Risk Management Canada FAQ

Risk Management Canada

What is meant by the term “Risk Management”?

This means managing the risks associated in business to avoid litigation or being fined.

Is it just easier to call a lawyer on all this?

Lawyers may have the answer for you, depending on the circumstance. Lawyers certainly have a valued place in business, however, the HR Power Centre is a comprehensive business tool and resource designed to allow you to act on your own with legal assistance only when necessary.

How do I become compliant without getting lawyers involved?

The HR Power Centre’s Risk Management module covers many of the risk areas associated with dealing with employees and we have provided links to expert advice where available. If you have additional questions or a specific situation on which you need advice we recommend that you talk to a lawyer who specializes in employment law.

How do I terminate an employee?

The reasons for termination can be many. If you want to terminate without really having an exact reason or one you would want to defend in a court of law, then you terminate someone without cause, which is legal, provided you pay severance pay in accordance with provincial legislation and also common-law practices as determined by other similar severance cases. When you terminate without cause, you provide severance pay and also pay in lieu of notice, so you can terminate employment on the spot if you wish. Legally, you do not even have to give a reason for termination of employment when you do it this way, however TwoGreySuits recommends that for purposes of closure and human dignity that you provide at least some reason for employment termination, even if it is quite generic in nature, such as, “we do not see a long term fit for you in the company.” In cases where you want to terminate because an employee violated the Code of Business Conduct you should consider termination “with cause’. This means you have a valid enough reason that you would be willing to defend in a court of law. This sounds easier than it really is. Quite often, even though companies have a valid reason for termination, they choose to terminate “without cause” in order to avoid the inconvenience of a court case.

What are valid reasons for termination?

Reasons for termination generally fall into two categories; terminations “with cause” and terminations “without cause”. If you are terminating “with cause” you need a valid defensible reason for termination. If you are terminating “without cause” you don’t need a defensible reason, because you are paying severance pay and/or pay in lieu of notice and also asking for a signed legal Release Document, which essentially says that in exchange for severance pay and/or pay in lieu of notice, the employee relinquishes their right to sue you for their employment termination or wrongful dismissal.

What do I say to someone to terminate their employment?

First, you should always have an additional person present as a witness (usually the individual responsible for Human Resources). The termination meeting must be carefully scripted and should last no longer than a few minutes. You must clearly state that their employment is being terminated and the effective date, which is often immediately. You should have the “Termination Package” ready for delivery to the employee. Suggest that they take some time to read the letter and, if they wish, to seek legal counsel. The termination letter will have a date by which they must accept the terms or not. If you are providing outplacement services, you should turn the employee over to the outplacement representative at this point. The thorny issue of collecting personal effects can be dealt with in a variety of ways. Generally, TwoGreySuits recommends that you allow the employee to retrieve their essential effects (coats, purses etc) and make arrangements for the employee to return at a convenient time to clean out their desk. Remember, unless it is a severe case of theft, fraud etc., the employee deserves to be treated with respect.

What do I have to pay in terms of notice or termination pay?

If the termination is for “Just Cause”, you are not required to pay any severance pay. Just Cause means that the reason for employment termination is pretty rock solid and that the employer would be willing to defend in a court of law. Most companies terminate “Without Cause” because they don’t want to end up in a legal fight with the employee. In this case you provide severance pay payment of which is conditional on the terminated employee signing a legal release document which essentially says they agree not to sue the company or take any court action in exchange for severance pay. The legal entitlement for employee notice of termination and severance or termination pay differs by province. In addition to what the law says you have to pay, there is another element called “common-law” severance pay or pay in lieu of notice of termination. This is based on what is called “jurisprudence”, or what the courts have awarded employees in reasonably similar cases.

How can I avoid paying severance pay?

Some companies pride themselves on never having to pay severance pay, but this is certainly unusual. You can avoid paying severance pay if the termination is for “just cause” or if you opted to provide working notice instead of pay in lieu of working notice. Remember, whenever you do not provide severance pay, you leave the company open to costly litigation.

Can I be sued for terminating someone without a good reason?

Yes, and this is why it is important to follow the legislative requirements. It is also why companies, in many cases, elect to pay severance pay.

What if I give generous severance pay and the person refuses to sign the release form?

This does happen from time to time. The proper way to deal with this is to carefully word the termination letter to indicate a time limit to sign the legal release document (one week is normal). If the release is not signed within the prescribed period, the severance offer will be null and void and the company will apply the legal minimums as set out in legislation. This way the person knows the difference between what they could get and what they are being offered, and can make an informed decision of whether or not to sign the form. Also, during this period employees will tend to want to negotiate a better settlement, and this should be considered if the demands are reasonable.

Can a person sue the company even after they have signed a legal release form?

This sometimes happens when the employee claims they signed the legal release form “under duress”. TwoGreySuits advises employers to always ask employees think it over and/or seek legal advice before signing a release document.

What is meant by constructive dismissal?

A constructive dismissal may occur when an employer makes a significant change to a fundamental term or condition of an employee’s employment without the employee’s actual or implied consent. Often, the employer will be considered to have terminated the employee’s employment if the employee resigns within a reasonable period of time after the constructive dismissal. An employee may be constructively dismissed if the employer makes changes to the employee’s terms and conditions of employment that result in a significant reduction in salary or a significant change in such things as the employee’s work location, hours of work or authority or position. The employee would have to resign in response within a reasonable period of time in order for the employer’s actions to be considered a termination of employment in most jurisdictions. Constructive Dismissal may also include situations where an employer harasses or abuses an employee, or an employer gives an employee an ultimatum to “quit or be fired” and the employee resigns in response. Constructive dismissal is a complex and difficult subject. An employee who thinks he or she may have been constructively dismissed should contact their provincial government for further information.

If someone is not working out, why can’t I just fire them right on the spot?

A requirement of notice of termination of employment or pay in lieu of notice or termination or severance pay is required in all Provincial jurisdictions. It is also permissible to terminate without repercussion if an employee is on probation as defined in the local employment legislation.

If an employee is frequently ill for legitimate reasons, can I terminate their employment?

Yes. There is a condition referred to as the “implied employment contract”. This means that even if hours of work are not specifically stated in an employment offer letter, the implication is that when employees are hired full time, that they will attend the workplace on the days agreed to verbally or the normal hours of work of the business. When this condition becomes “frustrated” to a degree that violates the “implied contract” you can terminate. However, TwoGreySuits strongly recommends that you apply the principals of Progressive Discipline before moving to termination.

I have an employee who has to stay home every time their child is sick. How much of this does an employer have to put up with?

TwoGreySuits hears about these situations quite frequently. There is a balance between what is acceptable and to what level this type of absence affects the workplace or the company in a negative fashion. Some employers in fact have a sick days policy which by definition includes sick days for the purpose of taking care of sick children. A policy of this nature at least details the financial liability the company is willing to undertake. However, in the absence of such a policy, these cases are managed on a 1:1 basis. Employees, at a minimum, should be asked to discuss their situation with the objective of finding alternate solutions. Most employers we see are actually quite tolerant of these situations and treat them as unpaid leaves of absence. Some employers allow the employee to make up the time if this is applicable to the specific job. Other employers sometimes allow the employee to work from home that day, if the nature of the job permits.

Is it possible to fire someone for being late for work?

Yes, if it is a habitual practice for which proper disciplinary processes have been implemented. Usually a stern written warning letter precedes any termination for this reason. It is a more critical issue if the delinquent employee is a manager as this obviously sends the wrong signal to employees.

How do I keep my company union free?

Everything you need can be found in our Risk Management module under Union Free Strategies.

There are picketers outside my office preventing me from coming in, what can I do about this?

In this situation, calling a lawyer would be appropriate. Different jurisdictions treat this matter quite differently. Quite often the police are called and end up being the monitor, or the company and the union agree on a process that is seen to be reasonable to both parties. You can find many of the answers in our Union Free Strategies section.

What is the chance of my company being audited by a government agency for things like equal opportunity employment, pay equity, employment equity, age discrimination and fair labour practices?

Quite often audits are triggered by employee or union complaints. At other times, audits are selected on a random basis by government agencies. A detailed audit can cause quite a disruption in your business and generate unnecessary employee expectations and also negative feelings about the company.

One of my employees is asking other employees to sign union cards. What can I do about this?

As an employer you have a right to stop this if it is being done on work time, however, in some jurisdictions doing this while on an unpaid break is permissible. Qualified labour lawyers can help here. Refer to our Union Free Strategies section for further advice and direction.

A union is handing out literature and misleading information to employees as they drive into the parking lot. What can I do about this?

Generally speaking, if the union reps are not on company property there is not a lot you can do about it. Be careful of getting into a “war of words” over misleading information given to employees. TwoGreySuits always recommends that employers stick to the facts when speaking to employees about this. As a rule of thumb, we recommend T.I.P.S. for managers during a union drive. Don’t Threaten, Interrogate, Promise or Spy.

Our employees claim they are being harassed by union organizers. Can I do anything about this?

First, make sure you have all the real facts of the situation. Everyone has their own personal definition of what constitutes harassment. Coaching employees how to respond may be appropriate but not to the extent of having them represent the company with a union organizer.

As an employer, how do I challenge some of the outrageous claims being made by the union organizer?

As a start you should develop a communication plan with your employees. See the Sample Letter to Employees in the Union Free Strategies section of our Risk Management module.

What latitude do I have as an employer in changing the hours of work for everyone?

This can normally be done provided proper notice is given to allow employees to adjust and make arrangements for their new hours. However, if the hours are radically different, employees may have a claim for “Constructive Dismissal” if they decide to quit and seek legal action against the company.

We have decided to move our business 30 miles away and some employees are asking for severance pay instead of moving with us. What should I do?

This may not be an unreasonable request from employees depending on where your business is located and you should review local legislation. This may fall under the definition of “substantive” change in terms and conditions of employment, however, an employee would have to quit because of this change and then seek legal action against the company. If the employee quit and went directly to another similar job with a different company, this would be in favour of the original employer as the employee would, in essence, have mitigated damages which would be awarded as a potential settlement in a court of law.

An excellent employee in terms of job performance was just caught stealing or lying. I really can’t afford to lose their services right now. How should I handle this?

Believe it or not, this situation happens more than you would think. Lying and stealing are normally employment infractions which generate a “termination with cause” scenario. Ignoring this type of infraction, even with an otherwise very good employee, is a mistake. If the infraction was that severe, the employer should terminate the employee “for cause”. Another possibility would be to implement strong disciplinary action, such as employment suspension or at the very least a written warning putting the employee on notice that any employment related infraction in future would likely be subject to termination.

Is it legal to install cameras to monitor time and attendance?

Yes, generally speaking. However, this is usually done more for security reasons. Time and attendance can be better monitored by a card scanning system or by managers managing the issue on a daily basis. Some companies monitor time and attendance with software that records the time an employee logs on to their computer each day.

In public companies, what do they mean when they tell you that you are an “insider” and that you cannot purchase shares of the company?

An insider essentially means that, as an employee, you have access to confidential information which has not been released to the public. This is normally, but not limited to business results, financial or otherwise, potential buy-outs, acquisitions, mergers or changes in employment status of key individuals. Being privy to this kind of information would give you an unfair advantage regarding investment in your company.

What is Privacy legislation all about? Do I need to be concerned about this?

Yes, all employers should be concerned about Privacy Legislation. To learn more about this important topic and your obligations under the legislation please refer to Privacy Legislation in our Risk Management module.

What are basic Human rights as defined in the Human Rights Act?

Please go to the Human Rights section of our Risk Management module for answers to your questions on Human Rights legislation.

What if I have complaints about my plan and I am represented by a union?

Your union was required to negotiate the pay equity plan with your employer. Once they have agreed to a plan, your plan is considered approved. However, your employer must post the plan so that all employees covered by the plan can read it. If you think your employer and union have not complied with the Act, you may complain to the Commission.

I work for a federally regulated company. Where can I get information about pay equity?

Ontario’s Pay Equity Act does not apply to employees of the federal government, federal agencies or federally regulated companies. The pay equity sections of the Canadian Human Rights Act cover employees of these employers. The Canadian Human Rights Commission can inform you about the pay equity provisions that may apply to you.

What is meant by employment equity?

Please go to the Employment Equity section of our Risk Management module for answers to your questions.