The Contract of Employment at the Supreme Court of Canada: Employee Protection and the Presumption of Employer Freedom

IntroductionI. The presumption of employer freedomII. Reasonable notice of terminationIII. The law of summary dismissalIV. Extended damages for wrongful dismissalConclusionIntroductionOtto Kahn-Freund famously identified the contract of employment as the corner-stone of the modern employment relationship.1 R. W. Rideout later declared this cornerstone to have of rubble, the common law of contract being ill-suited, without endless distortion, to govern the employment relationship.2 Kahn-Freund himself saw the contract of employment, although the legal foundation of the employment relationship, as no less mask,3 fiction4 and figment of the legal mind.5 More recently, Bob Hepple has added riddle6 to the list and Bruno Veneziani has added facade.7 Hugh Collins has accused the contract of employment of being dysfunctional8 and Simon Deakin has cautioned that the employment relationship is a contract in the normal sense.9Canadian courts too have frequently noted the special nature of the contract of employment, pointing to its many characteristics that set it apart from the ordinary commercial contract.10 Perhaps most frequently cited by our courts in support of the need for special consideration of the uniqueness of the employment contract is Dickson C.J.'s observation, almost 25 years ago, that [w]ork is one of the most fundamental aspects in person's life, providing the individual with means of financial support and, as importantly, contributory role in society. A person's employment is an essential component of his or her sense of identity, self-worth and emotional well-being.11 Justice Iacobucci, in series of important wrongful dismissal cases,12 regularly invoked the former Chief Justice Dickson's words, stressing the importance of judicial attentiveness to these personal and sociological aspects of work, adding that not only is work fundamental to an individual's identity, but also...the manner in which employment can be terminated is equally important.13 In those cases, Iacobucci J. also emphasized the unequal balance of bargaining power that most often marks the employment relationship and that underscores the vulnerability of employees, particularly at the time of dismissal. Given the special nature of work and the inequality in bargaining power that places employees in vulnerable position in relation to their employers, he often reminded us, care must be taken in fashioning rules and principles of law governing the contract of employment.My aim in this paper is to critically examine the judicial treatment of the contract of employment in the Supreme Court of Canada's wrongful dismissal jurisprudence over the last two decades. In particular, I set out to challenge the view, most explicitly found in Iacobucci J.'s judgments, that only by exempting the contract of employment from the ordinary workings of contract doctrine or by resorting to public policy considerations can the common law of dismissal provide adequate protection for employees. I will examine three key employee-protecting doctrines in the Canadian common law of wrongful dismissal: first, the employee's default implied right to reasonable notice of dismissal under an indefinite term contract; second, the common law doctrine of just cause, which extends to employees protection from summary dismissal; and third, the employer's implied duty to refrain from harsh and unfair conduct in terminating the contract of employment. Each of these doctrines have been justified by the Court on the basis of what most would regard as extra-contractual considerations, most commonly on the grounds of the personal and sociological importance of work and the desire to mitigate the vulnerability of employees as group. I will argue that those same doctrines might alternatively be defended in purely contractual terms- that is, they might instead be justified more narrowly in terms of the workfor-wages exchange at the core of the contract of employment. …

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