Determining an Employee’s Start Date
Feb 06, 2014
by Selina Pellerin and Constance Robinson
When it comes to the start of an employment relationship, it sometimes can be a bit confusing, and yet the answer to this question can have a significant impact on the employer’s obligations to an individual. As is often the case when the answer turns on an interpretation of the law, the response is, “it depends”. It depends upon the facts of the case, the words and representations made between the parties, and what statute or regulation is being used to interpret the status of the individual. In Schwartz v. Canada,  S.C.J. No. 15, the Supreme Court of Canada ruled that under the Income Tax Act, the definition of employment made a distinction between the start of the contractual relationship agreed upon by the employer and the employee and the moment, according to the terms of the contract, at which the employee is bound to start providing services to the employer. In that case, the Court ruled that the statutory requirement that one must be “in the service” which is triggered only when the individual is obligated to provide services under the terms of the contract. It follows that “loss of employment” cannot occur before an employee becomes under obligation to provide services to his future employer because he cannot, before that moment, be “in the service” of that employer.
While some may take this decision to mean that an employment relationship doesn’t exist unless actual work has started. However, because the Schwartz decision turned on the specific language of the Income Tax Act, it would be unwise for employers to assume that they do not owe an employment candidate any obligation before their start work date. In the employment sphere, there are many cases where the courts have recognized that an As noted by England in Halsbury’s Law, there are several decisions where courts have held that an employment contract can come into force before work actually begins. This can have an impact not only on reasonable notice claims, but also on determining when probationary periods are completed. This was recently an issue where an offer of employment was affected by foreign worker permit issues.
In Essar Steel Algoma Inc. v. United Steelworkers of America, Local 2251, 2012 CanLII 444421 (ON LA) (Smetek Grievance) the grievor received a job offer on May 18 from the Employer and was scheduled to commence work May 31. However, after the offer was signed, the Employer realized that the grievor was a foreign national and proceeded to apply for the required documents with Service Canada in order to procure a work permit. On June 4, the required documents were denied. The Employer applied for the required documents again and was successful; the documents were issued on June 29. Subsequently, the grievor obtained a work permit on August 4 and started work August 7.
It turned out that the grievor was not suitable for the position for which he was hired and his employment was terminated in January 2011. The employer believed that the employee was still probationary, whereas, the employee grieved, claiming he was a permanent employee. The collective agreement established that the probationary period was 520 hours worked. However, a new agreement came into force August 1, 2010 holding that the probationary period for new employees was 1040. At the time of termination the grievor had worked more than 520 hours but less than 1040 hours. To determine whether the grievor was a probationary employee or had permanent status, the arbitrator had to answer the question: when did the grievor’s employment begin?
The arbitrator concluded that, in the circumstances, the grievor began work after August 1, 2010 and that he was thus subject to the 1040-hour probation period, and therefore was still a probationary employee in January at the time of his termination. The arbitrator based his conclusion on the following considerations:
1) The initial employment offer was rescinded when the employer was unable to obtain the initial work permit.
2) Without a work permit, the grievor could not legally accept the Employer’s offer.
3) Common mistake: The initial offer of employment was based on a mistaken expectation that the grievor would be able to commence work within a reasonable time.
The decision upholds the principle that an employment contract is formed at the time that an unconditional offer of employment is accepted (subject to the terms of the agreement). It suggests that there is an inferred condition of being legally available to commence work before the contract takes effect.
Caveat: The decision was limited to the facts of the case. Employers that are concerned that there may be a disagreement as to when the employment relationship began should seek legal advice.
Warning: This information is not intended to constitute legal advice and should not be
relied upon in lieu of consultation with appropriate legal advisors in your own jurisdiction.
Link to the Decision: http://www.canlii.org/en/on/onla/doc/2012/2012canlii44421/2012canlii44421.pdf