate notice period. If you fail to give proper notice, in most circumstances the employer will not suffer sufficient loss to justify taking legal action against a former employee. However, the employer is nonetheless entitled to claim against the employee for any losses as a result of failure to give proper notice.
Who is eligible for employment insurance?
Employment Insurance (EI) is a benefit provided to individuals who lose their employment through no fault of their own and are available for and able to work but have been unsuccessful at securing employment. You may be eligible for EI if you:
- were employed in insurable employment
- lost your job through no fault of your own
- have been without work and without pay for at least seven consecutive days in the last 52 weeks
- have worked for the required number of insurable employment hours in the last 52 weeks or since the start of your last EI claim, whichever is shorter Temporary COVID-19 relief
- are ready, willing and capable of working each day
- are actively looking for work
Certain types of employment have different eligibility requirements. These include teachers, fishers, farmers, Canadian Force Members, self-employed people, and residents and workers outside of Canada.
You will not be eligible for EI if you voluntarily leave your job without just cause, were dismissed for misconduct, are unemployed due to participation in a labour dispute (ex. strikes), where you are on a period of leave that compensates for a period in which you worked under an agreement with your employer, more hours than are normally worked in full-time employment, or where you are confined to a jail, penitentiary, or other similar institution.
Can you get EI if you quit?
Employment Insurance (EI) is a benefit provided to individuals who lose their employment through no fault of their own, and are available for and able to work but have been unsuccessful at securing employment. If you leave your position involuntarily, you are generally not entitled to EI. However, if you are able to demonstrate that you had “just cause” for quitting your job by showing that it was the only reasonable alternative in the circumstances, you may qualify for EI even if you quit. An example of some of the reasons that will suffice include:
- you were harassed (sexually or otherwise);
- you were discriminated against;
- you need to provide care for a member of your immediate family;
- your employer is doing things that break the law; or
- you need to move with a spouse or dependent child to another place of residence.
Whatever the reason may be, you must be a position where quitting your job is the only reasonable alternative. For quitting to be the only “reasonable” alternative, you will need to have taken alternate steps to address the issue. This might include discussing the issue with your employer, using available methods of recourse through legislation and internally through the employer, and even attempting to transfer positions.
Am I entitled to a record of employment?
A Record of Employment, or “ROE”, is a form that employers must complete for employees when the employee experiences certain interruptions of earnings. The form requires information regarding the employee’s employment history, such as how many hours the employee worked, how much they earned, and why they are no longer working. An ROE may be paper or electronic, and is ultimately submitted to Service Canada. Service Canada uses this information to determine the employee’s entitlement to employment insurance benefits.
There are many reasons for which you may be entitled to an ROE from your employer. The general rule is that any employee who quits, retires, is terminated or laid off, or experiences another interruption of earnings of seven calendar days or longer is entitled to an ROE. You are also entitled to an ROE if your salary falls below 60% of your regular weekly earnings because of illness, injury, quarantine, pregnancy, the need to care for a newborn or a child placed for the purposes of adoption, or the need to provide care or support to a family member who is critically ill.
Additionally, several special situations may call for the employer to issue an ROE. These include but are not limited to:
- When Service Canada requests an ROE
- When your pay period type changes
- When an employee stays with the employer but is transferred to another CRA Payroll Account Number, unless there was no break in earnings and a single ROE will be issued that covers both periods of employment if the need arises
- When there is a change in ownership of the employer, unless there has been no break in earnings and the former employer’s payroll records are available to the new employer and the new employer agrees to issue a single ROE covering both periods of employment if the need arises
- When an employer declares bankruptcy, unless there is no break in earnings and the records are available to the receiver, and the receiver agrees to issue a single ROE covering both periods if the need arises
There are exceptions to the above. Real estate agents, for example, are only entitled to an ROE when their licence is surrendered, suspended or revoked, unless they stop working due to illness, injury, quarantine, pregnancy, the need to care for a newborn or child placed for adoption, or to care for a family member who is critically ill. Similar exceptions exist for employees with non-standard work schedules, and commission salespeople.
If you are a part-time, on-call or casual worker, you will not be issued an ROE for every interruption of earnings of 7 days or more. However, you may request one from your employer. If you have not done any work or earned any insurable earnings for 30 days, or if you are removed from the active employee list, you will be automatically entitled to an ROE.
How long does an employer have to issue a record of employment?
An employer must issue a ROE within five calendar days of the first day of an interruption of earnings OR the day the employer becomes aware of an interruption in earnings.
If you issue ROEs electronically and your pay period is weekly, biweekly, or twice per month, you will have up to five calendar days from the end of the pay period in which the interruption of earnings occurs.
If you have a monthly pay period or 13 pay periods per year (every four weeks), you must issue electronic ROEs by whichever date is earlier:
- five calendar days after the end of the pay period in which an employee experiences an interruption of earnings; or
- 15 calendar days after the first day of an interruption of earnings.
Service Canada provides detailed guidelines to employers regarding the issuance of ROEs. More information can be found on the Service Canada website.
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