Agenda. Case Study. Discharging Employees: In-house Counsel s Legal and Professional Obligations

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1 Discharging Employees: In-house Counsel s Legal and Professional Obligations FM Panelists: Guest Panelist: Karen M. Sargeant, Ian Campbell Stacey Parker-Yull, Dundee Wealth Management Toronto Fasken Martineau Symposium May 24, 2012 Agenda Responding to employee misconduct Investigating employee misconduct Facilitating employee terminations Conducting employment-related litigation 2 Case Study Anonymous complaint to HR Alleged that senior manager is having sexual relationship with subordinate Suggested that senior manager might be submitting personal expenses as part of her business expense claims You are in-house counsel and HR seeks your assistance What do you do? To what extent do you get involved? 3 1 1

2 Investigation Preliminary Questions/Issues Is external assistance necessary? Can investigation be completed in unbiased manner? Is special expertise required? To what extent should in-house counsel be involved? What type of an investigation do the circumstances warrant? 4 The Investigation Process Develop interview strategy Gather, review and secure all relevant documents Keep detailed notes Have witnesses sign statements Dealing with employees represented by counsel In-house counsel required to deal with counsel Other employees can deal directly with employee Seek legal advice where appropriate 5 Investigation Reporting the Investigation Investigation Reports may have to be disclosed in litigation May not have to be disclosed if privileged Solicitor-client privilege Communication between solicitor and client Seeking of legal advice Intended to be confidential May not apply if in-house counsel acting as investigator Litigation privilege Litigation is existing or reasonably contemplated Documents were created with a view to litigation May apply to in-house counsel Yes - if acting as legal counsel No - if acting as investigator 6 2 2

3 The Decision to Terminate In non-union environment, decision usually between: Warning Termination for cause Termination without cause Discipline (potential constructive dismissal issues) Require proof on balance of probabilities 7 Termination for Cause Employee fundamentally breaches employment relationship May require warnings If can establish cause, then no notice, pay in lieu of notice or severance pay owed to employee Onus on employer to prove cause in court Often difference between what you know and what you are able to prove Cost of getting cause allegation wrong Can lead to additional damages to plaintiff 8 Termination without Cause Can terminate employee at any time and for any reason Provided decision not influenced by discriminatory considerations Statutory entitlements of employees: Notice or pay in lieu of notice Ontario and Federal severance pay Ontario continuation of benefits for statutory notice period Contractual entitlements Must meet or exceed statutory entitlements at all potential times in order to be enforceable Significantly reduce risk of employment related litigation 9 3 3

4 Termination without Cause Absent contract, employees entitled to reasonable notice of termination at common law Theory working notice Where notice not appropriate, must put employee in same position as if had received working notice Base Salary Benefits Statutory obligations vs. common law Benefit carrier limitations vs. common law Risk court put employer in benefit carrier s shoes Health and dental benefits compensable Life insurance expensive Disability benefits if employee becomes disabled during notice period, employer can be responsible for disability benefits to 65 years old 10 Termination without Cause cont d Where notice not appropriate, put employee in same position as if had received working notice Profit Sharing, Bonuses, Options Termination date = lawful termination date (end of reasonable notice period) Unless plans provide otherwise: excluding any period representing pay in lieu of notice, severance pay, gratuitous payment or any other indemnity, amount or notice whatsoever on account of termination of employment Other Car allowance Overtime 11 Terminations Other Damages Bad faith/wallace/moral damages Was extension of notice period for bad faith conduct Now limited to actual harm Can be awarded when employer maintains cause allegation when knows doesn t have cause Punitive damages Designed to punish employer Independent actionable wrong required Plaintiff s legal fees Awarded by court

5 The Mechanics of Termination Employee entitled to written notice of termination Employee entitled to reasons for termination For cause Short description of cause Avoid debate with employee Without cause short description Consider termination letter as exhibit 1 in any lawsuit Separate statutory from gratuitous payments If relying on contractual provision, refer to provision 13 The Mechanics of Termination Be clear: Portion of offer not conditional on signing of release Portion of offer conditional on signing of release To support transition, consider offering: Outplacement services Letter of employment or recommendation (not conditional on signing release) Confidentiality 14 Employment Litigation Often starts with demand letter Depending on case, may: Negotiate directly with employee In-house counsel cannot if employee represented by counsel Negotiate with employee s counsel Engage in limited negotiations Leave some further room to move Engage in protracted negotiations Beware the unrepresented litigant

6 Employment Litigation Forums 16 The Courts Small Claims Court Limit increased to $25,000 No examination for discovery Simplified Procedure Limit increased to $100,000 can cover simple wrongful dismissal claims Now permitted up to 2 hours of examination for discovery Consider use of summary trial Regular Procedure Examination for discovery limited to 7.5 hours per party Can include human rights allegations along with other allegations Employment Litigation Forums Human Rights Applications Consider summary hearings, whenever possible Employment Standards Complaints Ministry of Labour Fact-finding meetings Appeals to Ontario Labour Relations Board Health and Safety Complaints Reprisal complaints Non-union employees Ministry of Labour Unionized employees Ministry of Labour or Arbitration Harassment/Violence No adjudication mechanism 17 Employment Litigation Considerations for In-House Counsel Preservation of documents: every document relevant to any matter in issue that is/has been in the possession, control or power of the party Whether or not privilege is claimed Broadly defined photos, video, computer-stored data, Issue document hold Communications with witnesses: No property in a witness Internal witnesses External witnesses

7 Risk Management Strategies Importance of polices Importance of training Ensure you have enforceable termination provisions in your employment agreements 19 Karen Sargeant Ian Campbell For this accredited session, please ensure you sign the attendance sheet located outside the room! 7 7