In the current economic climate, continued employment and employment relationships are more critical than ever. Loyal and productive employees will provide an employer its best chance to emerge unscathed at the end of this lengthy recession. During these uncertain times, economic pressures may require an employer reorganize or restructure its workforce. Doing so properly, and in accordance with the law, will ensure continued survival of your business, your profitability and your reputation.
The laws regarding employment standards have changed little in recent years. Still, you must know them when considering leave, layoffs and terminations.
The Employment Standards Act is the corner-stone of most Canadian employment relationships, although in recent years, the common law is being applied much more often in the determination of reasonable notice for termination.
The purposes of the Act are to ensure basic compensation and conditions for employees and to ensure fair treatment. The Act applies to all employees other than those excluded by regulation (such as certain professionals, enumerated jobs and where collective agreements speak to certain rights). The minimum requirements of the Act cannot be waived (except regarding hours of work and overtime for managers and certain employees).
Amongst many other rights and protections, the Act provides for overtime pay, statutory holiday, vacation leave and various other leaves of absence from employment and for penalties for breaches of these and other rights.
Most importantly, and subject to exceptions set out in the law, the Act provides at sections 63 and 64 for the liabilities of employers to provide notice or pay in lieu of notice. After three months of employment, an employee who is terminated is owed one weeks’ wages on termination. After 12 months of service the entitlement rises to two weeks wages. Finally, after three years of service to three weeks’ wages and an additional weeks pay for each year of service thereafter to a maximum of eight weeks’ wages on termination. In addition, where more than 50 employees are to be terminated in any two month period, certain modified rights to special notice arise and rise further if more than 100 employees are to be affected and further still if more than 300 employees are impacted.
The Director appointed under the Employment Standards Act, and the Employment Standards Tribunal are charged with enforcement and remedies under the Act. The Director has full investigatory and prosecutorial powers to ensure compliance and to enforce stiff penalties.
However, there are limits to their powers which are important to know in order to protect your company from wrongful intrusion by Provincial officers.
Employers may also be liable for wrongful dismissal and/or constructive dismissal at common
law as will be discussed below. The liability at common law for wrongful dismissal can be up to three times higher the awards statutorily mandated under the Act. Doing things right matters.
Employment contracts remain the key way to record and protect the all-important employment relationship. Properly drafted, they protect both parties, ensure compliance with the relevant laws and ensure peace in the workplace. This is especially the case for employees such as managers and professionals to which the Act does not apply; a properly drafted contract and policies are the only way that the parties can record their rights and relationship. Continue reading