current hr issues

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Current HR Issues

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Got Overtime? How Overtime Obligations Arise and How to Deal with Them Presenter: Joe Hunder

Partner

Employment & Labour

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Who is Entitled to Overtime?

• Employment Standards Legislation – Employment Standards Code

• When employer agrees to provide it/contractual overtime

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Code Obligations

• Basic Obligations

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When do overtime obligations ariseunder the Code?

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1. After an employee works 8 hours in a day

2. After an employee works 40 hours in a week

3. After an employee works 44 hours in a week

4. When an employee works more than 8 hours a day or 44 hours per week

5. Obligations are different depending on the industry a person works in

6. Quiet! I’m making my grocery list!

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Basic Obligation

• Except for certain positions, professions and industries ‐ basic overtime obligation after 8 hours per day or 44 hours per week

• Overtime obligation – 1.5 times employee regular wage rate

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Exemptions and Exceptions

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People who are salaried employees are not entitled to overtime under the Code

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1. True

2. False

3. It depends, which is always the answer I get from my lawyer

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Managerial Exemption

• A person falls within the managerial exemption if the person is employee in a supervisory capacity, a managerial capacity or in a capacity concerning matters of a confidential nature

• Contingent on what a person does

• Salary alone not the determining factor

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Other Employees to Which Overtime Hours and Pay do not Apply• Managers, supervisors and those employed in a confidential capacity• Farm workers• Professionals• Salespersons of automobiles, heavy machinery, homes• Salespersons who solicit orders• Licensed salespersons of real estate and securities• Licensed insurance salespersons who are paid entirely on commission• Salespersons who are at least 16 and engaged in direct selling• Licensed land agents• Extras in a film or video production• Counselors or instructions at an educational or recreational camp• Domestic employees

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Industries and Employees with Different Overtime Rules

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Contractual Overtime

• Through either express agreement or conduct an employer can agree to pay overtime, even though there is no labour standards obligation

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Managing Overtime Obligations

• Know your obligations and manage your business accordingly

• Compressed Work Schedules

• Time off in Lieu/Overtime Agreements

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Know your Obligations and Manage Your Business Accordingly

• The most straightforward solution

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Compressed Work Schedules

• What are they?

• How do they work?

• Elements to be valid

• Can be used in combination with overtime agreements

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Examples of Compressed Work Schedules• Single Week Example

– Non‐CWW Schedule:• 5 days of 8 hours, plus 4 hours on day 6 = 44 hrs/wk

– CWW Schedule:• 4 days of 11 hours = 44 hrs/wk• Daily hours are increased from 8 to 11 and days worked reduced from 6 to 4

• Multi‐week Example– Non‐CWW Schedule:

• 6 days or 7 hours = 42 hrs/wk– CWW Schedule:

• Week 1 – 3 days or 12 hours, then 4 days off = 36 hrs/wk• Week 2 – 4 days of 12 hours, then 3 days off = 38 hrs/wk• Daily hours are increased from 7 to 12 and days working reduced from 6 to 3 in the first week and 4 in the second

• Average total weekly hours are 42

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Time Off in Lieu ‐ Overtime Agreements

• A common practice to “bank time”

• Banking time or pay is lieu of overtime requires an overtime agreement

• Elements of a valid overtime agreement

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Write and Wrong: How to deal with reference letters for departing employees Presenter: Adrian Elmslie

Partner

Employment & Labour

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Why Provide a Reference Letter?

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Obligations

• No specific, independent contractual duty to provide a letter ofreference to a departing employee.

• Think carefully before refusing to provide a letter of reference to a departing employee

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Purpose of a Reference Letter

• A reference letter generally assists a departing employee in finding new employment

• Generally in the best interest of everyone for the employer to provide a reference letter

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Duty of Good Faith

• Duty of good faith ‐ requires employers to be candid, reasonable and honest in dealing with departing employees

• Duty includes a duty not to refuse to provide a letter of reference to a departing employee where there is no legitimate reason for refusing the request

• Breach of this duty can result in liability

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Duty of Good Faith

• Examples of bad faith refusal:

– Refusal in order to purposefully make it harder for an employee to find new employment;

– Refusal in order to pressure the employee into settling a wrongful dismissal claim; or

– Refusal in order to punish the employee

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When Should a Reference Letter be Provided?

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When should a reference letter be provided ?

• With no specific performance issues or termination for cause, the safest course is to provide a letter of reference

• Sound practice is to refuse to provide a letter of reference only in cases where the employee has been discharged for serious misconduct that the employer is confident it can demonstrate this on an objective basis to a third party

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What Should the Reference Letter say?

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What should the reference letter say?

Potential Liabilities

• Two primary groups of potential claimants:

– the former employee; and

– the new employer

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Liability ‐ Departing Employees

• Can arise as a result of a negative reference letter that interferes with the former employee’s ability to find work or maintain employment

• Has to be misleading or untruthful for liability to arise

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Liability: Prospective Employers

• Arises out of the principles of negligent misrepresentation

• Avoid letters that are misleading or unnecessarily positive (e.g. recommending an employee for a position handling large sums of cash after he or she has been terminated for theft)

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Avoiding Problems

1) Make sure the information in your reference letters is accurate

2) Avoid subjective opinions and stick to objective facts

3) Do not use reference letters to “punish” a former employee or make it more difficult for the former employee to find alternateemployment

4) Use caution in drafting negative reference letters

5) Control who responds to reference letter requests

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Employment Contracts: Worth the Paper They are Written on? Presenter: Colleen Verville

PartnerEmployment & Labour

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Employment Contracts

• Employment contract can be oral or written or a combination of both oral and written

• Why get it in writing?– Certainty– Clarity– Proof

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• To include specific terms such as:– Probationary term– Position and Duties & Responsibilities clause– Reporting clause– Hours of Work and Overtime clause– Employer Policies and Procedures– Remuneration (includes annual salary, benefits plan and expense, etc.)

clauses

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• Termination clause (without cause)

• Reasonable notice (working notice) or pay in lieu of notice

• Fixed term contracts (early termination clause) or Indefinite term contracts (termination provision)

• Employment Standards Code (Alberta) – statutory obligations– Minimum Standards

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• Common law obligations– Reasonable notice– Key factors

• Age

• Length of service

• Remuneration

• Position

• Duties and responsibilities

• Can be significant

• Contract must meet or exceed minimum statutory requirement but can limit common law obligations

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• Confidentiality clauses– Clarify what is covered– Clarify expectations and obligations

• Restrictive Covenants– Non‐solicitation– Non‐competition

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• Key is whether the restrictions are reasonable in the circumstances

– Depends on:• Certainty

• Geographic scope

• Temporal scope

• Scope of business

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• Key things to remember for employment contracts to be enforceable:

• Termination clause must be clearly and concisely worded and must meet or exceed the Alberta Employment Standards Code

• Independent legal advice clause:

• Employee must sign contract before starts

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The Globex Decision

Presenter: Alison Walsh

Associate

Employment & Labour

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The Globex Decision

• Globex Foreign Exchange Corporation v. Kelcher et al., 2011 ABCA 240

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The Globex Decision

• That for a period of twelve (12) months from the date of termination of the Employee’s employment with Globex, for whatever reason, he/she will not, for any reason directly or indirectly as principal, agent, owner, partner, employee, consultant, advisor, shareholder, director or officer or otherwise howsoever, own, operate, be engaged in or connected with or interested in, the operation of or in any way guarantee the debts or obligations of, or have any financial interest in or advance, lend money to, or permit his/her name or any part thereof to be used, or employed in any operation whether a proprietorship, partnership, joint venture, corporation, or other entity, or otherwise carry on, engage in, solicit customers in any manner whosoever, in any business or activity for any client of Globex with which he/she had dealings on behalf of Globex at any time within the twelve (12) months preceding the date upon which the Employee left the employment of Globex.

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Stress‐Free Terminations: reducing your risk when terminating employees

Presenter: Fausto Franceschi

Partner

Employment & Labour

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Reasons For Terminating the Employee

• Without cause v. just cause

• Just cause obviates the need for notice or pay and benefits in lieu of notice

• Just cause is serious misconduct that irreparably damages the employment relationship

• Few cases where an employer has ironclad grounds for terminating an employer for just cause

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Common “Problems” In Establishing Just Cause

– Misconduct or poor performance not quite bad enough for a just cause dismissal

– More warnings or constructive suggestions should have been given

– There was some sort of apparent condonation of the employee’s misconduct on the part of the employer

• In absence of just cause the employer must provide terminated employee with notice of termination

• Vast majority of terminations are without cause terminations

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Three Sources Used to Determine Length of Notice1. Employment Standards Code (Alberta)

• Provides for the employer’s minimum obligations (maximum entitlement under the Code is 8 weeks for 10 years of employment or more)

• Preserves any greater rights the employee has at common law or by way of contract

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2. Employment Agreement

• Do you have a valid employment agreement?

• Does the employment agreement contain a termination provision?

• Termination provision void if it does not provide for at least the statutory (Employment Standards Code) minimum

• Valid contractual termination provision will trump the common law

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3. Common Law

• Our experience is that most employers do not have employment agreements in place despite the obvious benefits

• So the common law will govern the termination of the employment relationship

• Common law contract of employment(i) indefinite term(ii) either party may validly end the contract at any time(iii) ending the contract is not a breach of contract, nor is it a tort(iv) reasonable notice of termination must be given(v) can provide pay and benefits (severance) in lieu of reasonable notice

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Wrongful Dismissal

• Misnomer

• “Wrongful” does not refer to the fact of dismissal – it refers to the failure to provide reasonable notice or pay and benefits in lieu of notice

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Reasonable Notice

• Assessing notice is an art, not a science

• Main factors in assessing notice:

(i) position and character of employment

(ii) length of service

(iii) age of employee

(iv) employee’s compensation

(v) availability of similar employment

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Reasonable Notice

• There are other factors (eg. enticement, relocation to accept position, promise of security, etc.)

• Key question: How long will it take the employee to find comparable alternative employment?

• Top end awards generally 24 months although some cases have awarded more

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Other Considerations

• Key concept: put the employee in the same position the terminated employee would have been in had he or she worked through the notice period

• Damages will also include amounts to compensate for the loss of benefits during the notice period

– Share options/profit sharing/bonus plans– Group benefits/pension/insurance plans

• Mitigation

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Implementing the Termination

• In a downsizing of operations do not ask for volunteers to leave your organization

• Determine common law exposure

• Corporate philosophy determines generosity of the offer

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Implementing the TerminationOPTIONS

• Working notice

• Lump sum severance payment

• Combination of working notice and severance

• Salary continuance (various options if employee finds work during salary continuance period)

• Provide employee with a choice (eg. lower lump sum payment v. higher salary continuance)

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Termination Meeting

• Persons performing the termination should generally be the employee’s supervisor together with someone from HR or another person in attendance as a witness

• Callousness and clumsiness in the termination interview creates animosity and could foster litigation

• Persons conducting the termination may subsequently be witnesses at trial so should be comfortable conducting the termination

• Prepare agenda

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Termination Meeting

• Terminate privately in office of the terminated employee or office of the person doing the terminating (depending on the situation, could have an offsite termination meeting)

• Terminate at the end of the day so can leave the premises without encountering co‐workers

• Any day but Friday as the weekend may impede the terminated employee from contacting members of his or her personal support network and can therefore increase the shock, worry and tension

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Termination Meeting• Get to the point quickly without a lengthy preface

• Tell the terminated employee in a general way the reasons (be honest!) for the decision but avoid debate (“I am sorry but the decision is final”)

• Arrange for return of company property (documents, customer lists, keys, credit cards, etc.) and supervised removal of personal effects from the employee’s office

• Arrange with IT to cut off access to computer and building access while termination meeting is taking place

• Should not be longer than 20 to 30 minutes (preferably shorter)

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Termination Meeting• If anticipate a “bad scene” have security available

• Do not threaten a bad reference if terminated employee refuses to sign a release

• Conclude the meeting with an explanation of the major severance terms

• Provide letter to employee confirming termination

• If providing severance which is greater than the minimum statutory requirements, the offer should be subject to a release

• Provide a deadline for consideration of the offer

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Termination Meeting

• Termination letter should remind employee of any post employmentobligations (confidentiality, non‐solicitation, non‐competition)

• Termination letter should also confirm which benefits continue and which benefits cease and of benefit conversion options, if any

• Record of Employment should be consistent with what would be argued at trial (if you allege cause don’t say termination is due to “lack of work”)

• If outplacement assistance will be provided have the outplacement provider present so the terminated employee can be handed off to the outplacement provider following the termination meeting

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Termination Meeting

• Make notes of meeting immediately thereafter

• Announcement to other staff should not get into reasons or details of termination

• Put a protocol in place to respond to reference checks

• Poorly handled terminations lead to:

(i) wrongful dismissal litigation or human rights claims

(ii) morale problems

(iii) potential difficulties in future hiring

(iv) potential union organizing drives

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Termination Meeting

• Honda v. Keays (SCC): when dismissing an employee, an employer has a duty NOT to use methods which are unduly unfair, insensitive, untruthful or misleading in the methods used to terminate the employee (examples used by the court to describe unfair or insensitive terminations includes telling co‐workers that the terminated employee is stupid or incompetent; dismissing an employee within a day or two of a daughter’s wedding or the death of a parent; insincerely alleging embarrassing or demeaning (but unfounded) reasons for dismissal and dismissals meant to deprive the employee of a pension benefit or other right)

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Termination Meeting

• You must be candid, reasonable, honest and forthright with your employees

• Engaging in unfair, insensitive, untruthful or misleading behaviour leads to damages for the manner of dismissal

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Tax and EI Issues

• A severance payment is taxable as a “retiring allowance” under the Income Tax Act– 10% for payments up to $5,000– 20% for payments over $5,000 but not over $15,000– 30% for payments over $15,000

• Since January 2011 retiring allowance payments should be reported on a T4 slip, like other employment income, rather than on a T4A

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Tax and EI Issues

• A retiring allowance can be rolled tax free into a RRSP

• The eligible RRSP rollover is:– $2,000 per pre‐1996 calendar year of employment; and– An additional $1,500 per pre‐1989 year for which no employer pension contributions have been made

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Tax & EI Issues

• Non‐eligible RRSP Rollover ‐ If the employee has room in his or her RRSP, an amount up to that threshold can also be rolled over without withholding tax provided the employee provides adequate evidence of entitlement to the deduction

• If a terminated employee has received EI benefits prior to a settlement being achieved, the settlement may trigger an EI overpayment issue

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Conclusion

• Proper planning and thought will reduce your risk of exposure and will allow you to navigate the unpleasant task of a termination relatively “stress free”

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Thank you for Joining Us

Joe Hunder 780.423.7354 e: joe.hunder@fmc‐law.comAdrian Elmslie 780.423.7364 e: adrian.elmslie@fmc‐law.comCristina Wendel 780.423.7353 e: cristina.wendel@fmc‐law.comFausto Franceschi 780.423.7348 e: fausto.franceschi@fmc‐law.comColleen Verville 780.423.7103 e: colleen.verville@fmc‐law.comAlison Walsh 780.423.7147 e: alison.walsh@fmc‐law.com

The preceding presentation contains examples of the kinds of issues companies dealing with HR issues could face. If you are faced with one of these issues, please retain professional assistance as each situation is unique.