Much of the success of a business often depends on the employees and their contributions to the organization. An employer's best resource is their employees so it is important that employers provide the support that employees need to be productive and satisfied in their work. Many organizations provide this support through a Human Resources Department or Professional. To learn more about Human Resources and its important role in the workplace, check out our blog here on why an HR Department is so important.
However, it is not always practical for businesses, especially small organizations, to have specialized HR staff internally employed. While many employers have an eye to business, the realm of employee relations and employment law is such a specialized knowledge base that not all employers can wear both hats. The improper management of sensitive employment issues can seriously impact a business' monetary and reputational success. An employer who takes action in terms of employee discipline, termination, changes to an employment contract, etc., cannot rescind any steps that have been taken which can lead to very costly consequences that could have been avoided if the employer had simply consulted with an employment law lawyer before taking such steps.
Let's use an example to help illustrate this idea. Julie is a successful business owner who employs 5 employees. Her organization provides tutoring services to children and adults of all ages in various subjects. She does not have an HR department. Julie didn't feel that she needed employment contracts for her employees because she prefers to keep things “more casual” in the workplace. One of her long-term employees of 15 years, Allison, has been late for work several times over the past month and has been somewhat rude towards Julie when asked about the absences. Julie has heard that an employer can terminate an employee for any reason so she decided to take matters into her own hands. Julie terminated Allison's employment effective immediately with no notice or pay in lieu of notice. Julie figured that it was for just cause because Julie felt that being late and rude was a good enough reason to terminate. Julie did not provide a termination letter, tell Allison of the reason she was being terminated or provide any termination pay to Allison. Julie satisfied herself in saying that she had a good reason for the termination and because of that she felt that she didn't owe Allison anything. Julie did not know that the threshold for a just cause termination is actually extremely high.
A couple weeks later, a demand letter was sent to Julie by Allison's lawyer proposing they settle the matter or Allison would be bringing forward a wrongful dismissal claim. The proposed settlement was for $75,000. The letter said this was based on the employee's years of service, regular rate of pay and “Bardal factors”. Allison was a long-term employee of 15 years, 61 years of age, making a high salary and there was not a lot of availability for similar positions in the area. Allison did not have an employment contract, so she was entitled to common law notice. Now Julie is facing a potential lawsuit, a high starting settlement offer and legal fees to respond to the opposing counsel.
This could have been avoided if Julie had reached out to an employment lawyer before taking any action herself in terminating Allison. An employment lawyer would have been able to explain the applicable law to Julie, advise her of the best course of action in dealing with the employee's misconduct and assist in properly terminating the employee if Julie felt that it was necessary. This upfront cost of seeking legal advice would have been minimal in comparison of the thousands of dollars to pay the claim, the legal fees to defend the claim, not to mention the added stress to deal with this legal issue. An employment lawyer would have likely advised that Julie should start by applying progressive discipline in hopes that the behaviour in issue may have been corrected. If Julie had sought legal advice even earlier before issues arose, then an employment lawyer would have suggested that she have employment contracts drafted for all her staff to limit termination pay to the minimum required under the Employment Standards Act, therefore protecting Julie from paying common law notice upon a termination. If an enforceable employment contract was in place and Julie did wish to end the employment relationship with Allison, she could have terminated her employment on a without just cause basis and provided the appropriate notice of termination or pay in lieu of notice which would have come to about $10,000. Employers are required to pay at least the minimum standards provided under the ESA, so for Julie it would have been a lot more economical to pay the $10,000 owed to Allison under her minimum standard entitlements plus benefits during the termination period rather than to be open to common law and negotiations starting at $75,000.
It is wise for an employer to seek legal advice before making any serious decisions regarding their employees. An HR department or professional may have been able to help guide the employer in this process, but without an HR professional the assistance of a lawyer would have been even more valuable. It is important that employers seek the services of a lawyer who practise and focus on the niche area of employment law because not every lawyer will have an in-depth knowledge of this area of practice. An employment lawyer will know not only the law surrounding the workplace, but also how all of this practically applies to organizations like yours. Ending an employment contract is different than ending a regular contract so it is important to choose a lawyer who practices employment law regularly and knows the intricacies of the practice so that you can put your best foot forward. An employment lawyer will also be knowledgeable about human rights and an employer's obligations in ensuring a workplace is free from discrimination. If an employer does not fully understand the legal landscape surrounding human rights, they may unintentionally discriminate against an employee when dealing with misconduct or other employee issues. This can be extremely costly as well so it is important that employers also consider human rights in managing their employee relations.
One of the best ways an employer can prevent some of the issues discussed above is to get legal advice, and become educated on how to deal with various employment law topics in their workplace. SDLaw can help employers who do not have an HR department or professional by equipping them with training in human rights sensitivity, applying progressive discipline properly, the use of employment contracts, and more. Check out the SDLaw e-Learning and Training Centre for more information about training options available.
At SDLaw, we focus on providing our clients with proactive advice that can help limit liability and cost before issues actually arise. Our team of lawyers is experienced in employment law matters and can assist employers in prevention, education, evaluating the strengths and weaknesses of a case, management of employment issues and representation throughout the legal process. If you are an employer that would like to mitigate your risk and better manage your employees, reach out to our firm at 705-268-6492.