When it comes to managing employment relationships, an ounce of prevention is worth a pound of cure. From hiring practices, recognizing conduct to avoid, to identifying potential risks, investing time and effort at the beginning of the employment relationship will help employers avoid unnecessary conflict, uncertainty and cost down the road.
Mistake #1: Unnecessarily aggressive pursuit of employees
Human resources professionals are always on the lookout for new talent for their organization, and the aggressive pursuit of top talent can be an important component of an organization’s recruitment strategy. However, an unchecked aggressive approach to recruiting can have costly consequences at the end of the employment relationship.
Enticing a prospective employee to join an organization, referred to as inducement, can be a factor in determining an employee’s reasonable notice period. Inducement is most often seen when an employee is convinced to leave one organization for another, but it can also be seen when an employee is encouraged to change roles within an organization or when an employee is coaxed out of retirement.
Inducement becomes a particularly significant consideration when the employee is only employed for a short stint; when an employee’s former position was secure, stable and lucrative; or when an employee was required to relocate.
An employer may take the following preventative measures to avoid these pitfalls:
- exercise caution in encouraging employees to join your team when it will require a major change in their circumstance (e.g. compensation, nature of position or relocation);
- assess new employees’ suitability for the position within a probationary period; and
- limit your organization’s exposure on a without cause termination through a written employment contract.
Mistake #2: Failing to include a statement of qualification or competence in application forms
Every position requires a particular set of skills or qualifications that are essential to job performance. In some instances, the failure of the newly hired employee to possess key capabilities will cause complications for an organization, such as the administrator who overstates their word processing skills and familiarity with key software. In other instances, the situation creates unworkable or even unsafe situations, in addition to potential liability, such as the construction foreman who overstates or misrepresents their experience and safety credentials.
In all cases, addressing the situation is easier when an employer asks new employees to confirm that they possess the key competencies and qualifications required for the position, as set out in the job description. Doing so pre-emptively addresses the potential claim that an employee thought they would receive training on the job and, where necessary, adds dishonesty to the list of misconduct underscoring a termination for cause.
An employer may take the following preventive measures to avoid this situation:
- ensure job descriptions have clear qualification and competency requirements; and
- require applicants to provide signed application forms attesting to their having the requisite competencies to perform the role and the qualifications outlined in the job description; or
- ensure applicants agree that they possess the requisite competencies to perform the role and the qualifications outlined in the job description in their written employment agreement.
Mistake #3: Improper interview questions
Human rights legislation forbids employers from asking potential employees for information falling under protected grounds, unless specifically permitted to do so or where there is a bona fide occupational requirement to do so (a “BFOR”). A BFOR must be reasonably necessary to achieving a goal rationally connected to the role, and which cannot be accommodated through other means without causing undue hardship.
For instance, when hiring a bus driver, safe operation of the bus is a key goal that is rationally connected to the fulfillment of the role. A bus cannot be safely operated by an individual with a significant visual impairment and there is no way to accommodate an employee without causing undue hardship to the employer. This would qualify as a BFOR. If a potential employee is only visually impaired at night time and an employer can provide the employee with day-shift work, this may not qualify as a BFOR.
Absent a BFOR, or specific exception under human rights legislation, asking for information relating to a protected ground can lead to a costly and time-consuming human resources complaint. Protected grounds include anything relating to: race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, marital/family status or disability.
Employers may avoid this mistake by taking the following preventative measures:
- diligent documentation practices: plan what is going to be asked by scripting or structuring interviews (this ensures interviewers stay on acceptable topics and provides a uniform interview experience for all applicants) and confirm what was asked with a checklist or interview notes;
- ensure all interview participants are aware of what information should not be sought from potential employees in interviews; and
- where there are potential BFORs that require asking about protected grounds, limit questions to those directly relating to the BFOR.
Mistake #4: Reference-related issues
Most employers require references from potential employees as part of the application process. However, many employers do not follow up with references provided by prospective employees. This presents a potential liability where an employee is unqualified to perform a role and causes damage to another party in the performance of that role and where a reference check would have revealed the lack of qualification.
For instance, suppose an employee lists their former employer as a reference on their application for an accounting position. The employee does not disclose that they left their former position as a result of allegations that they had embezzled money from their former employer. The new employer can be found contributorily negligent for failing to follow up with the employee’s references, where the new employer would have learned the context of the employee’s termination. This was the case in Sydney Cooperative Society Ltd. v. Coopers & Lybrand, where an employer’s contributory negligence reduced its damages against the accounting firm that failed to identify the fraudulent scheme through which an employee stole over $560,000 from their new employer.
A principal reason for not following up with references is the reticence of referees to divulge any more information than the bare minimum (i.e. confirming that the applicant held position X and was employed from date Y to date Q). This largely stems from a fear of exposure to liability, particularly the fear that if the former employer speaks poorly of the applicant, the former employee may sue for defamation.
This issue can be addressed with a referee release, which releases the referee from any liability for the information provided to an employer as part of the reference check. Where referee releases are desirable they can be provided to applicants as part of an application package.
Employers may avoid reference-related issues through the following preventive measures:
- only request references when references will be contacted;
- when references are provided, ensure they are contacted; and
- where a fulsome reference is desirable, include a referee release to be signed by the applicant as part of its application package.
Mistake #5: Not using written employment agreements
All employees have an employment agreement with their employer, even if it is not in writing. When an employment agreement is not in writing and there is disagreement as to the terms of employment, the ensuing dispute will be a significant drain on time, money and energy. While implementing a written employment agreement is more time-consuming and costly in the short term, these front-end costs usually prove worthwhile in the long run.
In a without cause termination, an employee’s minimum entitlements to notice and severance are set by employment standards legislation. Absent contractual terms setting out an employee’s entitlements on termination, these entitlements are determined by the common law. A well-drafted employment agreement limiting an employer’s severance obligations under the common law provides significant financial and temporal savings.
For example, a detailed termination clause will ensure that the four-year employee who has just been let go is limited to four weeks’ severance and not the four to six plus months he or she may be entitled to under the common law. Further, through the use of a written employment agreement, the employer avoids unnecessary and costly litigation in disputing what constitutes a reasonable notice period under the common law.
Employers should also be cognizant of two common pitfalls that can undermine the enforceability of an employment agreement. First, an employment agreement for a new employee must be agreed to (i.e. signed) before the employee’s first day of work. Second, an existing employee who is agreeing to the terms of an employment agreement for the first time, or who is agreeing to update their terms of employment, must be provided fresh consideration for the updated terms. Fresh consideration refers to a new benefit provided to the employee (over and above the benefit of continuing to work for the employer) in exchange for their executing the written agreement. Fresh consideration is commonly provided through a signing bonus.
Employers may avoid complications related to employment agreements by taking the following preventative measures:
- use written employment agreements with every employee;
- do not let an employee begin his or her employment without first providing an executed copy of their employment agreement; and
- provide fresh consideration for any revised or newly implemented employment agreements.