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Are employees covered by limited-liability contracts signed with customers? • Can a public holiday be moved to another day? • Do employees owe a fiduciary duty to an ex-employer if they have not signed a confidentiality agreement?

Are employees covered by limited-liability contracts signed with customers?

Question:
Among other things our organization is responsible for boat storage over the winter. In each customer contract there is a clause limiting liability of damage to their boats to $100. This past winter an employee caused more than $5,000 damage to a boat by negligently moving it in our storage facility. Is my employee protected by the limited liability contract I signed with the customer?

Answer: Case law indicates that, although not a party to the contract, there are certain situations where an employee will benefit from a limited-liability clause between a customer and an employer. The two main factors to consider are whether the clause is expressly or implicitly extended to the benefit of the employee, and whether the employee, seeking the benefit of the clause, was acting in the course of his employment, performing the very services provided for in the contract between their employer and the customer.

A fair and reasonable interpretation of the contract would include the employee under the limited liability clause. Regardless of the employee’s negligence, he was clearly performing the service his job entailed. In signing this contract there was a meeting of the minds between the employer and the customer. A limited-liability clause benefits both parties. The customer likely got a lower rate and the employer was not exposed to as high a risk in storing the boat.

It makes both commercial and common sense to protect the employee from liability in cases such as this because otherwise a potential plaintiff would be able to circumvent the contract and successfully sue the employee. If this were allowed employees would have to seek their own personal insurance, driving up the cost of their services to the employer and subsequently placing a higher financial burden on the customer.



Can a public holiday be moved to another day?

Question:
We operate a firm in Ontario. This year, Canada Day falls on a Thursday. Can we change the day off for July 1 to July 2?

Answer: It is important to provide you with an overview of the state of the law on public holidays in Ontario. The Employment Standards Act, 2000 (ESA) identifies eight days as being public holidays: New Year’s Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving Day, Christmas Day and Boxing Day. On these days employees are entitled to take off work and receive payment of their wages known as public holiday pay. If the public holiday falls on a day that would ordinarily be a working day the employer has a duty to give the employee the day off work and pay the employee public holiday pay. This duty exists provided the employee has met the eligibility requirements under the ESA unless there is an agreement between the employer and employee or if the employee falls into one of the identified exemption classes, such as employees of a hospital, a continuous operation, hotel, motel or tourist resort, restaurant or tavern.

If a public holiday falls on a day that would otherwise not be a working day, such as a weekend, the employee shall be given another day as a substitute for the public holiday no later than three months after the public holiday occurred.

An employer who wishes to have its employees work on a public holiday and give them another day off may do so, if the employee agrees to such a change. The employer may not impose such a change on an employee and it is the employee’s right to refuse such an agreement.



Do employees owe a fiduciary duty to an ex-employer if they have not signed a confidentiality agreement?

Question:
When an employee leaves a company in Ontario, if he has not signed a confidentiality agreement, does he still owe a fiduciary duty to the ex-employer?

Answer: The Ontario Business Corporations Act outlines the fiduciary obligations that directors and officers of a company owe to their corporation. But an evaluation of the case law demonstrates fiduciary duties are not limited to directors and officers of corporations. An employment relationship is elevated to a fiduciary level when an employer places his trust and confidence in an employee on a regular basis and relies on that employee in making business decisions that affect the organization.

It is not an employment contract per se but the employee’s privileged position that disentitles him from making unfair use of the information acquired in the course of his employment for the benefit of the former employee.

The difference in duty between a fiduciary employee and a regular employee leaving a company is the fiduciary employee is barred completely from soliciting clients of the former employer.

Because the fiduciary employee’s natural business advantage over the ex-employer, from knowing trade secrets and having established relationships with clients of the ex-employer, the reasonable period of non-solicitation is determined to be six months to one year.

Peter Israel is the head of Goodman and Carr LLP’s Human Resource Management Group. He can be reached at (416) 595-2323 or [email protected]. Address questions to [email protected].

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