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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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The information contained in this presentation is provided for general information purposes only and does not constitute legal or other professional advice.
Reading this presentation does not create a lawyer-client relationship with Sherrard Kuzz LLP.
Readers are advised to seek specific legal advice from members of Sherrard Kuzz LLP (or alternate legal counsel) in relation to any decision or course of action contemplated.