The Copyright Act provides the owner of a work with the exclusive right to produce or reproduce the work. In the employment context, an employee may create certain works during the course of their employment, which raises the question of who owns the copyright protectable work – the employer or the employee. While the general rule under the Copyright Act is that the author of a work is the first owner of the copyright in the work, an exception is carved out for works made in the course of employment. In particular, section 13(3) of the Copyright Act provides that where the author of a work was employed under a contract of service and the work was made during their employment, in the absence of any agreement to the contrary, the employer shall be the first owner of copyright (the “Employment Exception”). Three general requirements are required for the Employment Exception to apply: A contract of service: A contract of service refers to an employer-employee relationship, while a contract for service is more commonly known as a contractor relationship between a service provider and client. As provided by the Employment Exception, if a work is created by an employee during their employment, the employer is generally the copyright owner. In contrast, if a work is created by a contractor under a contract for service, the Employment Exception does not apply and the general ownership rules under the Copyright Act will govern. The contractor, as the author of the work, will be the first owner of copyright. Accordingly, if a contractor is hired by a business to create a work, appropriate contractual terms on copyright ownership should be in place, especially if the business wishes to own the copyright in the created work. It is important to note that copyright extends to a variety of works including software code, publications, architectural works, and web design. During the course of their employment: If an employee creates a work under the instruction of their employer and using their employer’s resources, this requirement of the Employment Exception will generally be satisfied. If a work is created using the employee’s own resources and on their own time, the employee will likely be the first owner of copyright. While this requirement of the Employment Exception may appear straightforward to assess, complexities may arise if an employee’s employment duties are not clearly defined, for example. In the absence of any agreement to the contrary: An employee and employer may agree that the Employment Exception does not apply. While there is no requirement in the Copyright Act to have a written agreement, a formal written agreement can clarify ownership of copyright in works created by an employee in the course of their employment. The Employment Exception specifically governs ownership of copyright in a protected work. In addition to copyright, which is considered as an economic right, an author also develops moral rights when a work is created. In general, moral rights protect the author’s right to association with their work, as well as the integrity of the author’s work. Moral rights cannot be assigned or transferred to any other party. Instead, moral rights may be waived in whole or in part. Often, an employer who has hired an employee to create copyright protected works during their employment will also obtain a waiver of moral rights from the employee. Moral rights are also commonly waived when an author assigns the copyright in a work to another owner, which may be the case in a contract for service. While the Employment Exception provides that an employer is the first owner of copyright in certain circumstances, it is in the employer’s interest to ensure appropriate formal agreements are in place to avoid uncertainties in copyright ownership. This is especially important when employees are hired to create copyright protectable works for an employer, such as software, website content, or architectural works. Moreover, while an employer’s reliance on the Employment Exception may be sufficient to deem the employer as the first owner of copyright, the employee will continue to have moral rights in the protected work unless waived. For questions regarding copyright in the context of an employment contract, please reach out to a member of our Labour & Employment team.