5 Reasons Why Employers Need Legal Services During Recession

1. Lay-offs and Terminations

It is critical employers handle lay-offs or terminations with due diligence and care. Otherwise, it can be a costly decision for employers. For example, the recent ruling by the Canadian Human Rights tribunal excoriated Bell Canada (a national telecommunication company) for firing an employee for unproven performance issues while he was recovering from cancer¹. The tribunal demanded the national company pay the former employee over $90,000 in lost wages, $15,000 for “pain and suffering,” and a further $15,000 in damages due to its “reckless” conduct.

The employee’s human rights claim was based on discrimination due to his illness with the company providing no accommodation. The tribunal agreed the company’s treatment of the former employee was a “serious transgression” of the Canadian Human Rights Act and its actions amounted to discrimination against someone with a medical disability.

2. Risks of Not Defining Relationships

Employers need to make sure their relationship with their employees are clearly defined and understood. Businesses should know when they are dealing with an independent contractor or have engaged in an employee relation. The difference is critical because it determines which legislation and case law will apply to the relationship. For example, you have a cognitive therapist working at a learning centre for children. The therapist hours of service are during the operating hours of the centre. The therapist uses a combination of their own teaching tools and those in the learning centre. The relationship can be either an independent contractor or an employee unless the employer clearly defines the relationship.

3. Risk of Having No Employment Agreement

If employers have not implemented an employee agreement it is even more critical to define the relationship during a recession.

An employment agreement defines key rights and obligations between an employer and employee throughout their working relationship. When there is no employment contract any dispute over the rights of the parties must be resolved either by looking for evidence of the parties’ intentions from pre-employment communications and negotiations or by applying common law principles (Canadian laws), such as the requirement for reasonable notice of termination. The result can lead to unanticipated liabilities and drawn-out litigation.

4. Risk of Having No Employee Handbooks and Policies

Having an employee handbook and policies specific to your business is important to reduce the risk of litigation and protect against costly employment claims. How often reviewed or revised?

An organization’s handbook and policies should be reviewed quarterly or yearly depending on the nature of the business. Employee handbooks and policies should be revised when there are changes in legislation (ie. gov’t mandatory Covid -19 measures), required by law (some workplace legislation requires annual or other periodic review of mandated workplace policies. For example, with occupational health and safety and workplace violence and harassment prevention annual or periodic reviews are required), change in employers’ policies or procedures, or the organization expands to a new jurisdiction.

5. Risk of Having No Compliance Program

Business organizations are subject to an increasingly complex framework of laws and regulations both inside and outside Canada, including competition, securities, fraud, data security, environmental and employment laws. A robust compliance program can be the most effective way to:

• Navigate this complicated legal environment.
• Protect the business.
• Reduce the costs associated with violations of law.

A legal compliance program brings together a company’s policies, procedures, and other compliance efforts.