The contract between employer and employee falls into the category of “commercial contracts”, but Courts have given the employment contract a particularly humane twist. Just like any other relationship between individuals, the relationship between “master and servant”, or employer and employee, changes constantly – even though the written terms may never be explicitly changed.

For example, at the outset of their relationship the parties may have a written agreement in which the employee is paid minimum wage, or occupies a junior position, or works part time. Over the course of the relationship the employee is likely to get a raise at some point, receive a promotion, and start working full time. The employer may start paying additional benefits or allow the employee to work special hours to accommodate childcare needs. Though these subsequent changes may never be written into the employment contract, they are still enforceable terms.

Defining the Employment Relationship

The BC Supreme Court described the relationship as follows in the case of Campbell v. MacMillan Bloedel Ltd., [1978] B.C.J. No. 940:

The relations between master and servant are, at best, uncertain and change from time to time in accordance with circumstances and the conduct of the parties… the terms of the bargain between the parties are determined by the conduct of the parties during the term of employment, and not by conscious negotiation and agreement between the parties.

The terms of the contract may vary from day to day or from year to year.

The terms of the contract are not express (or consciously spelled out by the parties), but are implied by the court, by reference to the complete history of the employer-employee relationship.

Likewise, in her judgment in Rose v. Shell Canada, Madam Justice Southin had this to say about such changes:

But I do think that parties to a contract of employment which lasts for many years and which is a continually changing relationship can show by various events that they had had a meeting of minds subsequently on a new term. For want of a better phrase, I will call such a term evinced by the parties a term by conduct.

Terms by Conduct Benefits the Employee

Of course there are many situations in which the terms of employment contracts are bargained and consciously negotiated. However a failure to consciously negotiate and write down the negotiated terms does not mean there is no contract at all. On the contrary, an unwritten set of “terms by conduct” is often a powerful tool for the employee, in whose favour ambiguous terms are typically construed. When the employer unilaterally changes one of these unwritten “terms by conduct” without giving sufficient notice of the change, then depending on the severity of the breach the employee may be constructively dismissed.