ceo liabilities from hr perspective
DESCRIPTION
As the economy recovers and new legislation is passed, the liabilities faced by CEOs are constantly changing. Pivotal is here to keep you informed of these liabilites from the HR perspective. We'll cover topics such as:* Financial Reporting* Health & Safety* Human Rights* Employment StandardsTRANSCRIPT
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Presenters:Michael Morawiec Ekta Tripathi
CEO Liabilities from an HR Perspective
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About Pivotal
Experience: 25+ years/ Private/ Canadian
Market Position: broadest range of HR solutions
» Outsourced HR management» HR Help Desk» HR Projects» Outsourced Payroll» Recruiting
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What you will learn today
• CEO’s are facing increasingly stringent “rules”
• Increases personal and corporate liability
• Higher potential of incarceration
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Today we will review…
….the liabilities CEO’s face in the areas of:
1. Financial Reporting2. Health & Safety3. Human Rights4. Employment Standards
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“CEOs and business leaders on the COMPAS business panel believe that putting executives behind bars is a relatively effective way of keeping the capitalist system honest…”
BDO Dunwoody Weekly CEO /Business Leader Poll by COMPAS in Financial Post June 5, 2006.
Why be concerned?
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Why be concerned? (cont.)
• This sentiment is growing…..
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1. Financial Reporting (cont.)
• Worldcom, and Enron have become synonymous with greed and financial criminality
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1. Financial Reporting (cont.)
• Canada has not been immune to it’s scandals• Bre-X in the 1990’s provided early evidence
that fraud could be perpetrated by senior managers
• This was followed up by the likes of YBM Magnex and Livent
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1. Financial Reporting (cont.)
• Led to Sarbanes-Oxley Act in the US • Canada followed suite with Bill C-13
amending the Criminal Code – Insider trading is a criminal offence– Increased penalties for corporate fraud– Protection for “whistle-blowers”
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1. Financial Reporting (cont.)
• Canadian securities administrators have adopted the S-OX requirements
• Ontario has Bill 198 which has strengthened securities law including the right to sue auditors
• The Rules have changed…..
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1. Financial Reporting (cont.)
• CEOs and CFOs required to personally certify quarterly and annual statements
• Forensic Accounting and Auditing is a new growth “industry”
• CFOs need strong compliance experience combined with operational skills
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1. Financial Reporting (cont.)
• Failure to meet these financial reporting standards has dire consequences– Just ask Bernard Ebbers, formerly of Worldcom– Kenneth Lay, formerly of Enron– Garth Drabinsky, formerly of Livent
and finally….
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1. Financial Reporting (cont.)
“CIBC Haunted by Enron”
Four years after a $3 billion settlement to extricate itself from the Enron scandal, CRA is challenging the tax deductibility of the settlement…losing would cost CIBC 8% of it’s book value
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HEALTH & SAFETY
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2. Health & Safety
Defines the rights and responsibilities of employees in their workplace to ensure their safety and health.
Introduction
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2. Health & Safety
• Effective H&S performance comes from the top
• Businesses have OHS, legal and financial obligations
• Quantifiable cost and benefit • Investing in H&S leads to better
performance, better working environment
Introduction
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• Brand Image & Value• Reduce absences, increase productivity• Increase motivation• Reduce costs
2. Health & SafetyBenefits to Employers
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2. Health & Safety
“...we can do our bit for society by running our companies in a socially responsible way…”Giorgio Armani
“..cannot escape liability for negligence...”- The court's verdict in the 1969-1973 lawsuit filed against Chisso by the Litigation Group of Minamata disease patients.
Why is it important?
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2. Health & Safety
• $21,300 Average direct cost (WSIB insurance) due to new lost-time injury in 2007
• $85,200 Average indirect cost of each lost-time injury in 2007 (such as re-hiring, re-training, lost productivity)
• 250,000 Average number of people injured in Ontario annually
• 335 Total deaths which comprises of 257 deaths due to
occupational diseases & 78 due to traumatic injuries in 2008
Why is it important?
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2. Health & SafetyHow does it affect you?
Organization Impact Penalty
Bell Canada Death of two employees Fined $280,000
Conquest Resources Ltd., Ontario Drowning of a worker Fined $130,000
Premier Fitness Clubs, Toronto No JHSC, proper PPE Fined $50,000 and its GM personally fined $25,000
CM Midway Ltd. Injury & Paralyzes of a worker
Fined $75,000 and corporate officer sentenced to 45 day Jail time
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HUMAN RIGHTS
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Human Rights
Why should CEO’s be concerned about Human Rights in Canada?
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Human Rights
Respect for human rights, human dignity and equality is a core value in Canadian society and a basis for public policy
Respect for human rights is the law
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Human Rights
• Second only to the Canadian Charter of Rights and Freedoms, 1982
• Overrides federal and provincial legislation and collective agreements
• Employers liability impacted by a precedent setting 1987 Supreme Court decision
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Human Rights
• Robichaud v. Canada (Treasury Board)• 1987 decision held employers liable for
harassment in the workplace:
“it must be admitted that only an employer can remedy undesirable effects; only an employer can provide the most important remedy – a healthy environment”
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Human Rights
• Employers are liable in virtually all circumstances for any harassment carried out by employees
• Applies to all protected categories, including:
Race, national or ethnic origin, colour, religion, age, sex, marital or family status, physical or mental disability, conviction where pardoned or sexual orientation.
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Human Rights
• Changes are continuing...• Age - mandatory retirement is essentially
gone in most of Canada• Disability - both physical and mental has to
be accommodated – Alcohol addiction is included
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Human Rights
Every employer has a duty to accommodate.Three factors are considered:
1. Cost of the Accommodation2. Outside sources of funding3. Health & Safety Requirements
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Human Rights
Factors not to be considered in assessing undue hardship:
1. Business inconvenience2. Employee morale3. Third-party preference4. Collective Agreements or Contracts
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Human Rights
To insure compliance, a complete strategy requires the following elements:
1. A barrier prevention, review and removal plan2. Anti-harassment / discrimination policy3. An internal complaints procedure4. An accommodation policy5. An education / training policy
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Human Rights
• The consequences of failing to meet Human Rights obligations can be expensive;– Lane vs. ADGA Group Consultants were assessed
$79,279 plus interest for terminating a probationary employee with bipolar disorder
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EMPLOYMENT STANDARDS
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Employment Standards Introduction
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Employment Standards
• Provincially regulated • Sets up basic legal framework• Provides ways to design flexible work
arrangements• Effectively handles mergers and reorganizations • Provides greater flexibility for hours of work
overtime, vacations and public holiday• Avoid disputes & minimize potential liabilities
Introduction
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Employment Standards
• Provincial government has promised $10 million to hire new inspectors to enforce the Employment Standards Act (ESA)– That commitment made 3 months ago as part to
investigate any contraventions in the ESA
• The hiring would lead to the recovery of more than $17 million in back pay and other obligations from "non-compliant" employers each year
Why is it important?
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Employment Standards
• Post the ESA Poster in the workplace• Retain records with respect to each employee for
minimum 3 years• Provide written notice of termination or pay in
lieu• Ensure employees are free from reprisals
Requirements
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Employment Standards
• Fines up to $100,000 - $500,000• Individuals can be fined up to $50,000 or
imprisonment for a term of not more than 12 months or
• Both
How does it affect you?
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Employment StandardsHow does it affect you?
Organization Details
US Steel, Toronto Had to recall 800 laid off employees in order to avoid paying approx $15 million in compliance with ESA
Advanced Merchandising Inc., Oakville
Two directors were convicted and fined $3,000 each for failing to comply with a Ministry of Labour order to pay wages owed to a worker
KPMG L.L.P. Sued for allegedly breaching its obligations under the ESA to accurately record and pay its employees for overtime work, in the order of $20 million
CGI, Toronto Used ESA as an opportunity to lengthen work week in Quebec and Ontario to boost competitiveness
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What should you do?
To reduce liabilities:1. Have strong CFO & HR capabilities2. Have/Review your current policies & procedures3. Where deficiencies are found, insure that P&P
are compliant4. Insure that your organization is trained and
adheres to these P&P
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Questions
www.pivotalsolutions.com
Twitter: pivotalHRcanada