The Executive Director and Board of Directors Relationship


The Employment Relationship


Learning Outcomes:
Upon completion of this section, the learner will understand:

  • The significance of the employment contract and how it relates to non-union employees, employees covered by a collective agreement, and management employees.
  • The roles and responsibilities of agents of the employer and their relationship to employees.
  • The difference between agents of the employer and employees.
  • The difference between fiduciaries and non-fiduciaries. 

The Employment Contract:
The context of any employment relationship is the employment contract. The principles utilized in employment law regarding the employer and employee relationship are basically the same principles applied to employees covered under a collective agreement. The requirements in employment law regarding such activities as notice of termination and the duty to evaluate employees fairly and honesty during probation are basically the same; however, the process to determine if the employer conducted its actions in a legal manner and the remedy is usually different. 

Employment law has been described as defining a minimum level of rights and respect within the employment relationship. Case law helps define the employment contract, and that provides the employment standards for non-union employees. A collective agreement is just a collective employment contract that provides more detail regarding the employment relationship. Labour law clarified by case law (arbitration awards) helps clarify the contract language (collective agreement provisions). Employment law and labour law are evolving areas.

There are three basic processes to deal with disputes regarding conditions of employment:

  • Non-union employees utilize legislation (Saskatchewan Employment Act, etc.). The remedy to a dispute under legislation is usually an order to the employer to implement retroactively specific provisions required by the Act or to provide proper notice or pay in lieu of notice.
  • Unionized employees usually utilize the grievance procedure. It may provide remedies “making the employee whole”.
  • Management employees utilize the courts. In most cases, the courts determine whether there was constructive dismissal and apply their ruling on reasonable notice and damages (if appropriate).

From an employment standards context, the major difference between the three processes is that the grievance procedure may change working conditions and/or return an employee to work, legislation does enforce certain provisions and notice requirements, and the courts just attach a monetary value to the employee’s unjust termination. 

This basic principle becomes complicated when complaints under legislation such as the Saskatchewan Employment Act and/or Human Rights Code become part of the situation. These legislative acts apply to non-union, unionized, and management employees. They can require employers to make changes to working conditions and return employees to the workplace, so the basic premise under employment law of attaching reasonable notice and damages can be overruled, but the usual result is more leverage for the employee during the negotiation of notice and/or damages.

This area becomes further complicated because, depending on the situation, parts of the Saskatchewan Employment Act may also apply to unionized and management employees while the whole Act applies to non-union employees. The complications arise when unionized or management employees attempt to utilize multiple jurisdictions to deal with workplace issues.

 

The Master and Servant Relationship:
The master and servant relationship provides the basis to define the rights and obligations that employees and employers owe to one another and may also define the rights and obligations owed to third parties. History provides some light on how the modern employment contract, enforced by the courts today, has evolved, but it also shows some of the short comings that still exist today. The early master and servant relationship bordered on slavery, but it evolved during the Industrial Revolution to the point that the servant was compelled to work at fixed wages while there were certain obligations on the master. 

In theory, the servant could not be dismissed without cause, and there was an obligation to provide medical assistance to servants who were injured and to provide for their physical and moral well-being. The only problem was that the courts did not enforce the obligations arising from the employment relationship during the heart of the Industrial Revolution so the legal reality did not conform to social reality, and the common law's development was delayed. It was no surprise that the courts responded to society's dominant force, the employer, so the reality created during the 19th century was almost totally lop-sided in favour of the master. Even if the servant had a legitimate case, the servant did not have the resources to pursue the matter in the courts.

Since the final phase of the Industrial Revolution, Canada has undergone a social evolution. This is evident by the nation's extensive social security system of legislation to ensure that the workplace is safe and humane. Despite a dramatic change in community values, which has caused the development of modern social legislation, the employment relationship is still primarily based on the contract of employment model that has until recently changed little over the last one hundred years. 

Today, the master and servant relationship is more difficult to define. The top and bottom of an organizational hierarchy is easy to categorize, but the groups in the middle provide some confusion. Generally, a master has a level of control in an organization and directs work to be completed while servants complete the work. There is a whole group of management and supervisory employees in the middle that provide a grey area because all the positions that direct work to be completed, without actually completing the work, are masters of some sort. The modern day characterization of master and servant is better explained in the next section, which deals with trying to define fiduciaries, agents, and employees.

 

Employees, Agents of the Employer, and Fiduciaries:
An employee completes the work required by the organization. They may be non-union or unionized. 

An agent is a master that applies the overall direction of the organization and directs or influences how the employee completes the work. This is usually categorized as the supervisory level of an organization.

A fiduciary is an agent that has the scope to exercise a higher level of discretion or power and can unilaterally exercise that power or discretion to determine the overall direction of the organization. Fiduciaries also have a high level of legal responsibility in regard to the actions of the organization as carried out by the agents and employees. They also have a legal responsibility to the company.

In the recent past, it appeared that the primary difference between a fiduciary, an agent, and an employee was the degree of control that each group has in the workplace. The fiduciary has the right to direct what the agent has to do and how if they so choose. An agent directs what the employee has to do and how. The employee follows the direction. Unfortunately, this distinction is no longer as conclusive because many professionals and skilled workers are employees, yet the employer has very little practical control over them. 

The easiest way to differentiate a fiduciary, an agent, and an employee is to look at their operational scope. In general:

  • A fiduciary has a position that exerts strategic influence on the whole organization while having operational control and responsibilities over a substantial portion of the organization.
  • An agent exerts control over a functional area and/or employees.
  • An employee answers to the agent. 

Following is a chart to indicate the context of the master/servant employment relationship in regard to the fiduciary/non-fiduciary relationship and the agent/employee relationship:


Best Practices:
Following are some best practices to support Supervisors and Managers:

  • Develop a comprehensive job description for Supervisors, Managers, and employees so they understand their areas of responsibility/accountability and what actions they have authority to complete. They need to know whether they are a fiduciary or non-fiduciary and whether they are an agent or an employee.
  • Ensure that Supervisors and Managers understand the limitations that their job description, legislation, and policies put on their authority/accountability.
  • Ensure all Supervisors and Managers are “on the same page” as Senior Management. They need to know “why” so they can understand initiatives and explain them to employees. As agents of the employer, their duty is to administer employer direction, not to undermine it. 

Summary: 
From an employee/labour relations perspective it is important to know that a fiduciary, whether an owner or a Senior Manager, is legally responsible for the overall operation of an organization, and that while the agent may have some legal responsibility due to their specific actions, both are agents of the employer. They both provide control and direction in the workplace, so their actions create precedents and practice that employees can rely on when attempting to hold the employer accountable in the employee/labour relations arena. That arena may be during informal discussions or formal like legislative tribunals and/or grievance procedures. Everything goes back to the employment contract between the master and the servants.
 

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