When business is good – revenues are rising, turnover is low, employee morale is high -- it can seem like there is no reason to worry about employment law issues in your workplace. But even in the best work environments, there are numerous employment-related problems that can arise and become quite disruptive, stressful, and expensive if mishandled or not prepared for in the first place.
If you are an owner, officer or manager of a small or mid-size company, you may not be prepared to handle the unpredictable problems that can arise from your role as an employer. Large companies are far more likely to have a full-time human resources department, employee handbooks, and various policies covering everything from how much vacation time employees receive to how to report serious matters such as workplace injuries and harassment in the workplace. Smaller companies tend to rarely have serious legal issues with their employees, but when they do, smaller companies are often caught unprepared to deal with them. This is usually completely avoidable, and some planning for such problems might save you considerable expense.
It is very easy for one, unanticipated workplace problem to explode into a costly, disruptive situation. Consider as an example a situation where an employee’s performance no longer is satisfactory after 5 or 6 years of good service. If you eventually decide to fire the employee, are you aware of what your obligations are?
For starters, the OntarioEmployment Standards Act requires that you provide this employee a minimum of 6 weeks notice, or pay in lieu of notice. For an employee earning $60,000 a year, that notice payment would be, at a minimum, more than $7,000. But if you are not careful with how you handle the termination, you could end up with a wrongful dismissal lawsuit. It would not be unusual for such an employee to expect to be awarded as much as 6 months’ salary or more in damages, plus legal costs that could easily add several thousand dollars to this amount. That would cost your business at least $30,000, and that doesn’t take into account your own legal expenses, and the stress, inconvenience, and disruption to your operations.
But it doesn’t have to play out this way if you handle things carefully in consultation with your lawyer. For instance, if an employee is not performing well it could become the basis for a dismissal for cause. If dismissal for cause can be established, then an employer is not required to provide notice pay upon termination. But what you think may be “for cause” may be different from what judges think “for cause” means. If you allege cause and a court later decides there was insufficient cause to justify the dismissal, the results could be very costly to you as an employer, and could even include punitive damages if things are mishandled at the time of termination. Your exposure to such liability can be limited by obtaining proper legal advice BEFORE taking any action against the employee.
There are countless instances of employees winning wrongful dismissal cases in which an employer’s haste to dismiss the employee created more problems than it solved. Instead of consulting with a lawyer to learn the proper way to handle a situation, some managers and supervisors take matters into their own hands and issue dismissals immediately. More often than not, this causes the employer more problems and expense which can often be avoided by obtaining legal advice first.
If the employee is required to sign an employment contract before starting their job, the contract may describe what severance payment the employee will receive. If it does, a wrongful dismissal action is usually pointless for the employee. Or if the employee is offered an additional severance amount in return for signing a properly written release, you can frequently control your costs and assure yourself the departing employee will not be able to take you to court later. By having new employees sign written contracts before starting to work, or by providing incentives for departing employees to sign a release, you may be able to put a stop to a wrongful dismissal claim against your company before it can get started.
Sexual harassment by a manager or supervisor can be extremely costly to a company. Damages awards for victims of sexual harassment are often $10,000 or more, plus compensation for lost work time if that is a factor. However, exposure to such claims can be limited by a careful evaluation of your workplace. Implementing a harassment policy can help limit damages and help inform your workers about acceptable conduct. Help insulate the company from liability for managerial misconduct by limiting the number of employees with supervisory roles, as misconduct by supervisors can create liability to the company. If a complaint of harassment is made, how it is first handled can often determine whether it is resolved quickly and quietly without a complaint filed in court or with the Human Rights Commission. If not handled properly, a disruptive investigation and costly litigation can often be the unnecessary result.
Do any of your employees regularly work overtime hours? If so, have you received written permission from both the employee and the Ministry of Labour? If not, you could face an investigation and penalty. Even worse, if you are not paying overtime to employees who are entitled to it, you could be setting yourself up for a big liability. Employees, with many exceptions such as managerial employees, must be paid overtime for all hours worked beyond 44 hours each week. If you have someone working 50 hours a week who is not exempt, that could be 300 hours of overtime at time-and-a-half that you may owe that employee for the past year. This liability can be avoided with proper advice to make sure employees are not earning costly overtime entitlement without your knowledge.
Employers increasingly are becoming concerned about how their employees use technology on the job and in the workplace. This can be a real trap for employers. If you are too lax in your policies about access to websites and use of email and text messaging, you may end up with employees sharing inappropriate messages, viewing illicit websites or simply not focusing on their work. On the other hand, if you monitor your employees too closely, you could be accused of invasion of their privacy. By implementing policies that take into account privacy laws, you will be able to protect your company from misuse of computers and other devices.
As a cost of doing business, employers should expect to endure some expenses from employee relations. But with good planning and good advice, you can keep those costs to a minimum and let you and your managers focus on running your business instead of dealing with lawyers.
Alderson, David
(416) 972-9001, Ext. 208
clientservices@heydary.com
Hayles, Richard
(416) 972-9001, Ext. 211
clientservices@heydary.com
