Effectively dealing with dismissals
and terminations
by Toronto Training and HR
September 2011
3-4 Introduction to Toronto Training and
HR
Contents 5-6
7-8
Definitions
Just cause
9-10 Bill 236
11-16 Employment Standards Act
17-19 Implied duties
20-22 Grounds for constructive dismissal
23-25 Avoiding wrongful dismissal claims
26-30 Damages
31-33 Wallace damages
34-40 Dishonesty
41-42 Integrity questionnaires
43-47 Questions to ask
49-52 Case studies
53-54 Conclusion and questions
Page 2
Introduction
Page 3
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
Page 4
Definitions
Page 5
Definitions
Wrongful dismissal
Constructive dismissal
Page 6
Just cause
Page 7
Just cause
Misconduct, insubordination, wilful disobedience
Absenteeism or lateness
Incompetence
Negligence
Breaching human rights, safety, or other laws
Breaching the employer’s policies
Dishonesty and breach of trust
Conflict of interest
Leaking confidential information or trade secrets
Page 8
Bill 236
Page 9
Bill 236
RELEVANT CHANGES
Immediate vesting
Certain employee terminations will be more
expensive
Impact of new grow-in rules on voluntary exit
packages
Introduction of “wilful misconduct”
Grow-in needs to be considered in terminations
Page 10
Employment Standards
Act
Page 11
Employment Standards Act 1 of 5
INDIVIDUAL TERMINATIONS
a. no notice is required where an employee has been
employed for under three months
b. 1 week’s notice in writing to the employee if his or
her period of employment is less than 1 year
c. 2 weeks’ notice in writing to the employee if his or
her period of employment is 1 year or more but less
than 3 years
d. 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
Page 12
Employment Standards Act 2 of 5
INDIVIDUAL TERMINATIONS
e. 4 weeks’ notice in writing to the employee if his
or her period of employment is 4 years or more
but less than 5 years
f. 5 weeks’ notice in writing to the employee if his
or her period of employment is 5 years or more
but less than 6 years
g. 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
Page 13
Employment Standards Act 3 of 5
INDIVIDUAL TERMINATIONS
h. 7 weeks’ notice in writing to the employee if his
or her period of employment is 7 years or more
but less than 8 years
i. 8 weeks’ notice in writing to the employee if his
or her period of employment is 8 years or more
Page 14
Employment Standards Act 4 of 5
MASS TERMINATIONS
Obligations 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
establishment
b. 12 weeks’ notice if the employment of 200 or more
persons and fewer than 500 persons is terminated at an
establishment
c. 16 weeks’ notice if the employment of 500 or more
persons is terminated at an establishment
Page 15
Employment Standards Act 5 of 5
FORM 1-includes details of:
the economic circumstances surrounding the
intended terminations
consultations with employees
any proposed adjustment measures
a statistical profile of the affected employees
Page 16
Implied duties
Page 17
Implied duties 1 of 2
EMPLOYEES
To perform work in a competent and non-negligent
manner
To be honest in workplace dealings
To demonstrate loyalty to the employer
Not to compete with the employer’s business
Not to claim entitlement to inventions achieved
during the employment
Page 18
Implied duties 2 of 2
EMPLOYERS
To not change the fundamental terms of the
employment contract without the employee’s
agreement or without providing to the employee
reasonable notice of that change
To maintain the position for which the employee is
hired
To deal respectfully and fairly toward the employee
To not dismiss an employee who has become ill
To pay reasonable notice of termination if there is no
just cause for that termination
Page 19
Grounds for constructive
dismissal
Page 20
Grounds for constructive dismissal 1 of 2
Reduction in wages or benefits
An 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)
Page 21
Grounds for constructive dismissal 2 of 2
Retraction of significant perquisites such as club
memberships or company vehicles
A demotion in position, reorganization resulting in
a reduction in responsibility or lower reporting
level
Transfer to another geographic location
Page 22
Avoiding wrongful
dismissal claims
Page 23
Avoiding wrongful dismissal
claims 1 of 2
Know the laws in your jurisdiction
Promptly document problems with an employee
Deal with problem behaviour as it arises, not at
some future date
Provide an opportunity for the employee to
improve, if this is feasible
Page 24
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 of
other expenses down the road
Always keep in mind the implied duties of
the employer and always act in good faith
Page 25
Damages
Page 26
Damages 1 of 4
FACTORS INFLUENCING THE AMOUNT OF NOTICE
Termination provisions in employment contract
Age of employee
Length of employment
Nature of employment
Availability of similar employment, having regard
to the employee’s experience, training and
qualifications
Page 27
Damages 2 of 4
IN WRONGFUL DISMISSAL CASES THERE MAY BE
Damages in lieu of reasonable notice
Punitive damages
Damages arising from torts
Page 28
Damages 3 of 4
ITEMS TO CONSIDER WHEN ASSESSING
LIABILITY
Salary
Commissions
Bonuses
Medical, dental, disability and life insurance
coverage
Pension plans
Company vehicles
Vacation pay
Page 29
Damages 4 of 4
ITEMS TO CONSIDER WHEN ASSESSING
LIABILITY
Profits sharing
Stock option plans
Moving expenses and the cost of the new job
search
Aggravated damages/mental distress
Punitive damages
Page 30
Wallace damages
Page 31
Wallace damages 1 of 2
HISTORY
Damages for wrongful termination
Pre-1997, before Wallace
1997, the birth of Wallace damages
1997-2008, the decade of Wallace bumps
The Keays ruling
Page 32
Wallace damages 2 of 2
TRENDS
Some courts are still extending the notice period
Not all courts are demanding evidence of mental
distress damages
Wallace damage awards are getting larger
Wallace damages are being extended for losses
beyond mental distress
Page 33
Dishonesty
Page 34
Dishonesty 1 of 6
RECENT SURVEY IN CANADA
46% committed by employees ($50k)
37% committed by managers ($150k)
17% committed by owners/executives ($485k)
57% men; 43% women
Size of loss correlates with annual income level,
tenure, age, education, level of collusion
86% were first-time offenders
45% judged as “living beyond their means”
45% experiencing financial difficulties
Page 35
Dishonesty 2 of 6
RISK FACTORS
Incentive or pressure to perpetrate a fraud
Business (making the “number”)
Personal (usually financially motivated)
Opportunity to carry out a fraud
Access to assets
Inadequate or non-existent controls
Authority to dissuade detection
Attitude and ability to rationalize fraudulent action
Management culture
Financial aggressiveness
Page 36
Dishonesty 3 of 6
BIG OR LITTLE
Large Frauds Almost Always Involve Collusion
High risk of detection
Enron, Tyco, WorldCom-- Madoff?
The frauds permeate operations
Small Frauds Can Be Carried Out by Individuals
Activities are under the radar screen
Unwitting accomplices
Few individuals are willing to report potential fraud
Page 37
Dishonesty 4 of 6
WHEN SUSPICIONS ARISE
Locate and read the policy
Conduct pre-notice investigation
Give notice to crime and property carriers
Conduct thorough internal investigation
Deal with employee issues
Consider civil litigation
Consider criminal prosecution
Page 38
Dishonesty 5 of 6
ONGOING BUSINESS CONCERNS
Employee morale
Management sensitivity
Time required of operations people
Cost
Delays
Periodic progress reports to management
Page 39
Dishonesty 6 of 6
MANAGING EXPENSES
Create an expenses policy
Decide what to include
Communicate the rules
Be reasonable
Have several levels of authorization
Be consistent
Discipline appropriately
Page 40
Integrity questionnaires
Page 41
Integrity questionnaires
TYPICAL QUESTIONS
I never make personal phone calls from work
If asked, I always give people my true opinion
I have never lost my temper
In my CV, I have been perfectly open and
straightforward
Page 42
Questions to ask
Page 43
Questions to ask 1 of 5
Have 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?
Page 44
Questions to ask 2 of 5
If 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 employees
been warned of the intention to strictly enforce the rule?
Page 45
Questions to ask 3 of 5
Have 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?
Page 46
Questions to ask 4 of 5
Am 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)?
Page 47
Questions to ask 5 of 5
Does 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?
Page 48
Case study A
Page 49
Case study A
Page 50
Case study B
Page 51
Case study B
Page 52
Conclusion & Questions
Page 53
Conclusion
Summary
Questions
Page 54