The 5 Most Costly Mistakes Employers

Make – and How to Avoid Them!

Financial Executives International

Shana French

November 10, 2011

250 Yonge Street Suite 3300

Toronto, Ontario M5B 2L7

Tel 416.603.0700

Fax 416.603.6035

24 Hour 416.420.0738

www.sherrardkuzz.com

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#1 Lack of Written

Employment Agreements

Lack of clear, written employment

agreements means uncertainty on key issues:

Employee vs. Independent Contractor

Confidentiality of information and Intellectual

Property

Non-solicitation / Non- competition

Termination entitlements

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#1 …Employment Agreements

Termination

Without clear, written termination clause,

defaults to „common law‟

Courts will look at age, service,

remuneration, position, economy and

determine „reasonable‟ notice period

Could be 3-4 weeks per year or more

24 months notice common for long service

employee

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#1 …Employment Agreements

Restrictive Covenants

Can limit:

Competition

Solicitation of clients/customers/employees

Must be carefully crafted; minimally

restrictive

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#1 …Employment Agreements

Tips

Written agreements

Clear, enforceable termination clause

Properly crafted restrictive covenants, where

appropriate

Implemented before employment starts, or with

financial incentive later

Can quantify and limit liability

Could be as low as one week per year to a

maximum of 8 weeks

Makes your business more marketable!

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#2 Lack of Written Employment Policies

Failure to have in place = missed opportunities

to control the workplace / save money

Code of Conduct

Overtime policy

Vacation scheduling / Carry-over

Sick leave entitlements

Opportunity for perception of „favourtism‟

Can undermine productivity and culture

Can lead employees to seek union representation

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#2 …Employment Policies

Tip – written policies

Certainty about the terms, such as

Sick leave entitlement

What actions will result in termination

Vacation entitlements (time vs. money)

Enforceability

Cannot enforce expectations not communicated

Consistency in application

All adds up to predictability and cost savings

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#3 Employment Standards Errors

Governs hours of work, overtime, meal breaks,

vacation, minimum wage, etc.

Did you know…

That someone isn‟t exempt from overtime just

because they‟re on a salary?

That you must pay 1½ time for all hours worked

over 44 in a week (certain exemptions)?

That if you and employee agree to „lieu‟ time, that

must be in writing and accrued at 1½ time?

That vacation time and vacation pay are two

different entitlements?

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#3 Employment Standards Errors

Overtime is owed after 44 hours per week unless an

employee is a Manager or otherwise exempted

If you‟re not tracking your employees‟ hours not

only are you out of compliance, you‟re creating

liability

Failure to get approval for overtime doesn‟t mean

you don‟t have to pay

Can have overtime averaging agreement with permit

Can agree to have „lieu time‟ provided it‟s

in writing and accrued at 1 ½ time

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#3 Employment Standards Errors

Vacation time and vacation pay are two separate

entitlements

Vacation time accrues during job-protected, unpaid

leave such as preg/parental

If your contracts, policies or practice reference

„weeks of (paid) vacation‟ employee accrues paid

time off

If you split out vacation time and vacation pay,

vacation time is accrued but generally unpaid

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#4 Occupational Health and Safety

Obligation is to take all reasonable steps to protect the

health and safety of workers

Mandatory policies, programs, postings, etc.

Bill 168 – new obligations

Now obligation extends to protection from harassment

and violence

Includes protection from co-workers, employer, public,

contractors, etc.

Now require workplace harassment and violence

prevention policies, programs and training

Specific required content

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#4 Occupational Health and Safety

Bill 168 – new obligations

Written workplace risk assessment for risks of

violence required and updated

Obligations to advise employees if they may come

into contact with someone who has a history of

violent behaviour that may put worker at risk

Obligation to protect against domestic violence that

„visits‟ the workplace

Failure to comply with all obligations may result in

charges/fines

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#4 Occupational Health and Safety

Best defence is due diligence

Employer did everything reasonable to protect worker

Starts with basic compliance

Virtually impossible to make out due diligence if lacking

basic compliance

Ensure record keeping timely and accurate

Proof of training

Proof that complaints addressed

Proof policy posted and reviewed at least once annually

Proof that violence risk assessment completed and follow

up undertaken

#5 Terminations

“I‟m not terminating her, I‟m just laying her off”

“If I fire someone I only have to pay them what‟s

in the ESA”

“I only have to keep benefits going for the ESA

notice period”

“What they did was almost just cause, so I have to

pay them less”

I found someone better when she was on mat

leave so there‟s no job for her anymore”

#5 Terminations

Layoffs may be considered a termination by a court

Can lead to

Can head off in Employment Agreement

Termination entitlements start at ESA but quickly escalate if no Agreement in place

Can implement even during current employment if done properly

#5 Terminations

Courts expect all benefits to be continued for entire notice period

Employer can become guarantor of benefits

Parties can agree to cover less than full common law period, provided exceeds ESA

You either have cause or your don‟t – there‟s no in between, but misconduct may still mean leverage for smaller package

Having found someone better doesn‟t excuse not returning employee from leave

Questions

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Sherrard Kuzz LLP

250 Yonge Street, Suite 3300

Toronto, Ontario, Canada M5B 2L7

416.603.0700 Phone

416.420.0738 24 Hour

416.603.6035 Fax

www.sherrardkuzz.com

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