"Reasons to Call Your Employment Lawyer Before You Think You Need Them"
Article by Rose Keith, BA JD, Vancouver BC Employment Law Lawyer RoseKeith.bc.ca
Employee Discharge and Documentation in British Columbia
Reasons to Call Your Employment Lawyer Before You Think You Need Them
One of the biggest assets and potential liabilities for any company is its people. The happiness and management of your team of employees can affect the success of your business. The unfortunate reality is that in any company terminations can and do occur. When they occur they can cost a company a significant amount of money if they have not been handled correctly. Setting up your employment practices properly from the outset can prevent or limit liability when terminations occur. Ensuring your employment relationships include provisions to protect you in the event that employment ends either voluntarily or by termination can prevent losses in the form of other staff, clients, and information that is proprietary to your company.
Legal costs are also a concern for many companies and in an attempt to lessen legal costs many wait until a crisis is before them to seek legal advice. Unfortunately, taking such an approach inevitably increases the costs associated with responding to a problem. Being proactive and partnering with your lawyer can protect the company in terms of potential liability and can ensure that your employment practices and procedures are arranged and managed in such a way as to ensure that your employees are happy and that the risks associated with employees leaving either voluntarily or otherwise are appropriately managed.
Unemployment rates in Canada are rising. This statistical trend is a clear indication that terminations are occurring more frequently. The average employee will change jobs four or five times during their lifetime. Getting fired is one of the most stressful events that an individual can experience. Firing someone is one of the most difficult jobs for anyone. Both the employer and employee have interests in the employment relationship and the manner in which the employment will come to an end. Overriding those interests are the legal obligations of both. In this paper I will examine those interests and the concurrent legal obligations and provide you with practical tips and guidelines on the management of your employment relationships.
Employment can come to an end for a variety of reasons. An employee may leave an organization because a more interesting or better opportunity may have come their way or their personal situation may have changed. Employees may be off work due to illness or the necessity of caring for another person. An entrepreneurial employee may set up their own business. An employee may be terminated without cause because they are
not a good fit, the needs of the business have changed or because their personality or style clashes with others within the company. Employees may be terminated for cause because they have done something egregious. Most if not all of us will at some point in our lives be touched by a termination, either it will be us being terminated or terminating someone, or it will be a loved one that is experiencing this.
Terminations also are not just a legal or contractual issue. For most, our work is how we define ourselves. Our careers enable us to live the lives that we live, they provide our identity and work is the place that most of us spend the majority of our waking hours. A termination can be a devastating, emotional event. Employees will feel hurt and rejected when they are terminated. They will not view the termination in a clinical, business transaction manner. This in turn will result in them making emotional decisions about the actions that they take following a termination. Managing this to the highest degree possible is essential to any business. Dealing with a distraught ex-employee who is on the war path to seek compensation for the wrong that has been done to them through the termination costs not only a significant amount of money in legal fees, it also costs time and emotional energy from employees of the business who have to deal with it. When your people are tied up spending their time and energy on responding to a past employees claims of unjust dismissal they are not spending time doing what they are being paid to do and what your business requires them to do in order for the business to be successful. The financial cost of having to deal with a wrongful dismissal claim is huge. In this paper I will provide you with some guidelines on how to reduce the likelihood of your business facing wrongful dismissal claims and how you can effectively enlist the help of your lawyer prior to a wrongful dismissal claim, in effect to be your partner in establishing and managing your employment practices.
Lawyers do not just bring legal expertise to the table. An integral part of legal training is learning to analyze and critically assess situations. A lawyer with experience has had many clients and has seen firsthand the problems that those clients have faced with their employment relations. Partnering with your lawyer from the outset enables you to learn from the mistakes and the victories of others. Although you may have a great HR department in your company with experienced people who know what they are doing, their experience will be limited to their experience. Generally they will have been involved in at most a few terminations each year of their experience. An employment lawyer will have been involved in hundreds of terminations, either from the employer or the employees perspective and brings all of that wealth of experience as well as their legal expertise and judgment to the advice that they are providing your business.
Working with your lawyer to ensure that your employment practices are sound can lessen the chances of facing a costly wrongful dismissal claim, can limit the risks associated with termination and can limit the risks to your business when an employee voluntarily leaves.
The employer and employee have different interests in the employment relationship. Considering and understanding those interests assist in understanding how working with your lawyer in a partnership type of way rather than in response to a crisis can decrease the ultimate legal costs to your business. Following an analysis of the competing interests of employers and employees this paper will discuss statutorily imposed legal obligations, without cause terminations, just cause terminations, the duty to mitigation, termination meetings, releases and post-employment competition.
1. Competing Interests
All parties to an employment relationship have certain interests, expectations and motivations. Understanding and examining those interests, expectations and motivations provides a clue as to the risk areas when an employment relationship comes to an end.
As a general rule, employees rely on their employment for the income that it generates. They want to feel confident that that income will continue. Employment often provides a social outlet. Employees want to enjoy the time that they spend at work, they want to feel fulfilled in their work, they want to be learning and acquiring skills and generally want to be advancing in a company. When it comes to terminations, employees want to be treated fairly and respectfully, they want certainty and they want to feel that their future is safe. They want to know that the employer will not negatively affect their ability to find replacement employment.
When terminated employees come to see lawyers following a termination, they generally have the following complaints:
- There was no reason for the termination
- They were treated unfairly or insensitively during the termination meeting
- They have done a significant amount for the company and it is not recognized
- Others who were not doing as good of a job were not fired
The company is treating them differently than others
-The company is preventing them from getting another job due to the way that they are handling references
-The company is pressuring them to sign a release
There is a personality conflict and they are not the cause of it.
When terminated employees come to see a lawyer for help, it is generally not about the money. It is about the personal aspects of termination and how the ex-employee feels about the termination more than anything else. Once they see a lawyer, it does become about the money. An employment lawyer will explain to the employee the law and will explain in particular that an employee can terminate them but is obligated, assuming that there is no just cause, to provide reasonable notice of the termination or pay in lieu of notice. A lawyers job is to take the client away from the emotional aspects of the termination and get them focused on the contractual obligations. Almost without exception when the employee hires a lawyer it is going to cost the employer a lot more money in terms of severance and dealing with the termination. The goal as the employer should be to handle the termination in such a way that the employee does not feel the need to seek legal advice.
Employers want employees to be productive in the work place. They want employees to be doing the job that they are hired to do, to be providing results to them. They want to know that their confidential information and proprietary knowledge is being kept secure. They want to feel that they can trust their employees. In the event of terminations they want their liability limited, they want to avoid being sued and they want the employment relationship to end peacefully without requiring an undue amount of time and resources. When an employee leaves voluntarily, the employer wants to know that their confidential information is safe and that an employee will not unfairly use information that they have obtained during the course of their employment.
The employer$146;s interests when terminating an employee include the following:
Certainty in terms of costs to the employer
Conclusion of all legal rights and responsibilities
Certainty that they will not be faced with further legal action
Comfort that proprietary information is safe
Peace of mind regarding concerns about competition
Protecting the reputation of the Company
The way to manage these competing interests and to lessen the chances of an employee being dissatisfied is to ensure that your employment practices are structured in such a way as to provide both parties with certainty and in recognition of the competing interests and concerns.
2. Statutorily imposed legal obligations
Overlying the competing interests are the legal obligations that accompany an employment contract. An employment contract is no different than any other contractual obligation, although our courts have recognized that because of the unique nature of the relationship between employer and employee there is an obligation of good faith and fair dealing which may be over and above that which is found in other contractual obligations. Many employment relationships do not have a formal written contract defining the terms of employment but regardless of whether the terms of employment are put into written form or not, the employment relationship is a contract. The formality of a contract is not a necessary part of an employment contract.
2.a. Employment Standards Act
The Employment Standards Act provides the minimum terms that must be incorporated into every contract of employment. You cannot contract out, or agree not to be bound by the provisions of the Employment Standards Act. Every employee is entitled to the protections and remedies in the Employment Standards Act. Understanding the contractual obligations that are imposed on you as an employer by the Act is an important component of managing your employees. You should specifically discuss with your legal counsel the implications for your business of the terms imposed by the Employment Standards Act and whether or not exceptions apply to your business.
The purposes of the Employment Standards Act are set out in Section 2 of the Act and are as follows:
(a) To ensure that employees in British Columbia receive at least basic standards of compensation and conditions of employment;
(b) (b) To promote the fair treatment of employers and employees;
(c) To encourage open communication between employers and employees;
(d) To provide fair and efficient procedures for resolving disputes over the application and interpretation of this Act;
(e) To foster the development of a productive and efficient labour force that can contribute fully to the prosperity of British Columbia;
(f) To contribute in assisting employees to meet work and family responsibilities.
The categories of contractual terms that are implied into every contract of employment due to the operation of the Employment Standards Act are far reaching and include in part the following:
i. Minimum and maximum hours of work
ii. Overtime pay
iii. Minimum wages
iv. Statutory Holidays
v. Termination of Employment
vi. Leaves of Absence
For the purposes of this paper, the most relevant sections of the Employment Standards Act relate to the requirements regarding termination of employment. Remember that this is the bare minimum that every employee is entitled to. You cannot agree to less than this and as well there is no duty to mitigate as it relates to this bare minimum. Mitigation does not decrease the employers liability to pay this minimum. Almost all employees will be entitled to more than this bare minimum unless there has been an actual agreement to limit entitlement upon termination to the Employment Standards minimums. The implications for doing so should be considered at length as although the benefit is limitation on the exposure to liability of the employer the detriment is that
such provisions may limit the type and quality of employee that your business is able to attract and may also negatively impact employee satisfaction which also has a significant cost associated with it. This again is an area where discussion with experienced employment law counsel can greatly assist in determining the best approach for your business.
In terms of the minimums required under the Employment Standards Act in a without cause termination, the Act requires that the employer must either provide advance written notice of the impending termination or provide pay in lieu of notice. This must be done in all situations except where the employee quits, retires or is fired for just cause. The terminated employee finding alternate work during the period of notice does not affect his rights to notice or pay in lieu of notice as required under the Act. The minimum provisions do not apply to Group Terminations which involve other requirements. The termination notice cannot coincide with an employees vacation or leave for other reasons such as medical or pregnancy. The termination provisions generally do not apply to employees who:
Are employed for a defined term
Are hired for a specific contract lasting less than 12 months
It is impossible to perform the work due to some unforeseen event or circumstances;
- Work in the construction industry; or
- Have been offered reasonable alternate employment by the employer and have refused that employment.
- Are teachers
The amount of notice or pay in lieu of notice that is required under the Employment Standards Act is connected to the length of time that the employee has worked for the employer. The employer can satisfy their obligations under the Act by providing a combination of notice and pay in lieu of notice. The specific requirements are as follows:
|Length of Service
|3 months but less than 12 months
|12 months but less than 3 years
|3 years but less than 4 years
|4 years but less than 5 years
|5 years but less than 6 years
|6 years but less than 7 years
|7 years but less than 8 years
|8 years or more
If payment in lieu of notice is being provided the pay is calculated by totaling the employees wages, excluding overtime, earned in the last eight weeks in which the employee worked normal or average hours and dividing this total by 8. If notice is going to be provided rather than pay in lieu, the notice must be in writing.
The act prohibits temporary layoffs unless the possibility of temporary layoff:
Is expressly provided for in the contract of employment
- Is implied by well-known industry wide practices; or
Is agreed to by the employee.
A temporary layoff becomes a termination when it exceeds 13 weeks in any period of 20 weeks.
Under the Act if an employer substantially alters a condition of employment this may be seen to be a termination for the purposes of the Act with the accompanying requirement to provide notice or pay in lieu of notice.
2.b. Human Rights Legislation
All employment relationships are also governed by applicable Human Rights Legislation, either under the Canadian Human Rights Act or the British Columbia Human Rights Code (or other provincial legislation if non BC company). The Canadian Human Rights Act came into force in 1977 with the express goal of ensuring equal opportunity to individuals and to prevent discriminatory practices based on sex, disability or religion. The Canadian Human Rights Act applies throughout Canada but only to federally regulated activities. The provincial human rights legislation applies to all other activities and employers. The Code guarantees people equal treatment regardless of their:
- Place of origin
- Marital status
- Family status
- Physical or mental disability, or
- Sex or sexual orientation.
The purposes of the BC Human Rights Code are specified in Section 3 which states that the purposes are as follows:
(a) To foster a society in British Columbia in which there are no impediments to full and free participation in the economic, social, political and cultural life of British Columbia;
(b) To promote a climate of understanding and mutual respect where all are equal in dignity and rights;
(c) To prevent discrimination prohibited by this Code;
(d) To identify and eliminate persistent patterns of inequality associated with discrimination prohibited by this Code;
(e) To provide a means of redress for those persons who are discriminated against contrary to this Code.
The purpose of the Canadian Human Rights Act is specified in section 2 of the Act which states as follows:
The purpose of this Act is to extend the laws in Canada to give effect, within the purview of matters coming within the legislative authority of Parliament, to the principle that all individuals should have an opportunity equal with other individuals to make for themselves the lives that they are able and wish to have and to have their needs accommodated, consistent with their duties and
obligations as members of society, without being hindered in or prevented from doing so by discriminatory practices based on race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability or conviction for an offence for which a pardon has been granted or in respect of which a record suspension has been ordered.
Human Rights legislation impacts employment practices in a variety of ways. For the purposes of this conference the most relevant is that an employee cannot be terminated for a discriminatory reason. Examples of this would be termination due to pregnancy, illness, age, disability, race or religious practice. Human Rights legislation has also been defined and interpreted by the courts to require employers to ensure that employees have a work place free of harassment. Sexual harassment has been found by the Supreme Court of Canada to be a form of discrimination based on sex. Specifically the court found that discrimination on the basis of sex will be found to exist where there is a practice or attitude which had the effect of limiting the conditions of employment or, or the employment opportunities available to, employee on the basis of a characteristic related to gender.
As an employer, human rights legislation imposes a variety of requirements on you. All of your practices must be compliant with human rights legislation and the legislation imports a requirement that employers have in place anti- harassment policies and procedures. Significant liability can fall to an employer who fails to ensure that their work place is compliant with human rights legislation.
3. Without Cause Terminations
Over and above the terms imposed into employment relationships by the Employment Standards Act and the Human Rights Code, the law imposes certain terms into every employment relationship. The term most relevant to the subject of this conference is that although an employer may terminate an employee anytime that they want, when they do so without just cause they are obligated to provide reasonable notice of the termination or pay in lieu of notice. A failure to do so is a breach of the employment contract and entitles the employee to sue for damages. There is no specific rule as to how much notice an employee is entitled to when they are dismissed without cause. Almost without exception in wrongful dismissal cases, the following quotation from the case of Bardal v. Globe & Mail (The),  O.W.N. 253, 24 D.L.R. (2d) 140 is referred to:
There could be no catalogue laid down as to what was reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.
This approach requires a consideration of several variables in determining appropriate notice and tailors the notice period to the specifics of the employment relationship. The other approach that has been taken in Canada is referred to as the Lazarowicz Approach, taken from the Ontario Court of Appeal decision in Lazarowicz v. Ornda Engines Ltd.,  O.R. 141, 26 D.L.R. (2d) 433, which says that the proper approach to assessing notice is to determine what the employer and employee themselves would have seen as fair at the time of hiring. The decision of Roach J.A. included the following paragraph which clearly describes the theoretical basis for this approach:
Opinions might differ as to what was reasonable, but in reaching an opinion a reasonable test would be to propound he question, namely, if the employer and the employee at the time of the hiring had addressed themselves to the question as to the notice that the employer would give in the event o him terminating the employment, or the notice that the employee would give on quitting, what would their respective answers have been?
actors such as availability of similar employment, specialized nature of an industry, restrictive covenants, change of location required, inducement and employer misconduct all are factors that may be taken into consideration.
Damages that are payable as a result of a failure to provide reasonable notice are meant to place the employee in the position that he or she would have been in if they had been provided with adequate notice of the termination. That means in practice that the employee must be compensated for such things as bonuses, salary, benefits, pension contributions and any other items that were a part of their compensation.
There are many ways that a without cause termination can be structured. An employer may choose to:
1. Provide working notice;
2. Provide a lump sum pay out;
3. Provide a salary continuance.
The way that you structure each of these options should be carefully discussed with your legal counsel, prior to making any offer to the employee. There are ways of structuring the termination that will serve to limit the liability of you as employer and at the same time satisfy the employee such that they do not feel the need to seek legal counsel.
f your intent as an employer is to provide working notice rather than severance, it is important that you discuss this fully with legal counsel. There are a number of issues around provision of working notice including the adequacy of the notice, performance of job duties during the period of working notice and dealing with non- performance by a disgruntled employee.
4. Firing for Cause
When an employee is terminated for cause, no severance or notice of the termination is required. This includes under Employment Standards legislation. The burden is on the employer to establish that there was just cause. The employer must prove misconduct that goes to the root or essence of the employment relationship. There is no line in the sand of conduct that will be found to constitute just cause and the employer is left in the unenviable and difficult position of hoping what they have alleged to be just cause will in fact be found to be so. As is illustrated below, even in situations where just cause seems obvious, unless particular steps are taken courts will not uphold just cause. If just cause is found to not exist then the employer will be liable to the employee for damages for failure to provide reasonable notice of termination. In any with cause termination an employer is advised to carefully document all incidents of misconduct and all discussions with the employee regarding the misconduct. Specific communication, preferably in writing, to the employee regarding the misconduct and the consequences is advised.
The difficulty and uncertainty with alleging just cause is illustrated in the following quotation from a decision of the Ontario Court of Appeal in 1967 in R. v. Arthurs; ex parte Port Arthur Shipbuilding Co.,  2 O.R. 49. This quotation remains a quote which is frequently referred to in cases in which just cause is alleged. Just cause in this case was described as follows:
If an employee has been guilty of serious misconduct, habitual neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employers business, or if he has been guilty of willful disobedience to the
employers orders in a matter of substance, the law recognizes the employers right summarily to dismiss the delinquent employee.
Just case was defined in Leung v. Doppler Industries Inc. (1995) 10 C.C.E.L. (24) 147 in the following terms:
Just cause is conduct on the part of the employee incompatible with his or her duties, conduct which goes to the root of the contract with the result that the employment relationship is too fractured to expect the employer to provide a second chance.
4. Firing for Cause
this section continues on next web page - click to employment-law-plan...
: nb. to be continued....2013.09.23-2303
The above article was
Prepared and Presented by:
Rose Keith, Trial Lawyer
Rose Keith Law Corporation
1486 West Hastings Street
Vancouver, BC V6G 3J6
Web site: rosekeith.bc.ca
See also BC Employment Standards Act .bclaws.ca/EPLibraries/bclaws_new/ document/ID/freeside/00_96113_01 .bclaws.ca/EPLibraries/bclaws_new/ document/ID/freeside/00_96113_01
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