Care needed in firing employee as it could lead to significant liability: employment lawyer

Human resource managers need to recognize the “warning signs” of when a decision to terminate an employee’s job may result in significant liability to their employer and consider an approach that minimizes the risk of a claim, says Carman Overholt, Managing Partner at Overholt Law in Vancouver.

The developments in labour and employment law over the past 30 years “reflect a far greater emphasis on individual human rights, the importance of employment to our society and the vulnerability of employees in the employment relationship,” says Overholt.

There is now a far higher standard for employers regarding managing their workforce. “This includes the written terms of employment that will be enforced, and the policies introduced in the workplace,” Overholt notes.

In falling short of the current expected standards, he adds, employers “face potential liability for damages for bad faith,” along with aggravated damages, punitive damages and any remedies available under human rights legislation.

Overholt points to the Supreme Court of Canada’s decision in Keays v. Honda. It ruled an employer who is “unduly insensitive” in the termination of the employment relationship will be liable for additional damages.

In that case, the plaintiff Kevin Keays was hired in 1986 by Honda of Canada Manufacturing in Alliston, Ontario, to work on the assembly line, later moving into data entry. In 1997 he was diagnosed with chronic fatigue syndrome, upon which he ceased work and received disability insurance benefits until 1998, when the insurance company determined that he could return to work full‑time.

The plaintiff continued to not show up for work and ended up in Honda’s disability program, which allowed for absence from work, providing proof that it was related to a disability.

In 2000, Honda requested the plaintiff meet with an occupational medicine therapist to determine how Honda could accommodate him so he could return to work. Before a meeting could be arranged, Keays retained counsel, who sent a letter outlining his concerns and offering to work toward a resolution.

Honda expressed concern over deficiencies in the notes from Keays’ doctor(s) and advised it preferred to deal with employees directly and not “third-party advocates.” Keays told Honda that, on the advice of counsel, he would only meet with the specialist provided there was an explanation of the consultation’s purpose, methodology, and parameters. He did not come to work for a week following this incident. On his return, Keays received a written warning to return to work or lose his job. When he refused to do so, Honda terminated his employment.

Keays subsequently sued Honda for wrongful dismissal. After making its way through the Ontario trial and appeal courts, the SCC built on its earlier decision in Wallace v. United Grain Growers Ltd. That case offered some guiding principles for assessing and identifying whether an employer has discharged its duty of good faith upon the termination of an employee.

It ruled an employer fails to discharge its duty of good faith where, during dismissal, the employer fails to be open, reasonable, truthful and forthright with the employee. An employer also fails to discharge its duty when it acts unfairly by being misleading or unduly insensitive.

Overholt says that considering how courts have ruled in these cases, “obtaining a few hours of legal advice can make all the difference between a well-executed termination of employment that does not give rise to any claim and a disaster that may result in years of time consuming and expensive litigation.”

As a result, employment lawyers have become integral to managing the workplace and resolving disputes. Overholt says lawyers can provide advice for a good foundation for employment agreements, handbooks and policies that are “critically important” to managing a workplace.

“Human resources professionals have become teachers and trainers who can help all employees understand polices and the expectations of employers on a wide range of subjects including respectful behaviour, the use of social media and disability management.” Addressing the wide range of employee behaviour that can be destructive to an employer’s business is an important skill set that human resources professionals should strive to acquire.

Overholt adds, “considerable new legislation has been introduced to provide greater support and protection of employees.” Given the labour shortage in many sectors, “the reputation of an employer for being fair and generous has become very important,” he says.

“A public dispute with a former employee can create lasting damage to an employer’s reputation and goodwill.”