Principle of Commercial Law


The area of corporate law focuses on the establishment of new business entities. This field addresses issues that emerge from the interaction of businesses with the government, other companies, and the public. The subject of business law is multidisciplinary since it covers the areas of intellectual property, tax law, bankruptcy, employment law, and real estate among other disciplines (Howe 123).

Apart from playing a crucial part in business formation, commercial law also fosters the legality of internal agreements that guide the operations of business after its creation. Furthermore, business law is also critical in the corporate world since it streamlines the navigation of complex transactions (Blanpain et al. 73). For instance, the complexity of deals concerning securities regulations requires the organization to involve business law experts to foster the interpretation of various legal provisions regarding complex transactions. Employment law is one of the fields of business regulation. The policy seeks to protect the rights and freedoms of the employee, as well as the employer. Importantly, employment law covers aspects of dismissal, redundancy discrimination, and the formation of employment tribunals in the organization.

It is important for the employer to treat workers with respect by observing legal provisions that guide employment actions. The issue of unfair dismissal in business law is one that has seen considerable litigations in the recent past where employees continue accusing employers of unfair termination of their employment contracts (Davidov and Eshet 185). Hence, investigating the principles that surround unfair dismissal in employment law by integrating a supporting case law is relevant.

A Law of Business/Contract/ Commerce

Unfair Dismissal in Employment Law

Unfair dismissal, also referred to as wrongful termination policy, is concerned with the determination of whether or not employers observed the required procedures of terminating the employment contract of their employees. Moreover, wrongful termination policies offer reasonable remedies for settling an unfair dismissal (Freyens and Oslington 255). Thus, the area of unfair dismissal underlines the need for employers to engage in a fair dismissal process to enhance the effectiveness and efficiency of human resource management in the business world. An array of factors in the workplace environment triggers the unfair dismissal of an employee.

The notable factors include the nation of origin, sex, religion, disability, veteran status, and race (Davidov and Eshet 187). Importantly, wrongful termination law underlines the need for organizations to base the dismissal of employees on reasonable grounds. As such, the area of employment law is geared towards mitigating the prevalence of discrimination in the organizational setting. In this regard, unjust termination law borrows a leaf from civil rights provisions that address the various forms of discrimination in different settings. In the United States (U.S.), wrongful termination law bases its provisions on the Civil Rights Acts of 1964 (Howe 126). The Act is comprised of Title VII stipulations that underline the need for employers to provide equal employment opportunities to qualified individuals.

The Employment at Will Doctrine

The doctrine of “employment at will” applies in most unfair dismissal controversies. The principle as an important element of employment law holds that the employee and the employer engage in an employment relationship whereby each party is granted the right to voluntarily continue or end the association (Freyens and Oslington 255). Thus, either the employer or the employee can end the employment relationship with or without a specified reason. However, the Employment at Will Doctrine is controversial since some labor laws require employers to provide sufficient reasons for dismissing employees. Legal experts in the area of employment law reveal that some employers take advantage of the employee’s “at-will status” by terminating the employment contract at their discretion.

The Employment at Will Doctrine has exceptions that safeguard the employee from negative employment actions of the employer. Collective bargaining agreements exempt workers from unfair dismissal when employers choose to voluntarily end the employment relationship with or without a specific reason (Davidov and Eshet 169). For instance, labor unions may bind members to a collective bargaining agreement that protects them from a wrongful termination of employment.

Furthermore, labor unions provide the appeal process that its members may consider after being subjects of unfair discharge. Individual employment contracts also provide an exception in the application of the Employment at Will doctrine. Importantly, individual employment agreements offer an outline of the employment terms, as well as the discharge conditions. Thus, employers need to observe the agreement terms to the latter. Such employment contracts limit employers from dismissing employees based on the Employment at Will principle.

Moreover, a public policy regarding employment may limit an employer from discharging employees at will (Howe 126). For example, a public policy that seeks to discourage employees from engaging in unlawful acts, as they perform their professional duties and responsibilities, limits employers from dismissing workers who refuse to engage in acts regarded as illegal. In this respect, an array of public policies that protect the rights of different stakeholders in the business environment may undermine the ability of an employer to use the Employment at Will Doctrine in the dismissal of an employee.

Automatically Fair and Unfair Dismissals

The reason for dismissal determines whether the move is fair or not. Nonetheless, some instances influence the employer to automatically dismiss the employment contract of an employee either fairly or unfairly. An array of reasons leads to the automatic discharge of an employee in an unjust way. In instances where the employee is a threat to national security, the employer can automatically dismiss the member of staff.

Importantly, employers need to create a business environment that encourages employees to observe the law. As such, the employer needs to monitor the legality of the actions undertaken by its employees. In case employers notice suspicious criminal activities from employees, they should terminate the employment agreements while at the same time informing law enforcement authorities about the workers’ conduct (Howe 124). For example, an employer realizing that one of the employees is affiliated with a particular terrorist group may fairly sack the particular worker since he or she poses a national security threat. Therefore, a dismissal is automatically fair if the employee exposes the security of the majority to significant threats.

An employer may also terminate the employment contracts of all employees who take part in an official industrial action. The mass dismissal is fair since the company identifies the relationship between them and the employee as not being effective and efficient towards the attainment of shared goals and objectives (Davidov and Eshet 170). In most cases, labor unions influence employees to engage in a formal industrial action such as a strike or demonstration to air their grievances. Some employers regard the interference of labor unions in their employment affairs as disturbing.

Thus, they consider dismissing all employees who participate in the official industrial action. Additionally, an organization can automatically sack some employees who participate in an informal or unofficial industrial action. The employer considers the move fair since the employee may have breached the employment agreement regarding industrial action provisions.

On the other hand, a broad range of automatically unfair reasons leads to the dismissal of employees. Employees’ membership or the lack of membership in a labor union can expose them to an unfair dismissal. Notably, some organizations require their employees not to subscribe to a particular labor union since the affiliation of their employees to such associations may interfere with the interests of the organization (Player and Sperino 84).

As such, they may unfairly sack employees joining labor unions. The employment action is automatically unfair since most labor unions seek to protect employees’ rights in the business world. Furthermore, an employer who requires employees to gain membership to a labor union may consider sacking workers who refuse to join such organizations (Howe 128). Employment law regards the sacking of employees on the grounds of their lack of membership to a labor union as automatically unfair.

Pregnancies, as well as maternity-related aspects, may prompt an employer to engage in an unfair dismissal. Employment law underlines that it is unfair to end the contact of employees, owing to their pregnancy. However, some employers overlook this provision since they view pregnancy as a factor that undermines the productivity of an employee. In addition, sicknesses associated with maternal issues may also irk the employer to the extent of dismissing a worker. In some instances, women who extend their maternal leave end up being surprised with dismissal amid the need for them to take good care of the newborn. In this respect, it is unfair to dismiss an employee due to issues associated with pregnancy and maternal health.

A dismissal is automatically unfair if it arises from the shift in management or ownership of the company. Employment law emphasizes the need to protect the employee from dismissal after the transfer of business undertakings in areas of management and ownership (Player and Sperino 65). As such, the prioritization of the employee’s job security is crucial if an organization seeks to transfer its undertakings to a new party.

The dismissal of an employee based on race, religion, sex, disability, or ethnicity is automatically unfair. In the United Kingdom, legal provisions such as the Disability Discrimination Act of 1995, Race Relations Act of 1976, and the Sex Discrimination Act of 1975 seek to protect individuals, including employees from different forms of discrimination (Davidov and Eshet 172). Employment law also incorporates anti-discriminatory provisions that pursue the realization of equal employment opportunities regardless of an individual’s background.

Therefore, discriminating employees to the extent of dismissing them on the grounds of their background is regarded as automatically unfair under employment law. Importantly, the regulation stipulates the need for organizations to embrace diversity in the workplace environment in a way that demonstrates equality and fairness.

Compulsory retirement is also a negative employment action that denotes an automatically unfair dismissal. An employer who forces employees to retire is unjust since the act goes against the will of the staff members regarding the timing of their retirement. Particularly, as Howe reveals, employment law views forced retirement based on age as illegal (127). The need for protecting employees from compulsory retirement in the U.S. prompted the federal authorities to establish the Age Discrimination in Employment Act (ADEA), which addresses the issue of unfair dismissal.

An array of situations leads to the unfair dismissal of employees. Employment law seeks to protect employees from such situations since they deserve a reasonable treatment that fosters the realization of equal employment opportunities in the business world. In this respect, the law underlines the need for employers to dismiss employees based on permissible reasons. The notable permissible reasons for dismissal include capability, conduct, redundancy, and statutory restrictions among other substantial reasons (Player and Sperino 46). In this respect, analyzing a case law relating to unfair dismissal is relevant towards contextualizing employment law in the business world.

Wallace v United Grain Growers Ltd [1997] 3 SCR 701

The Wallace v United Grain Growers Ltd is one of the notable Canadian employment law cases that address unfair dismissals and the damages arising from such employment actions. The respondent, United Grain Growers Ltd, hired Wallace, the appellant, as a salesperson before the latter accused the former of unfair dismissal. Particularly, Wallace started working as a sales representative for the company when he was 46 years old expecting to retire at least at the age of 65 years. However, United Grain Growers Ltd subjected Wallace to compulsory retirement after working for 14 years (Hall 336). The employer terminated Wallace’s employment contract without a reasonable explanation.

Before the employment contract termination, Wallace was the leading sales representative at United Grain Growers Ltd. In 1985, before the termination, Wallace filed for bankruptcy that was discharged in 1988. The employment action triggered a great deal of mental distress for Wallace. Thus, the situation underlined the need for compensation. Furthermore, Wallace could not secure a similar employment position elsewhere, owing to the damages caused by the unfair dismissal (Li 1).

Particularly, Wallace claimed the loss of income that he could have earned within the unexpired period of the fixed-term contract between him and the employer. Additionally, the appellant claimed the loss of the amount he could have earned during the time of reasonable notice. Moreover, Wallace made claims for various damages, including mental distress and punitive damages, as well as special compensation.

In response to the alleged unfair dismissal, United Grain Growers Ltd accused Wallace of engaging in an egregious conduct. However, the company dropped the accusation before the trial day. Furthermore, United Grain Growers Ltd argued that the employment contract was not on a fixed-term basis. Moreover, it underlined that the resultant mental distress was not a direct outcome of the dismissal. The initial hearing at the Court of Queen’s Bench saw Lockwood J identify “undischarged bankruptcy” as a valid basis for awarding Wallace compensation for the mental distress damages.

As such, due to the unfair dismissal, the respondent was required to award Wallace $15,000 for the aggravated damages, as well as $157,700 for unfair dismissal (Hall 336). The Manitoba Court of Appeal saw the parties engage in an appeal and cross-appeal of the ruling realized in the Court of Queen’s Bench. Particularly, Wallace appealed the existence of a fixed-term contract. He termed the overturn of the aggravated damages as erratic. Furthermore, the appellant underscored his entitlement to punitive damages. Moreover, the appellant claimed the reduction of reasonable notice period from 24 to 15 months as unfair, owing to the damages incurred during the period (Li 4). On the other hand, United Grain Growers Ltd made a cross-appeal that questioned the capacity of the “undischarged bankruptcy” to determine the matter.

In the Court of Appeal, Iacobucci J made the declaration that the lower courts did not err in holding the inexistence of a fixed-term employment contract. The judge also declared that the employee was entitled to the extension of a reasonable notice period. Hence, the emotional distress arising during the period required the awarding of aggravated damages given that an independent action did not trigger the distress.

Additionally, Iacobucci J dismissed the application of contract or tort law in suing for “bad faith discharge” (Li 5). In addition, the appeal judges dismissed the need for awarding punitive damages to the appellant since the employer did not engage in malicious actions (Hall 336). The Court of Appeal also made the declaration that the 24-month award was reasonable, thus calling for the need to compensate the appellant on the grounds of bad faith conduct demonstrated by the employer.

Implications of the Case Law

The Wallace v United Grain Growers Ltd litigation poses considerable implications, especially in the field of employment law. Notably, the matter uncovers that the awarding of damages triggered by unfair dismissal should not be founded on the extension of the notice period. In this respect, the notice period should not determine the value of the damages. Instead, the actual damages arising from the employment conduct should determine the award.

The recoverability of the damages emerging from the manner of dismissal should be considered. As such, the conduct of the employer in administering the dismissal is crucial towards determining the award of damages (Li 5). For example, tarnishing employees’ image on false grounds in the process of sacking them may trigger emotional distress. In this regard, if employers have no reasonable causes for terminating the employment contract, they should issue a notice period. Alternatively, they can show employees the door after offering them the remuneration package they could have gained during the notice period.

Importantly, the awarded compensation ought to be a reflection of the actual damages sustained rather than a consideration of an extension of the period of notice. Instead, the negative implications of the contract breach, as well as the dismissal manner, should determine the award of damages (Hall 335). Thus, the automatic unfairness and negative implications of the unfair dismissal determine the availability of damage awards rather than the period of extension.


Employment law is a key aspect of business law since it offers the legal provisions that promote the effectiveness and efficiency of interactions in the business settings. Particularly, unfair dismissal conducted by employers has the potential of causing adverse implications to the employees’ well-being. Notably, employment law doctrine and the Employment at Will Principle foster an understanding of the fair and unfair dismissal actions of employers. Nonetheless, some automatically unfair reasons for unwarranted dismissal unearth that employers breach the employment contract in a way that undermines the employees’ well-being.

The Wallace v United Grain Growers Ltd case law uncovers the degree to which the manner of dismissal may affect the employee to the extent of causing emotional distress. Thus, employment law offers provisions that seek to mitigate the prevalence of unfair dismissal in the corporate world while identifying the legal procedures for remedying such matters.

Works Cited

Blanpain, Roger, et al. Global Workplace: International and Comparative Employment Law Cases and Materials. 2nd ed., Aspen Publishers, 2012.

Davidov, Guy, and Edo Eshet. “Intermediate Approaches to Unfair Dismissal Protection.” Industrial Law Journal, vol. 44, no. 2, 2015, pp. 167-193.

Freyens, Benoit, and Paul Oslington. “A First Look at Incidence and Outcomes of Unfair Dismissal Claims Under Fair Work, Work Choices and the Workplace Relations Act.” Australian Journal of Labor Economics, vol. 16, no. 2, 2013, pp. 295-306.

Hall, Geoff. “Bhasin v. Hrynew: Towards an Organizing Principle of Good Faith in Contract Law.” Banking & Finance Law Review, vol. 30, no. 2, 2015, pp. 335-335.

Howe, Joanna. “Poles Apart? The Contestation between the Ideas of No Fault Dismissal and Unfair Dismissal for Protecting Job Security.” Industrial Law Journal, vol. 42, no. 2, 2013, pp. 122-151.

Li, Chenyang. “You Can’t Fire Me: The Problems with Wrongful Dismissal Damages in Canada.” WJ Legal Stud, vol. 7, no. 1, 2017, pp. 1-12.

Player, Mack, and Sandra Sperino. Federal Law of Employment Discrimination in a Nutshell. West Academic, 2017.

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