Death of the Employment Relationship

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Death of the Employment Relationship
April 10, 2013
Matthew R. Vella, Principal/Lawyer
Vella Labour Law (Vella LPC)

Agenda

• Termination Checklist
• Termination Without Cause
• Termination With Cause
• Is Cause Dead?
• Near Cause
• What to Avoid
• Medical Issues

For more information, call 416.216.1067

Termination

Before terminating the employment relationship, Human
Resources and/or legal counsel should be consulted.


Termination Checklist

• Is this a performance based termination, a termination
for misconduct, or a simple downsizing?
• Are there any human rights considerations?
• Does the employee have a written contract which
stipulates a reasonable notice period?
• Are there other factors that may add to or detract from
reasonable notice calculations?


Termination Without Cause

• If the termination is for lack of
performance, we offer a package
• It is very hard to prove cause for
failure to perform
• In order to figure out what that
package should be, (if there is no
contract), we must consider:
– Statutory Termination Pay (1 week
per year of service up to 8 weeks)
– Statutory Severance Pay



• Statutory Severance Pay
• An employee qualifies for this payment if the employee:
– Has 5 or more years of service AND
• The employer has an annual payroll of $2.5 million
or greater; OR
• May be applicable in the case of large
terminations/discontinuance of business



• The provisions of the ESA 2000 are MINIMUMS
• If the employee does not have a contract limiting him or
her to those provisions, we need to assess greater
common law notice
– The Employee’s Bardal Factors
• Age
• Length of service
• Availability of similar employment
• Position



• Trying to ascertain reasonable notice on Bardal factors is
difficult and should involve legal counsel
• There are factors which may increase reasonable notice
entitlements above the Bardal factors
– For example, an employee who was recently enticed
away from another employer may be entitled to much
greater notice even though he has only been with you
a short period of time.



• It is always an option to make an offer of a lower amount
and then a higher amount in exchange for a release. Or
to offer the higher amount up front and ask for a release
• We try to make the calculation based on:
– What is reasonable and fair in the circumstances
based on similar cases
– What is an amount which is not the most the
employee could win, but is enough to make a lawsuit
not worthwhile


What do the Courts Say?

• The courts are awarding anywhere from 3
to 5 weeks’ per year of service
• Employees with 9 years are now routinely
winning 12 month awards
• Stay out of the courtroom if you can, it will
cost you more than you can imagine
• This is why up-front costs of properly
assessing and drafting terminations are
well worth it


Cause

• Cause can be difficult to prove
• The employer must prove that it
had cause if sued
• The threshold for proving cause
GROWS as the employee
gains seniority


Cause

• Do you have WRITTEN warnings?
• Do the warnings properly warn of future consequence?
• Has a program of progressive discipline been followed?
• Have you condoned the behavior?
• Has there been a culminating incident?
• Please don’t go to your lawyer after the termination
with an empty employee file


Is Cause Dead?

I have heard many people say that cause is dead in
Ontario.

THIS IS NOT TRUE.


Is Cause Dead?

• Single Incident Cause is dead in Ontario, or
nearly dead. It has been killed by labour
arbitrators
– The case of the hunting rifle
– The case of the employee who was lit on fire


The Theory of “Near Cause”

• Near Cause is dead
• However, practically speaking, we often use Near Cause
situations to our benefit


Near Cause as Leverage

Employee X has been with ABco for 5 years. Over the last year and a
half he has received verbal and written warnings for lateness, poor
work attitude, failure to follow proper instructions. In April of this
year Mr. X fails to attend work for two days without calling in. When
he returns he says that he was sick, however he has no doctor’s
note.
ABco has had enough. They want to fire Mr. X. Counsel tells them that
they have a decent case for cause but that it is not really a slam
dunk. There is exposure to liability, but tells ABco to allege cause
anyway and to make an offer in settlement (for a release).



We write to Mr. X and say “we have cause to terminate
your employment. Without prejudice to that position we
offer you 6 weeks’ pay in exchange for a release.”



WHY WOULD WE DO THIS?
• Provides the employer with leverage
• Provides a shield from summary judgment motions and
ensure the employer is not completely defenceless
• You cannot allege cause later if you do not do it at the
time of termination
• There is always the chance that Mr. X will sign the
release and then there are no possible future actions.


What to Avoid

• On top of regular notice provisions in any legal action,
the employee will claim aggravated damages, punitive
damages, moral damages, et cetera
• We have seen some pretty crazy claims, including
allegations of forcible confinement


What to Avoid

Generally speaking, employee claims for these additional
damages are throw away claims. They are meritless
and put in the claim as a bargaining chip to be discarded
at mediation.

But not all are.


Meritorious Claims

Examples Include:
• Actions which humiliate the employee such as public
terminations, terminations in front of a “firing squad”, or
terminations conducted in other embarrassing
circumstances
• Emails to the entire workforce about why the employee
was fired OR emails or other notices that are misleading
• Failure to pay statutory termination pay
• Failure to pay vacation pay


Meritorious Claims

• Unreasonable refusals to provide reference letters
• High-handed, cavalier or vindictive treatment
• Terminations at times when the employer knew that the
employee was in a personal situation
• Allegations of cause or misconduct which are clearly
without merit


Medical Issues:
A Completely Different Ballgame

• Do not fire an employee for cause
due to absenteeism if there is a
medical issue
• Employee side lawyers are starting
to learn the value of jury trials for
these
• Do not fire an employee without
cause if there are medical issues
that may be human rights protected
until and unless the contract is
“frustrated”


Medical Issues

• Frustration of contract is hard to prove
• Has every effort to accommodate been made?
• Has enough time passed to say that the employee
cannot recover?
• Is there medical evidence showing a poor prognosis for
recovery?
• Frustration must be an “unforeseen event”. Do your
policies make it impossible to allege frustration?


Medical Issues

• This is a very complicated and tiring road to go down
• See my upcoming paper, Duelling With Doctors (to be
released soon)


QUESTIONS?


Free Offer

• We’re offering a free 30-minute Consultation that will
introduce our HR Help Line, which includes:
– Performance management advice including lawful
terminations and company restructures
– Generalist strategic HR advice on any workplace
issues

Contact Maysa to take advantage of this exclusive offer!
mhawwash@na.drakeintl.com
416.216.1067


Upcoming Webinar

Register @
https://drakeintl.webex.com/

May 22, 12:00pm EDT
Hire Right the First Time
Presented by: Michael McGrath
Area Sales Manager, Drake International


Thank You For Attending
For questions, please contact Maysa Hawwash
National Manager – Talent Management Solutions
mhawwash@na.drakeintl.com
416.216.1067

Death of the Employment Relationship

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