Half day interactive open workshop on how to legally and effectively end the employment relationship held in London, Ontario.

1. Effectively dealing with dismissals and terminations by Toronto Training and HR September 2011

2. Contents 3-4 Introduction to Toronto Training and HR 5-6 Definitions 7-8 Just cause 9-10 Bill 236 11-16 Employment Standards Act 17-19 Implied duties 20-22 Grounds for constructive dismissal 23-25 Avoiding wrongful dismissal claims 26-30 Damages 31-33 Wallace damages 34-40 Dishonesty 41-42 Integrity questionnaires 43-47 Questions to ask 49-52 Case studies 53-54 Conclusion and questions Page 2

3. Page 3 Introduction

6. Improving employee engagement & morale

8. Page 6 Definitions Wrongful dismissal Constructive dismissal

9. Page 7 Just cause

10. Page 8 Just cause Misconduct, insubordination, wilful disobedience Absenteeism or lateness Incompetence Negligence Breaching human rights, safety, or other laws Breaching the employer’s policies Dishonesty and breach of trust Conflict of interest Leaking confidential information or trade secrets

11. Page 9 Bill 236

12. Page 10 Bill 236 RELEVANT CHANGES Immediate vesting Certain employee terminations will be more expensive Impact of new grow-in rules on voluntary exit packages Introduction of “wilful misconduct” Grow-in needs to be considered in terminations

13. Page 11 Employment Standards Act

14. Page 12 Employment Standards Act 1 of 5 INDIVIDUAL TERMINATIONS a. no notice is required where an employee has been employed for under three months b. 1 week’s notice in writing to the employee if his or her period of employment is less than 1 year c. 2 weeks’ notice in writing to the employee if his or her period of employment is 1 year or more but less than 3 years d. 3 weeks’ notice in writing to the employee if his or her period of employment is 3 years or more but less than 4 years

15. Page 13 Employment Standards Act 2 of 5 INDIVIDUAL TERMINATIONSe. 4 weeks’ notice in writing to the employee if his or her period of employment is 4 years or more but less than 5 years f. 5 weeks’ notice in writing to the employee if his or her period of employment is 5 years or more but less than 6 years g. 6 weeks’ notice in writing to the employee if his or her period of employment is 6 years or more but less than seven years

16. Page 14 Employment Standards Act 3 of 5 INDIVIDUAL TERMINATIONS h. 7 weeks’ notice in writing to the employee if his or her period of employment is 7 years or more but less than 8 years i. 8 weeks’ notice in writing to the employee if his or her period of employment is 8 years or more

17. Page 15 Employment Standards Act 4 of 5 MASS TERMINATIONS Obligations are triggered in the event that 50 or more employees are terminated in any period four weeks or less as follows: a. 8 weeks’ notice if the employment of fifty or more persons and fewer than 200 persons is terminated at an establishment b. 12 weeks’ notice if the employment of 200 or more persons and fewer than 500 persons is terminated at an establishment c. 16 weeks’ notice if the employment of 500 or more persons is terminated at an establishment

18. Page 16 Employment Standards Act 5 of 5 FORM 1-includes details of: the economic circumstances surrounding the intended terminations consultations with employees any proposed adjustment measures a statistical profile of the affected employees

19. Page 17 Implied duties

20. Page 18 Implied duties 1 of 2 EMPLOYEES To perform work in a competent and non-negligent manner To be honest in workplace dealings To demonstrate loyalty to the employer Not to compete with the employer’s business Not to claim entitlement to inventions achieved during the employment

21. Page 19 Implied duties 2 of 2 EMPLOYERS To not change the fundamental terms of the employment contract without the employee’s agreement or without providing to the employee reasonable notice of that change To maintain the position for which the employee is hired To deal respectfully and fairly toward the employee To not dismiss an employee who has become ill To pay reasonable notice of termination if there is no just cause for that termination

22. Page 20 Grounds for constructive dismissal

23. Page 21 Grounds for constructive dismissal 1 of 2 Reduction in wages or benefits An alteration in the manner of compensation (from salary to commission, for example) Employer behaviour creating a workplace environment that makes continued employment intolerable (such as vague and unsubstantiated negative performance reviews, unjustified and non-specific warning letters and the unwarranted imposition of probation or the toleration of sexual harassment)

24. Page 22 Grounds for constructive dismissal 2 of 2 Retraction of significant perquisites such as club memberships or company vehicles A demotion in position, reorganization resulting in a reduction in responsibility or lower reporting level Transfer to another geographic location

25. Page 23 Avoiding wrongful dismissal claims

26. Page 24 Avoiding wrongful dismissal claims 1 of 2 Know the laws in your jurisdiction Promptly document problems with an employee Deal with problem behaviour as it arises, not at some future date Provide an opportunity for the employee to improve, if this is feasible

27. Page 25 Avoiding wrongful dismissal claims 2 of 2 Promptly provide letters to the employee explaining the problem and what your expectations are for rectifying it consult with a lawyer as to whether there is just cause for termination in any given situation – while this costs you some fees, it may save you a lot of other expenses down the road Always keep in mind the implied duties of the employer and always act in good faith

28. Page 26 Damages

29. Page 27 Damages 1 of 4 FACTORS INFLUENCING THE AMOUNT OF NOTICE Termination provisions in employment contract Age of employee Length of employment Nature of employment Availability of similar employment, having regard to the employee’s experience, training and qualifications

30. Page 28 Damages 2 of 4 IN WRONGFUL DISMISSAL CASES THERE MAY BE Damages in lieu of reasonable notice Punitive damages Damages arising from torts

31. Page 29 Damages 3 of 4 ITEMS TO CONSIDER WHEN ASSESSING LIABILITY Salary Commissions Bonuses Medical, dental, disability and life insurance coverage Pension plans Company vehicles Vacation pay

32. Page 30 Damages 4 of 4 ITEMS TO CONSIDER WHEN ASSESSING LIABILITY Profits sharing Stock option plans Moving expenses and the cost of the new job search Aggravated damages/mental distress Punitive damages

33. Page 31 Wallace damages

34. Page 32 Wallace damages 1 of 2 HISTORY Damages for wrongful termination Pre-1997, before Wallace 1997, the birth of Wallace damages 1997-2008, the decade of Wallace bumps The Keays ruling

35. Page 33 Wallace damages 2 of 2 TRENDS Some courts are still extending the notice period Not all courts are demanding evidence of mental distress damages Wallace damage awards are getting larger Wallace damages are being extended for losses beyond mental distress

36. Page 34 Dishonesty

37. Page 35 Dishonesty 1 of 6 RECENT SURVEY IN CANADA 46% committed by employees ($50k) 37% committed by managers ($150k) 17% committed by owners/executives ($485k) 57% men; 43% women Size of loss correlates with annual income level, tenure, age, education, level of collusion 86% were first-time offenders 45% judged as “living beyond their means” 45% experiencing financial difficulties

38. Page 36 Dishonesty 2 of 6 RISK FACTORS Incentive or pressure to perpetrate a fraud Business (making the “number”) Personal (usually financially motivated) Opportunity to carry out a fraud Access to assets Inadequate or non-existent controls Authority to dissuade detection Attitude and ability to rationalize fraudulent action Management culture Financial aggressiveness

39. Page 37 Dishonesty 3 of 6 BIG OR LITTLE Large Frauds Almost Always Involve Collusion High risk of detection Enron, Tyco, WorldCom-- Madoff? The frauds permeate operations Small Frauds Can Be Carried Out by Individuals Activities are under the radar screen Unwitting accomplices Few individuals are willing to report potential fraud

40. Page 38 Dishonesty 4 of 6 WHEN SUSPICIONS ARISE Locate and read the policy Conduct pre-notice investigation Give notice to crime and property carriers Conduct thorough internal investigation Deal with employee issues Consider civil litigation Consider criminal prosecution

41. Page 39 Dishonesty 5 of 6 ONGOING BUSINESS CONCERNS Employee morale Management sensitivity Time required of operations people Cost Delays Periodic progress reports to management

42. Page 40 Dishonesty 6 of 6 MANAGING EXPENSES Create an expenses policy Decide what to include Communicate the rules Be reasonable Have several levels of authorization Be consistent Discipline appropriately

43. Page 41 Integrity questionnaires

44. Page 42 Integrity questionnaires TYPICAL QUESTIONSI never make personal phone calls from work If asked, I always give people my true opinion I have never lost my temper In my CV, I have been perfectly open and straightforward

45. Page 43 Questions to ask

46. Page 44 Questions to ask 1 of 5 Have I got all of the facts, and has a proper, thorough investigation been conducted to verify those facts? Is the proposed disciplinary action for this employee consistent with the treatment others have received for the same offense? In the same department or other departments? What is the employee’s past disciplinary record? What is the employee’s service record? Is the rule that has been violated a reasonable one? Has the rule been applied in a reasonable way in this case? Did the employee know the rule? If not, is it reasonable to think the employee should have known the rule?

47. Page 45 Questions to ask 2 of 5 If the issue is performance, has the employee been given fair warning (preferably in writing) concerning the seriousness of his or her conduct? (This would not apply for serious misconduct, such as fighting on the job or sabotage, where there is irrefutable proof.) Was there a record made of such past warning, and is it on file? Who gave the warning? When? Have similar past violations resulted in little more than a verbal reprimand or even been overlooked? Does my organization have a past record of strict enforcement for similar offenses? If not, have employees been warned of the intention to strictly enforce the rule?

48. Page 46 Questions to ask 3 of 5 Have I observed all rules and followed proper preliminary procedures including my employer’s disciplinary policies and procedures? Was there a personal problem that may have contributed to the employee’s action? Does the employee have a reasonable excuse? Was the employee given a reasonable opportunity to improve? Was the employee offered a reasonable amount of help and did the employee take advantage of that help? Did the employee know what was expected of him or her?

49. Page 47 Questions to ask 4 of 5 Am I being fair, unbiased, and level-headed, or am I reacting against the employee because of a personality clash, because there was a challenge to my authority, or because of a complaint (either formal or informal) made by the employee? Can I prove the employee’s guilt by direct, objective evidence, or am I relying only on circumstantial evidence or suspicion? What effect will the discharge (or failure to discharge) have on other employees and how will it affect morale? Is the timing of the discharge correct (e.g., to avoid the appearance of retaliation)?

50. Page 48 Questions to ask 5 of 5 Does the punishment fit the crime? What possible alternative is there to discharge? Are we dealing with a potential claim of employment discrimination or wrongful discharge? (e.g., could factors such as age, gender, race, religion, disability, or national origin be an issue?) Do I need assistance from my superior, the human resources department, or outside counsel?

51. Page 49 Case study A

52. Page 50 Case study A

53. Page 51 Case study B

54. Page 52 Case study B

55. Page 53 Conclusion & Questions

56. Page 54 Conclusion Summary Questions