effectively dealing with dismissals and terminations september 2011

Effectively dealing with dismissals and terminations

by Toronto Training and HR

September 2011

Contents3-4 Introduction to Toronto Training and HR5-6 Definitions7-8 Just cause9-10 Bill 23611-16 Employment Standards Act17-19 Implied duties20-22 Grounds for constructive dismissal23-25 Avoiding wrongful dismissal claims26-30 Damages31-33 Wallace damages34-40 Dishonesty41-42 Integrity questionnaires43-47 Questions to ask49-52 Case studies53-54 Conclusion and questions

Introduction

Introduction to Toronto Training and HR

• Toronto Training and HR is a specialist training and human resources consultancy headed by Timothy Holden

• 10 years in banking• 10 years in training and human resources• Freelance practitioner since 2006• The core services provided by Toronto Training and HR

are:- Training course design- Training course delivery- Reducing costs- Saving time- Improving employee engagement &

morale- Services for job seekers

Definitions

DefinitionsWrongful dismissalConstructive dismissal

Just cause

Just causeMisconduct, insubordination, wilful disobedienceAbsenteeism or latenessIncompetenceNegligenceBreaching human rights, safety, or other lawsBreaching the employer’s policiesDishonesty and breach of trustConflict of interestLeaking confidential information or trade secrets

Bill 236

Bill 236RELEVANT CHANGESImmediate vestingCertain employee terminations will be more expensive Impact of new grow-in rules on voluntary exit packagesIntroduction of “wilful misconduct”Grow-in needs to be considered in terminations

Employment Standards Act

Employment Standards Act 1 of 5

INDIVIDUAL TERMINATIONSa. no notice is required where an employee has been employed for under three monthsb. 1 week’s notice in writing to the employee if his or her period of employment is less than 1 yearc. 2 weeks’ notice in writing to the employee if his or her period of employment is 1 year or more but less than 3 yearsd. 3 weeks’ notice in writing to the employee if his or her period of employment is 3 years or more but less than 4 years


INDIVIDUAL TERMINATIONSe. 4 weeks’ notice in writing to the employee if his or her period of employment is 4 years or more but less than 5 yearsf. 5 weeks’ notice in writing to the employee if his or her period of employment is 5 years or more but less than 6 yearsg. 6 weeks’ notice in writing to the employee if his or her period of employment is 6 years or more but less than seven years


INDIVIDUAL TERMINATIONSh. 7 weeks’ notice in writing to the employee if his or her period of employment is 7 years or more but less than 8 yearsi. 8 weeks’ notice in writing to the employee if his or her period of employment is 8 years or more


MASS TERMINATIONSObligations are triggered in the event that 50 or more employees are terminated in any period four weeks or less as follows:a. 8 weeks’ notice if the employment of fifty or more persons and fewer than 200 persons is terminated at an establishmentb. 12 weeks’ notice if the employment of 200 or more persons and fewer than 500 persons is terminated at an establishmentc. 16 weeks’ notice if the employment of 500 or more persons is terminated at an establishment


FORM 1-includes details of:the economic circumstances surrounding the intended terminationsconsultations with employeesany proposed adjustment measuresa statistical profile of the affected employees

Implied duties

Implied duties 1 of 2EMPLOYEESTo perform work in a competent and non-negligent mannerTo be honest in workplace dealingsTo demonstrate loyalty to the employerNot to compete with the employer’s businessNot to claim entitlement to inventions achieved during the employment

Implied duties 2 of 2EMPLOYERSTo not change the fundamental terms of the employment contract without the employee’s agreement or without providing to the employee reasonable notice of that changeTo maintain the position for which the employee is hiredTo deal respectfully and fairly toward the employeeTo not dismiss an employee who has become illTo pay reasonable notice of termination if there is no just cause for that termination

Grounds for constructive dismissal

Grounds for constructive dismissal 1 of 2

Reduction in wages or benefitsAn alteration in the manner of compensation (from salary to commission, for example)Employer behaviour creating a workplace environment that makes continued employment intolerable (such as vague and unsubstantiated negative performance reviews, unjustified and non-specific warning letters and the unwarranted imposition of probation or the toleration of sexual harassment)

Grounds for constructive dismissal 2 of 2

Retraction of significant perquisites such as club memberships or company vehiclesA demotion in position, reorganization resulting in a reduction in responsibility or lower reporting levelTransfer to another geographic location

Avoiding wrongful dismissal claims

Avoiding wrongful dismissal claims 1 of 2

Know the laws in your jurisdictionPromptly document problems with an employeeDeal with problem behaviour as it arises, not at some future dateProvide an opportunity for the employee to improve, if this is feasible

Avoiding wrongful dismissal claims 2 of 2

Promptly provide letters to the employee explaining the problem and what your expectations are for rectifying it consult with a lawyer as to whether there is just cause for termination in any given situation – while this costs you some fees, it may save you a lot ofother expenses down the roadAlways keep in mind the implied duties ofthe employer and always act in good faith

Damages

Damages 1 of 4

FACTORS INFLUENCING THE AMOUNT OF NOTICETermination provisions in employment contractAge of employeeLength of employmentNature of employmentAvailability of similar employment, having regard to the employee’s experience, training and qualifications

Damages 2 of 4

IN WRONGFUL DISMISSAL CASES THERE MAY BEDamages in lieu of reasonable noticePunitive damagesDamages arising from torts

Damages 3 of 4ITEMS TO CONSIDER WHEN ASSESSING LIABILITYSalaryCommissionsBonusesMedical, dental, disability and life insurance coveragePension plansCompany vehiclesVacation pay

Damages 4 of 4

ITEMS TO CONSIDER WHEN ASSESSING LIABILITYProfits sharingStock option plansMoving expenses and the cost of the new job searchAggravated damages/mental distressPunitive damages

Wallace damages

Wallace damages 1 of 2HISTORYDamages for wrongful terminationPre-1997, before Wallace1997, the birth of Wallace damages1997-2008, the decade of Wallace bumpsThe Keays ruling

Wallace damages 2 of 2TRENDSSome courts are still extending the notice periodNot all courts are demanding evidence of mental distress damagesWallace damage awards are getting largerWallace damages are being extended for losses beyond mental distress

Dishonesty

Dishonesty 1 of 6RECENT SURVEY IN CANADA46% committed by employees ($50k)37% committed by managers ($150k)17% committed by owners/executives ($485k)57% men; 43% womenSize of loss correlates with annual income level, tenure, age, education, level of collusion86% were first-time offenders45% judged as “living beyond their means”45% experiencing financial difficulties

Dishonesty 2 of 6RISK FACTORSIncentive or pressure to perpetrate a fraudBusiness (making the “number”)Personal (usually financially motivated)Opportunity to carry out a fraudAccess to assetsInadequate or non-existent controlsAuthority to dissuade detectionAttitude and ability to rationalize fraudulent actionManagement cultureFinancial aggressiveness

Dishonesty 3 of 6BIG OR LITTLELarge Frauds Almost Always Involve CollusionHigh risk of detectionEnron, Tyco, WorldCom-- Madoff?The frauds permeate operationsSmall Frauds Can Be Carried Out by IndividualsActivities are under the radar screenUnwitting accomplicesFew individuals are willing to report potential fraud

Dishonesty 4 of 6

WHEN SUSPICIONS ARISELocate and read the policyConduct pre-notice investigationGive notice to crime and property carriersConduct thorough internal investigationDeal with employee issuesConsider civil litigationConsider criminal prosecution

Dishonesty 5 of 6

ONGOING BUSINESS CONCERNSEmployee moraleManagement sensitivityTime required of operations peopleCostDelaysPeriodic progress reports to management

Dishonesty 6 of 6MANAGING EXPENSESCreate an expenses policyDecide what to includeCommunicate the rulesBe reasonableHave several levels of authorizationBe consistentDiscipline appropriately

Integrity questionnaires

Integrity questionnairesTYPICAL QUESTIONSI never make personal phone calls from workIf asked, I always give people my true opinionI have never lost my temperIn my CV, I have been perfectly open and straightforward

Questions to ask

Questions to ask 1 of 5Have I got all of the facts, and has a proper, thorough investigation been conducted to verify those facts?Is the proposed disciplinary action for this employee consistent with the treatment others have received for the same offense? In the same department or other departments?What is the employee’s past disciplinary record?What is the employee’s service record?Is the rule that has been violated a reasonable one?Has the rule been applied in a reasonable way in this case?Did the employee know the rule? If not, is it reasonable to think the employee should have known the rule?

Questions to ask 2 of 5If the issue is performance, has the employee been given fair warning (preferably in writing) concerning the seriousness of his or her conduct? (This would not apply for serious misconduct, such as fighting on the job or sabotage, where there is irrefutable proof.)Was there a record made of such past warning, and is it on file? Who gave the warning? When?Have similar past violations resulted in little more than a verbal reprimand or even been overlooked?Does my organization have a past record of strict enforcement for similar offenses? If not, have employeesbeen warned of the intention to strictly enforce the rule?

Questions to ask 3 of 5Have I observed all rules and followed proper preliminary procedures including my employer’s disciplinary policies and procedures?Was there a personal problem that may have contributed to the employee’s action?Does the employee have a reasonable excuse?Was the employee given a reasonable opportunity to improve?Was the employee offered a reasonable amount of help and did the employee take advantage of that help?Did the employee know what was expected of him or her?

Questions to ask 4 of 5Am I being fair, unbiased, and level-headed, or am I reacting against the employee because of a personality clash, because there was a challenge to my authority, or because of a complaint (either formal or informal) made by the employee?Can I prove the employee’s guilt by direct, objective evidence, or am I relying only on circumstantial evidence or suspicion?What effect will the discharge (or failure to discharge) have on other employees and how will it affect morale?Is the timing of the discharge correct (e.g., to avoid the appearance of retaliation)?

Questions to ask 5 of 5Does the punishment fit the crime?What possible alternative is there to discharge?Are we dealing with a potential claim of employment discrimination or wrongful discharge?(e.g., could factors such as age, gender, race, religion, disability, or national origin be an issue?)Do I need assistance from my superior, the human resources department, or outside counsel?

Case study A

Case study B

Conclusion & Questions

Conclusion

SummaryQuestions