Employment Contract

Constructive Dismissal, Employer Policies, Employment Contract, Employment Law

How Do I Fire Someone Properly?

5 TIPS FOR EMPLOYEE TERMINATIONS

As an employment lawyer, one of the most common questions I get from employers is “How do I fire someone properly?” Proactive work can save a lot of stress and expense, compared to a “fire now, ask questions later” approach. Here are 5 things to think about when terminating an employee.

1. With or without cause?

If you terminate with cause, the employee could be terminated effective immediately and would not be entitled to any severance. However, proving that you have cause to terminate an employee is a high bar to meet. “Cause” means that an employee has engaged in some type of serious misconduct that would justify dismissal without further warnings or other types of progressive discipline. Most terminations are without cause and advance notice and/or severance pay is required.

2. Start with the employment contract

When an employee is fired without cause, calculating how much severance pay is owed can be straightforward if there is a valid and enforceable termination clause in their employment contract. Most employees are governed by the BC Employment Standards Act (ESA), which outlines the basic standards of compensation and conditions of employment—it sets the minimums. If the amount of pay or notice in the contract falls below the minimum termination notice required by the ESA, the termination clause is invalid, and an employee could be entitled to severance under the “common law”.

3. Consider human rights

The BC Human Rights Code helps protect people from discrimination in the workplace. In plain language, discrimination means treating someone badly or denying them a benefit based on a personal characteristic that is protected by the Code. Employees may file a complaint with the Human Rights Tribunal if they believe they have been discriminated against by their employer. As such, you cannot fire your employee on the basis of any protected human rights ground. If the employee can prove that their protected characteristic, such as age, was a factor in the adverse impact, for example the termination of their employment, you could be found to have discriminated against your employee. Since the remedy for a human rights claim can be substantial and includes wage loss and injury to dignity damages, it’s important that you do not terminate an employee based in any part on their protected personal characteristics. Protected personal characteristics for employment can be found here: http://www.bchrt.bc.ca/human-rights-duties/characteristics.htm.

4. Write it up

An employer must be as clear and concise as possible when communicating a termination of employment. In advance of the termination meeting, prepare a termination letter to give to the employee at the meeting. The letter should include a specific date of termination, and in some cases, could include a severance offer in exchange for a Full and Final Release from the employee. Remember, however, that you cannot ask an employee to sign a Release in order for them to receive their basic minimum entitlements under the ESA. Termination letters should be prepared meticulously with careful reference to the employee’s contract and the requirements of the ESA. Even innocent mistakes can be costly.

5. Respectful delivery

You may want to start the termination meeting by acknowledging that this was a difficult decision to make for the company. You are not obligated to explain or give reasons for the termination. Ideally, you should go over the contents of the termination letter as briefly as possible. If possible, conduct the termination meeting with another employee present, preferably an office manager or supervisor, so that you have a witness—especially if it’s expected to be a difficult meeting. If you’ve presented the employee with a severance offer and Release, they should be given adequate time to review the information and be provided with an opportunity to seek legal advice.

This blog is not intended to serve as legal advice, and only provides general information. Every situation must be considered on its own facts. Need legal advice? Contact us by phone at 604 535-7063 or email [email protected].

Employment Contract, Employment Law

Are Non-Competes Enforceable?

A non-compete is a “restrictive covenant”.

What is a restrictive covenant?

In employment contracts, restrictive covenants are clauses that stop employees from doing specific things. Examples of restrictive covenants are:

- Confidentiality clauses – stop employees from sharing confidential information.
- Non-competition (non-compete) clauses – stop employees from working in competing businesses.
- Non-solicitation clauses – stop employees from taking clients or other employees with them when they change jobs.

Are restrictive covenants enforceable?

Courts do not like to stop employees from working, but also recognize that employers need to be able to protect their business. Courts will enforce “reasonable” restrictive covenants that go “no further than necessary” to protect the employers’ interests.

What does “reasonable” and “no further than necessary” mean?

When deciding whether to enforce a restrictive covenant or not, the court will consider whether it is limited in time, geography and scope. The Court will also consider whether the terms are clear, certain, unambiguous, overly broad or against the public interest. The clearer, narrower and less restrictive the restrictive covenant is, the more likely it is to be upheld.

Will the court fix a poorly drafted clause?

Generally if any part of the restrictive covenant is defective or unreasonable, the whole clause fails.

Case Study

In the case of IRIS The Visual Group Western Canada Inc. v. Park 2017 BCCA 301, Dr. Park provided contract optometrist services to Iris. Dr. Park’s agreement with Iris contained a non-competition clause that was meant to stop her from working in a competing business within 5 km of Iris. Dr. Park stopped providing services to Iris and set up her own optometrist practice 3.5 km away. Iris sued Dr. Park to enforce the non-competition clause.

The non-competition clause read:

NON-COMPETITION

7.1 The Optometrist hereby covenants and agrees that during the term of this Agreement and for a period of three (3) years from the date this Agreement is terminated the Optometrist will not, without first receiving the written consent of OpCo and IRIS do any of the following:

(a) Compete either directly or in partnership or in conjunction with any person or persons, firm, association, syndicate, company or corporation, directly or indirectly carry on or be engaged in any part thereof or be employed by any such person or persons, company or corporation carrying on, engaged in, interested in or concerned with a business that competes with OpCo or IRIS within 5 km of the Location. For greater clarity, a “business that competes with OpCo or IRIS” is defined as any entity that dispenses performs [sic] any sort or [sic] prescription or non-prescription optical appliances including eye glasses or sunglasses, vision correcting lenses and contact lenses, or is an optical retail dispensary, optometry clinic, an ophthalmology clinic, or any laser eye surgery centre and/or any location that performs optical refractions and/or complete or partial eye examinations or eye health assessments,

(b) disclose to any person, firm or corporation any information concerning the business or affairs of OpCo or IRIS at the Location, including, without limitation, the customer list for the Business.

(c) solicit, interfere with or endeavor to entice away any customer, patient, company or organization that is in the habit of dealing with OpCo or IRIS or to interfere with or endeavour to entice away any of OpCo or IRIS’s employees or optometrists.

The Court found the clause to be unenforceable and refused to fix it. Amongst other criticisms, the Court said that the clause was overly broad, ambiguous and went further than was necessary to protect Iris interests.

Takeaway

Restrictive covenants need to be drafted carefully, clearly and narrowly or they will not be enforceable.

Need help with a restrictive covenant? Give our team a call.

Covid-19, Employer Policies, Employment Contract, Employment Law, Human Rights

New – BC employers must provide employees 5 days of paid sick leave

The BC Government has announced that starting January 1, 2022, all businesses with employees falling under the Employment Standards Act will be required to give their employees up to 5 days of paid sick leave each year. Paid sick leave is a significant change in the minimum employment standards in BC. We tackle some frequently asked questions below:

Q: When does this rule come into effect?

A: January 1, 2022

Q: Are all businesses impacted?

A: All businesses with employees falling under the BC Employment Standards Act are required to follow this rule.

There are some exceptions which could include:

unionized workplaces (which would have their own collective agreements);
independent contractors (who would have their own contracts);
certain professionals such as engineers, accountants, or lawyers (read more); and
federally-regulated businesses, for example those whose businesses are in the air transportation, banks or telecommunications industries (see list).

Q: Which employees are covered?

A: All employees falling under the Employment Standards Act, including full-time, part-time and casual workers.

Q: Are there any conditions these employees need to meet before they become eligible for the paid sick leave?

A: The employees need to have been employed for at least 90 calendar days. There is no requirement that they have worked a certain number of hours or days.

Q: Does the 5 days of paid sick include the 3 unpaid days of sick leave that was recently added to the Employment Standards Act as a pandemic response?

A: No, the 5 paid days are in addition to the 3 unpaid days, meaning that starting January 1, 2022, an employee could be at minimum entitled to 8 days off if they are sick, 5 paid and 3 unpaid.

Q: Is a doctor’s note required?

A: Employers are allowed to ask for “reasonably sufficient proof” and the employee must, as soon as practicable, provide such documentation to their employer. No further details have been provided about what “reasonably sufficient proof” might be.

Stay tuned! We expect there will be more guidance from the Government of British Columbia coming out in the following weeks and we will updating this post.

This blog is not intended to serve as legal advice, and only provides general information. Every situation must be considered on its own facts.

Need legal advice? Contact us by phone at 604 535-7063 or email [email protected].

Employment Contract, Employment Law, Severance Package, Wrongful Dismissal

Severance for a Contractor? What, no way!

I hired this person to work in my business. They asked to be a contractor. They wanted the flexibility and the write offs. It didn’t work out and now they want severance. What?! I don’t owe them anything! … do I?

They hired me as a “contractor” but always treated me like an employee. Then they let me go with no notice. Can they really do that to me!?

These questions come up all the time and the lawyerly answer to both is “it depends.” Why? Because the law says that even if you have a “contractor agreement” with someone, you can owe them severance. So when is a “contractor” entitled to severance? We have to look beyond the agreement and examine the true nature of the relationship between the company and the “contractor” to answer this. It often boils down to whether the contractor was really running their own business or whether they were really working for the company. Key factors are:

Exclusivity – Was the contractor able to work elsewhere? Did they? How dependent were they on the income? The more exclusive and dependent the relationship, the more likely the person is to be entitled to severance.
Control – Did the employer control the contractor’s work and hours? The more control the company has over the contractor, the more likely the company owes the contractor severance.
Tools and Expenses – Who owned them? Who paid to repair them? Was the contractor reimbursed for expenses? Contractors normally supply their own tools and are not reimbursed for personal expenses –expenses that are not passed through to a client. True independent contractors are not entitled to severance.
Profits and losses – If the contractor completed the job quickly, did she get the profit? If it took too long, did she take the loss? If the contractor had little opportunity for profit or loss, they are more likely to be seen to be working for the company and owed severance.
Workers – Could the contractor hire its own workers to get the job done? If not, the contractor is more likely to be seen to be working for the company and owed severance.
Contract – What does it say? Did it reflect the true reality of the situation? We have even seen “contractor” agreements that refer to the contractor as an “employee” throughout!

Whether you are a company or a contractor, it is important to have a contract that reflects the true intentions and the reality of the situation. If you don’t:

as a company you can be surprised with liabilities such as having to pay severance to “contractors” and sanctions for not complying with Employment Standards, tax and other legislation; and
as a “contractor” you can be out of work on little or no notice with potential claims that you have to fight about instead of something fair upfront.

Whether you need a contact, or are involved in a claim, a knowledgeable employment lawyer can help.

Constructive Dismissal, Employment Contract, Privacy, Wrongful Dismissal

Recording conversations at work – will it get you in hot water?

We are regularly asked by employee and employer clients about secretly recording conversations (audio or video) at work. Some common questions we get are:

Is it legal to record conversations at work?
I think I am going to get fired, should I record the meeting?
What can I do with the recording, if someone is lying about what was said in the meeting?

With a smartphone in everyone’s pocket, it can be done with the press of a button, but should you?

Is recording conversations legal?

In Canada, it is not a crime to secretly record conversations as long as you are an open participant in that conversation. This is different from recording a conversation in which you are not an open participant. For example, planting your smartphone in an office on record, and then leaving the room and recording conversations between others while you are not there is not legal. That type of recording is not legal and could have criminal consequences. Don’t do it!

Secretly recording conversations is risky

Assuming we are only talking about recording conversations in which you are openly participating, in the employment context, should you do it? It is risky and here are some of the reasons why:

If you are an employee, recording conversations at work could be a violation of your employment confidentiality/privacy obligations, agreements or policies. Depending on the circumstances, you could be disciplined or even fired for making the recording. Even if your employer does not have policies against recordings, making secret recordings could be taken by your employer as a reason to fire you for cause. This is because of the trust that is needed in an employment relationship.

If you are an employer, you have obligations under privacy legislation to notify your employees that you will be collecting their personal information and the purpose of doing so before you do so. Making secret recordings could be the basis for claims against you including claims for constructive dismissal, breach of privacy and depending on the circumstances, aggravated or punitive damages.

Whether you are an employee or an employer, if you end up in court, you might have to produce the recording, even if it doesn’t help your case.

So, think long and hard before secretly hitting record at work. If you think you need to make secret recordings, this is a sign that there is a problem. You should consider whether there are more upfront strategies for dealing with the situation. If you have already secretly recorded a meeting and are involved in an employment dispute or expect to be, an employment lawyer can help you decide whether and how the recording can be used.

Employment Contract

Is a non-compete enforceable?

There is something about the start of a new year that gets our phones ringing with questions about non-compete clauses. The ball-dropping and new years champagne gets a lot of people thinking about changes at work. Whether you are an employer or an employee, thinking about ending a work relationship to move on to something new inspires a dusting off of employment contracts to see what is there. Here are some of the most common myths about non-competition clauses.

Myth 1 : Non-competes are never legally enforceable

This is common myth. Non-competition clauses can be enforced by courts in BC. It is true that employers face an uphill battle in getting a judge to agree to enforce a non-compete, but it can and does happen. If you are wondering whether your non-compete will stick, ask an employment lawyer. Enforceability of a non-compete depends on the specifics of the wording of the clause itself and the overall employment contract. Some key considerations are whether the clause is clearly worded, and whether it is limited in time, geography and scope of what is covered.

Myth 2 : Non-competes mean the employee can’t work for any competitor

We find that many employers and employees do not read the actual words of their contracts, and instead assume what is covered. If a non-competition clause is enforced by a judge, it will only be applied to prevent the employee from the specific activities listed. If the employer has missed something from the clause, or there is a “loop-hole,” that is generally fair game. Wondering what an employee can or can’t do post-termination? Read the clause.

Myth 3 : Non-competes are the only way to stop an employee from competing post-termination

Non-competition clauses are only one way to stop an employee from competing. Many contracts include non-solicitation (aka non-solicit) clauses, which are meant to prevent the employee from contacting clients. Non-solicitation clauses are still an uphill battle to enforce, but slightly easier than a non-competition clauses. This is because non-solicits don’t dictate where an employee can work, just what business they can seek out. Even if there is no contract, obligations to respect confidential information, and fiduciary duties (in the case of key employees) last beyond the end of employment and can limit competition.

Wondering whether your non-compete is enforceable? An employment lawyer will be able to tell you. At our firm, in a flat-fee consultation, we can review your contract, advise you on legal enforceability, and work with you to make a plan of how to deal with it going forward.

Employment Contract, Severance Package

Employment Contracts – Don’t try this at home, folks

I spend a lot of time talking about employment contracts. This is because employment contracts can define rights under employment law, particularly at the time of termination of employment. When an employee is fired, without cause, the answer to how much severance pay is owed can be very simple if there is a valid and enforceable termination clause in an employment contract.

Many written employment contracts have termination clauses that are invalid or not enforceable. The Ontario Court of Appeal has recently issued a decision finding that a termination clause was not valid in Wood v Deeley. This decision considered two common challenges to termination clauses.

1. contract was provided after the employee's start date

This is a common mistake that many employers make. For a contract to be binding, each party has to receive "consideration," or something of value. There are ways to cover this and put a new contract in place for a current employee, but I strongly recommend to employers that contracts be provided to prospective employees, and returned with a signature, before the start date.

2. contract does not meet the Employment Standards Act minimums

This is why the Ontario Court of Appeal refused to enforce the termination clause in Wood v. Deeley. If the amount of pay or notice in the contract could fall below the minimum termination notice required by the Employment Standards Act, a court will not enforce it. Unfortunately, this is not easy for a non-lawyer (or even sometimes for a lawyer!) to determine.

Don't try this at home, folks! When to get advice?

Employees should get legal advice when they are given a written contract to sign. An employment lawyer can help you understand what you are signing and may be able to help you negotiate a better contract. Employees should also get advice when their employment is terminated. Even if it looks like your contract states what you will get for severance pay, it may not be valid, and you could be entitled to much more.

Employers should get legal advice before they hire a new employee. An employment lawyer can help you put together an employment contract that is valid and enforceable, and give you advice on how to properly implement it. This is tricky for a non-lawyer to do right, but can actually be nailed down with a small amount of legal guidance. If you don't deal with that upfront, you can have an unpleasant surprise of a legal claim for a large severance package down the road.