Nov 14, 2023  By John Hyde

Red Flags for HR Professionals & When to Seek Legal Advice: Part II

One of the most important skills that effective HR professionals possess is the ability to recognize when to seek legal advice before taking steps which could create or substantially increase liability for the Company. This is because some workplace issues are more complicated than others and present more potential liability, such that obtaining legal advice before making a costly misstep will generally save employers money in the long run.

This article is the second installment in our series aimed at helping HR professionals recognize when they should seek legal advice. Below are another three types of situations which warrant seeking specific legal advice, to avoid common pitfalls, minimize exposures, and safeguard your organization’s reputation.  

1. Workplace Harassment & Sexual Harassment

One red flag situation is when an employer becomes aware of a complaint or alleged incident of workplace harassment or sexual harassment and the employer does not have any employees who are properly equipped to conduct an appropriate workplace investigation internally.

Employers are legally required to investigate and address complaints and incidents of workplace harassment in a reasonable manner under applicable occupational health and safety legislation, but there are many potential pitfalls and challenges. For example, assessing the credibility of witnesses and the reliability of their evidence is a complex but crucial part of investigating, particularly in “he said, she said” situations.  This is because many incidents occur in private, such that there are no witnesses who can corroborate the complainant’s or respondent’s conflicting accounts. Nonetheless, many internal investigators are not equipped to do this properly because they do not understand the distinction between credibility and reliability or the factors that are relevant to each. Similarly, inexperienced internal investigators often fail to ensure procedural fairness by providing the respondent with a full and fair opportunity to respond to the allegations against them. For example, if an investigator fails to interview the respondent or to provide them with sufficient particulars about the allegations against them, then courts will place little if any weight on the results of the investigation.  

Furthermore, failing to conduct an investigation which is reasonable in the circumstances can lead to substantial legal liability, serious reputational damage, and worse employer-employee relations. For example, in the recent decision in McGraw v. Southgate (Township) decision, the Ontario Superior Court of Justice ordered the defendant employer to pay a former employee $170,000 in aggravated, general, and punitive damages. This is because the employer dismissed her based on the results of an “amateurish” internal workplace investigation into several “rumors” about her, which the court ultimately found to be unfounded and sexist (for details on this decision, please read our earlier blog).

Accordingly, in many circumstances, employers would be well-advised to seek specific legal advice on how to properly conduct a workplace investigation, or to engage a qualified third-party investigator.

2. Dismissing Long Service Employees

Another high-risk situation is dismissing long-service employees, as they are often entitled to substantial amounts of pay in lieu of reasonable notice of termination at common law. This is because: (i) employees are entitled to reasonable notice or pay in lieu of notice where there are no legally enforceable termination clauses in their employment contract; (ii) long-service employees typically do not have a written contract of employment, or if they do it is from many years ago and contains termination clauses that have been rendered legally unenforceable due to changes in the law over time; and (iii) length of service and age are two of the primary factors for determining employees’ reasonable notice entitlements, and long-service employees have many years of service and tend to be older.  

For example, in the recent decision of Lynch v. Avaya Canada Corporation, the Ontario Court of Appeal (“ONCA”) upheld an award of 30 months of pay in lieu of notice to a 63-year-old professional engineer who had more than 38 years of service at the time of his dismissal. Similarly, in the recent decision of Milwid v. IBM Canada Ltd., the ONCA upheld an award of 27 months of pay in lieu of reasonable notice to a 62-year-old manager who had 38 years of service. This resulted in the employer in Milwid being ordered to pay more than $400,000 in damages.  Accordingly, both of these decisions illustrate how costly dismissing a long-service employee can potentially be.

Crucially, however, long-service employees are only entitled to common law reasonable notice where there are no enforceable termination clauses in their employment contracts, which only a competent employment lawyer can determine. This is because the law regarding the enforceability of termination clauses is complex and ever-changing. Moreover, proactively making long-service employees an appropriate settlement in exchange for them signing a full and final release can result in massive savings and avoid time-consuming and costly litigation. Thus, Employers would be well-advised to seek specific legal advice before dismissing a long-service employee.

3. Mass/Group Terminations of Employment

Yet another red-flag situation is where an employer needs to substantially downsize its workforce by terminating the employment of 50 or more employees in the same four-week period. This is because: (i) such situations involve massive potential liability, given the number of dismissals involved; (ii) there are often enhanced termination pay obligations for “mass terminations” under applicable employment standards legislation; and (iii) there are often other special requirements that apply to mass terminations under applicable legislation.  

For example, under Ontario’s Employment Standards Act, 2000, employees who are part of a mass termination are entitled to: at least 8 weeks’ notice or termination pay where 50 or more but fewer than 200 employees are being dismissed; at least 12 weeks of notice where 200 or more but less than 500 employees are being dismissed; and at least 16 weeks of notice or termination pay where 400 or more employees are being dismissed. Moreover, Ontario employers who dismiss more than 50 employees in a 4-week period are legally required to give notice to the Director of Employment Standards of the mass termination, and to provide prescribed information to the affected employees by posting it in a conspicuous place in their workplace. There are also other special requirements that apply to mass terminations but suffice it to say that employers should seek specific legal advice as early as possible when it becomes apparent that they will need to greatly downsize their workforce.  

The Bottom Line

Please do not hesitate to contact us for expert legal advice the next time you encounter one of the red flags noted above, and please stay tuned for the next installment in this series for more red flags that HR professionals should be aware of.

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