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Can employers ask staff to take a lie detector test? • Can an employment contract be for life?

Can employers ask staff to take a lie detector test?

Can an employer request that its employees undergo lie detector tests?

Answer: For the most part, Canadian employment standards legislation does not contain comprehensive prohibitions against the use of lie detector tests in the employment context. The major exceptions to this are the unique provisions in the Ontario and New Brunswick Employment Standards Acts, which specifically prohibit employers from either asking or actually requiring an employee or job applicant to take a lie detector test. Not only is the employee expressly entitled to refuse to submit to such a test, but the employer cannot require, enable or influence, either directly or indirectly, an employee to take a test.

Despite their apparent breadth, these prohibitions do not completely outlaw the use of lie detector tests. Employers are still entitled to suggest to an employee that he consider submitting voluntarily to a test, and even to arrange an appointment for the employee. It would appear that the mischief at which the section is aimed is “pressure” by the employer with actual or potential employment-related consequences for the employee.

Furthermore, there is an increasing awareness and legislative protections of privacy rights in Canada. It is possible that if this information was obtained without the employee's consent or if it is being used for a purpose other than that for which it was collected, there would be a violation of the employee's personal data protection. At present, the Personal Information Protection and Electronics Act (PIPEDA) applies to employment relationships in a “federal work, undertaking or business” (for example, banking, telecommunications or airlines). As of Jan. 1, 2004, PIPEDA will apply to non-federal organizations unless a province has enacted a "substantially similar" law. To an employer, the single most important principal to remember is: “Get consent.”

While Canadian employers, with the exception of Ontario and New Brunswick, can require their employees to take lie detector tests, it is still advisable that when doing so they obtain the employees' consent.

Can an employment contract be for life?

Is there a maximum length of time an employment contract can be for? Can an employment contract be for life?

Answer: In order to answer this question it is important to understand the distinction between a fixed-term contract of employment and an indefinite-term contract of employment. A fixed-term contract is one that terminates automatically after the expiry of a fixed-term or upon completion of a defined project. Thus, the term of a fixed-term contract could be for the life of the employee.

This is in contrast to an indefinite-term contract of employment, which is for an indefinite period of time, but which can be terminated by either party by providing reasonable notice of termination. If a specific term of employment is not stated in an employment contract, it is assumed that it is for an indefinite term.

In Ontario section two of the Employers and Employees Act limits the term of employment contracts, both fixed and indefinite term, to a maximum period of nine years. But this limitation period can be waived under section 11(2) of the act in the case of an employee who is a manager, officer or superintendent. Furthermore the courts have held in Ontario that a contract of employment for a term of longer than nine years will still be enforceable for its full term if it provides for termination of the contract before the end of the nine-year period

While it is possible to have a fixed-term contract for the life of an employee, the courts have held that such an agreement requires clear and unequivocal language to be binding. The reason for this is the profound financial responsibility of an employer for guaranteeing lifetime employment.

In the case of a fixed-term contract of employment, the employee is not entitled to reasonable notice of termination if the contract ends after the expiry of the fixed term. The employee is only entitled to recover damages if the employer terminates the employment relationship before the term expires. The damages in such circumstances are equivalent to the wages and benefits the employee would have earned over the balance of the term, subject to the employee’s duty to mitigate her losses by seeking suitable alternative employment. Therefore, in the case of a fixed-term contract for life, the damages would be equivalent to lost wages for the life of the employee subject to mitigation. This is in contrast to termination of an employment relationship for an indefinite term, which would only entitle the employee to damages equivalent to a period of reasonable notice (generally the maximum period of reasonable notice is two years).

In Foreman v. 818329 Ontario Limited [2003] O.J. No. 3327, the Ontario Court of Appeal ruled on how a contract that stipulated the employee could not be dismissed, should be interpreted. The issue before the court was whether a contract that stated that the employee shall not be dismissed should be found to be a fixed-term contract for life.

The court stated that in order for a fixed-term contract to be effective, the terms of the contract must be clear and explicit. In the absence of such clarity, any ambiguity will be held against the party seeking to enforce a contract for life. Stating that the employee shall not be dismissed did not constitute clear and unequivocal language that employment was for life or until retirement. Thus while contracts for life can be enforceable, they will require clearer articulation because of the financial consequences which flow from such an agreement. (For more information on this case, see page 3112 of CELT # 398.)

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].

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