Elevated HR Solutions: Terminations are never easy but they don't need to be hard

During the last while, I have had the privilege of meeting with many small business owners to discuss how I can take the "HR out of the business".  The topic of choice always seems to land on terminations.  I've been through my fair share of corporate terminations (one of which even ended in my life being threatened, but that's another blog in itself) and have certainly learned what to do and more importantly, what NOT to do.  It is an art - as are many actions integral to the HR world.

Unfortunately, I often get asked to come into an organization AFTER something bad has happened (reaction).  At any rate, this particular client had just gone through a "terrible" termination and were literally exhausted by the whole ordeal.  They claimed they had warned the employee over and over again that if the behaviour continued they would eventually end the employment with them and after 3 months of no change, the finally let the person go.  They claimed it was due to performance and then provided the statutory amount of pay as legislated by the province (thinking they were being nice).

The client did have a couple of things going for them:

A.) They had a policy on corrective discipline
B.) They had sat down with the employee multiple times
C.) They had a signed action plan

While it never went to court, lawyers eventually settled on an additional 4 weeks of pay (for a total of $8,425 settlement plus legal fees.)

"So let me get this straight..." I said, slowly, trying to comprehend the story. "So you spent 90 days, trying to coach someone, who you knew was inevitably uncoachable, and you still had to pay them out an additional 4 weeks of what you originally offered? Where's his employment agreement? Where's his termination letter?"

Pausing, they said they didn't really have an employment agreement and as for the termination letter, they just gave him his record of employment and told him it was over. Further to that, when I audited his employee file, there was only one action plan and no evidence of follow-up.

3 learnings came out of this:

1.) Ensure you have an employment agreement that stipulates what may happen upon termination without cause (remember, this is different per province and must comply with minimum provincial statutes).  You may elect to provide more (to mirror common law) but this is not mandatory.
2.) If you go so far as to have a policy on how corrective discipline works in your organization, you may as well follow it.  Remember - if you're already going so far as to writing down an action plan, meeting weekly, having crucial and tough conversations - you better make sure it is supported in writing that the employee understands the consequences if the behavior continues.  The consequences MUST be laid out.
3.) Always ensure a termination letter is included in the termination package. And the wording should be laid out in such a way that protects the organization.  In other words, "Effective immediately, your services are no longer required and we are terminating your employment agreement as per section 7.1, dated June 1, 2010. We relieve you of your job responsibilities immediately, so you may secure alternative employment."
4.) Finally - there is no such thing as little bit of cause.  If you are paying out something anyway, you are not alleging cause and therefore, should make no mention of poor performance or WHY you are letting go of the individual.  Yes, it FEELS like the right thing to do (to explain it) but don't get caught up in the emotions of it.  Pay them what is required inform them their services are no longer needed.  If you believe you have the right to terminate someone without pay, then you are alleging cause and you have to have ample proof that you can prove in court.

There is nothing nice about terminations.  You are responsible to  to do it humanely and discreetly to avoid Wallace damages / punitive damages, but that doesn't mean getting into a conversation. It's quick and simple.

What would I have done if I were working with the client prior to the termination?

After 2 weeks of coaching and clearly no improvement, knowing what the final solution was going to be...I'd have let him go.  Thank him for his services, pay him a bit more than what legislation requires, get him to sign a release for the additional monies and be done.  I save time (there is no credit given in court for the amount of "coaching" you do), I save legal fees (even it's lawyers talking to each other) and ultimately I've mitigated my overall risk (a bad seed in a organization can do more damage than what's at the surface.)

www.elevatedhr.com

Elevated HR Solutions: New Years Resolutions May Mean Higher Turnover

Just like clockwork, the end of the first week of 2011 had my phone ringing non-stop.  Employees have decided to resign and my clients (and potential clients) need help to replace and/or have asked me to complete exit interviews of their departing staff.

Unfortunately this was not a surprise to me as unemployment rates have started to drop as recovery from the recession continues and employees start to feel confident enough to look for a change. Those companies that used the phrase, "Stick with us during the hard times and we'll reward you when we get through it," need to either pony up or watch their A-Stars leave. This is the perfect time for it - as New Year's resolutions are most acted upon within the first to two weeks of the new year. 

If your company still can't necessarily afford raises or bonuses (or any of those recession promises made), a company's next greatest defence is communication.  Grab your A-Players and make sure that they know they are that (A-Players). Remember - the whole carrot and the stick trick is running out.  So try to give them something like meaningful praise or maybe an extra day or two off before things get crazy in 2011, or perhaps a gift certificate for dinner and an offer to pay for the sitter for a night - anything that would be customized to the person's life outside of work that says, "We care! We want you here!"

If you can get through January, you've got a chance to keep them hooked again for the year.  Of course, employee engagement and employee enablement initiatives should technically last more than a month - but that's another blog!

Happy New Year All!

Elevated HR Solutions: Disabled employee is terminated for dishonesty

So for those of you who personally know me, have often heard of my frustration when it comes to the human resources reputation.   Ultimately, I truly do love the profession and I love that it can support a business as well as protect it.   I say it often, your employees are your greatest asset, but can also be your greatest liability. 

Here's a recent case that demonstrates the liability...

Winpak Ltd. v. C.E.P., Local 830, 2010

Cole's notes version of the case: Set in the province of Manitoba, Canada an employee goes on disability due to an injured back. The injury did not occur due to work, however prevented the employee to work, much like an illness.

When an employee goes on long term disability (LTD), during the first 12 months (typically) you are only asked about being able to do your own job.  After 12 months, the insurance provider asks if there are any accommodations that could be made, or if you could do another job, similar in stature and pay.  If you cannot, your long term disability benefits are continued.

Typically a long questionnaire is asked, and in the case of above, he said that he could no longer do anything, he couldn't even drive - he was pretty much bed ridden and could only watch TV/movies (direct quote!)  The doctor, didn't deny any of this, wrote a note and did not state a date of return.  If the doctor can't find anything, but the patient still complains, this is typical practice.  It's like the guy who has migraines, but nothing can be found, but he still says she's in pain - it's hard for a doctor to say, "You're lying" or "I don't believe you."

Anyway, the insurance company hires an investigator who follows him for two days.  And guess what? He can drive, and is caught carrying bags to his car. He drives around all day going to various stores and seems to be walking without issue (videotaped).  He picks up his wife in the car both days.  And at one point goes to the gym for 4 hours.  Yup - 4 hours.  (Later he claims that his physio therapist told him to swim, but he conveniently left that off the questionnaire...)  No matter how you slice it, he's certainly not bed ridden.

So he was fired for cause - and it turns out, as long as you have really good evidence that the person was indeed showing dishonesty - you've got it - no payout, nothing. Dishonesty = cause.  And I'm pretty sure now that the insurance agency will take their run at him too - after all, it smells like fraud!

A human resources department has to be vigilant when handling benefits claims.  Of course they have to be supportive of the employee - but they also have to be looking out for the company and make sure the company is protected.  In most cases, Long Term Disability insurance is paid for by the employee to avoid taxes should they ever have to use it.  This guy was going to make insurance premiums go up for everyone - if he was truly, legitimately disabled - sure - not a problem.  I can't say for sure that a Human Resources representative was part of this case, but if they were - they were doing their job. 

An outsourced HR representative can help in these types of situations - if you've got questions, we've got answers.

http://www.elevatedhr.com/

He needs to be terminated...do I have cause?

Here's a crazy tale: An employee can get drunk at a party, knock out a client and drive into a co-worker's vehicle as he is fleeing the scene.  In addition to that, you can have multiple witnesses and you still don't have cause UNLESS...

1.) You have a record of repeated behavior (written, with his/her signature agreeing to past behavior and the consequences of it - a good rule of thumb is at least 3 written warnings)

2.) You have offered him "help" for alcoholism and he has denied treatment (in writing)

3.) You have a policy that outlines expected behavior at events and the consequences of behavior

And even then, a judge may see it differently. Ugh.

You can take your chances and still let the employee go with cause. However, the minute he or she goes to a lawyer, they will come back and state that you not only need to provide minimum notice in terms of termination pay, you also need to provide additional monies.  It can then escalate into hourly invoices from lawyers and depending if you come to an agreement or not, court (and more hourly lawyer invoices).

So what should you do?

I would not want an employee who shows no control to be a representative of my company either.  That said, here is the simplest thing to do:

A.) Make sure your employment agreements have a termination clause that outlines you can terminate for any reason by providing termination pay (which is at minimum the provincial standards, but could be more)

B.) Terminate the employee without cause, which means you do not specify why you are letting the employee go. All you need to say is, "Your services are no longer required."

C.) Provide the amount stipulated in the employment agreement. At the very least, it needs to meet the minimum standards in each province.

In Alberta it looks like this:

• one week - for employment of more than three months, but less than two years
• two weeks - for employment of two years, but less than four years,
• four weeks - for employment of four years, but less than six years,
• five weeks - for employment of six years, but less than eight years,
• six weeks - for employment of eight years, but less than 10 years, and
• eight weeks - for employment of 10 years or more.

Depending on the province you are in, this changes. So be sure to make sure your employment agreements reflect the right termination clause dependent on the province.

Now all of this said, the employee may be entitled to more based on age, position, how easy it would be to find an additional position etc. Therefore, a common practice is to add an additional amount called "Severance Pay". This is up to each organization what amount they would want to add, but common practice is double. That said, you are not required by law to offer anything.

Once again, I'm not a lawyer.

But I've been there - in these exact situations, mulitple times. If you create an internal process and follow it consistently, you protect yourself. If you choose to go down the path of straight termination with cause, and provide no notice to the employee, you've had fair warning, and should expect a call from a lawyer.

Sure, some employees do not have any idea what their rights are - but it just takes one that does.

http://www.elevatedhr.com/ 

Exit Interviews - Exposing hidden secrets upon resignation

The lessons I have learned from the early days of my career are definitely amongst the most valuable.  Perhaps it’s because I was the most impressionable back then (not that I would ever admit it). I was ego-centric and thought I knew everything.  I have definitely eaten some very delicious humble pie in my career.  I always tried to brush it off quickly but as I have grown older (and hopefully wiser) I love to look back on the lessons I have learned. “Did I really do that?”

One lesson learned in particular comes to mind after I attended a networking event and was asked if I conduct exit interviews and if I saw value from them.  My answer was “Yes and yes.”

Exit Interviews are those meetings an organization has when they are off-boarding an employee.  Typically, conducted by an HR representative (or anyone that is not a direct supervisor, as it allows for more open and candid responses), it’s a set of pre-selected questions asking the employee what their experience was like while working for the company.

My first exit-interview looked something like this:

Me: “Why did you decide to leave?”

Employee: “I got a better job.”

Me (somewhat puzzled by tone, but trying to maintain control): “What about the job that makes it better?”

Employee: “Everything.”

Me (definitely flustered, voice cracking slightly): “Do you have any suggestions to make X a better place to work? Was there anything that would have prevented you from leaving?”

Employee (leans in across the table, makes direct eye contact with me and in a very quiet, monotone voice says): “Don’t you think it’s ironic that you’re asking me how I feel now that I’m leaving when you had 5 years to get my opinion previously? Why would I want to provide you any feedback to make this a better workplace AFTER I leave. Go f**k yourself.”  (I’m probably paraphrasing everything BUT the last sentence.)

Me (shaking, but trying to not let her see it, most likely on the verge of tears…I hadn’t really developed any sort of thick skin at this point): “I appreciate that.  If it’s any consolation, I’m new to this. You’re right, we should have asked you prior to you leaving.  That’s my fault.  May I take this as a suggestion for us to improve?”

Employee (honestly surprised at my response…perhaps she was looking for a fight, but both her face and voice softened): “Uhh. Sure. Sorry, I shouldn’t have sworn.  It’s just I put my heart and soul into this organization and…and you just didn’t ever seem to care…”

The interview actually lasted close to an hour and half and a week later I did an anonymous employee survey (big lesson learned).  She gave me a ton of examples (some were valid, some were just the opinion of a disgruntled employee) but I realized how important the information was that she provided.  And at the end of the day, it actually allowed her some closure too – she was harbouring a lot of feelings and by opening up, it allowed her to finally say what she always wanted to. She didn’t end up holding anything back – because she didn’t have anything to lose.

That said, not all exit interviews provide a lot of valuable insight.  But if you ask the same questions, and implement a rating scale of some sort, you can use the exit interviews as one component towards a report card for the organization as a whole on a semi-annual or annual basis. 

After a few exit interviews, from the same department, we realized the manager may need some additional leadership support. At another company, information regarding our compensation came up and we did a salary review, realizing we were not only paying at the 30^th percentile, our benefits were not on par with the market at all. 

While deep, dark secrets don’t always come to the surface – having a standardized approach to off-boarding an employee makes it easier for management to make decisions that affect the staff.  (But at the same time, it’s equally as important to ask the employees how they feel while they are still in fact employees.)

Oh and one other thing – I don’t do exit interviews when the company has made the decision. I just think it’s asking a lot to get an employee’s perspective on things when you’ve just told them they no longer have a job.  But it’s the organization’s call. (Just a recommendation from someone who has been in the situation and realized this wasn’t a good call!)

http://www.elevatedhr.com/

What is Wrongful Dismissal?

In general, an employer is permitted to terminate employment without just cause, provided they give an employee reasonable notice or compensation instead of reasonable notice. An exception to this is if an employer has violated an employee’s human rights or violated certain parts of the Employment Standards Act (i.e. failure to reinstate an employee after pregnancy leave).


There is an implied term in every contract of employment that an employer will provide an employee with reasonable notice of termination. This presumption may be rebutted with a valid and enforceable termination clause (this will be expanded on below). Absent an enforceable and valid termination clause, an employer must provide an employee with reasonable advance notice of termination or payment in an amount equivalent to all salary and benefits that would have been earned by the employee during the reasonable notice period. The ‘wrongful’ in wrongful dismissal, refers to the failure of an employer to provide an employee with reasonable notice and does not refer to the dismissal itself.

The Employment Standards Act only provides minimum notice periods, which is different depending on the province.  An employee can be entitled to a notice period beyond the statutory minimum, depending on a number of factors which the courts will consider in determining the appropriate notice period. These factors include: length of employment; training and experience required to fill the position; responsibility attached to the position; availability of equivalent alternative employment; employee’s relevant education, training and experience; the employee’s age; and if there was inducement to leave another job. If an employer has acted unfairly or in bad faith at the time of termination, an employee may be entitled to an increase in the amount of notice they are entitled to.
 
Employers are increasingly looking to minimize their exposure to common law notice periods (i.e. notice periods that are awarded by the Courts depending on the factors listed above) by inserting a termination clause in their employment agreement with their employees. A termination clause is an unambiguous, statutorily compliant, clause that outlines the amount of notice an employer will provide an employee if they are terminated without cause. For example, the Ontario Court in its decision in the case of Lloyd v. Oracle Corp. Canada [2004] O.J. No. 1806 upheld a termination clause that read as follows: “Oracle may terminate your employment at any time, without cause, upon giving prior written notice in accordance with the Ontario Employment Standards Act, or any similar legislation which is in force in the province within which Oracle’s offer of employment is accepted”. The Court reasoned that the termination clause was sufficient to rebut the common law presumption of reasonable notice and the clause met the minimum requirements of the Employment Standards Act.
 
In the majority of instances when a termination clause is present, the termination clause will provide for a notice period that is less than what an employee would have received under the common law presumption of reasonable notice. It is for this reason that many employees seek to challenge the validity and enforceability of these clauses. Some arguments that are usually put forth to challenge these clauses include, misrepresentation, lack of consideration, duress and unconscionability. Employees also tend to challenge the specific content of these clauses. In this regard, the employee will argue that the clause is too vague and ambiguous or that it fails to comply with the minimum notice periods required by the applicable employment legislation in the province.
 
In the event an employer has not provided an employee with reasonable notice and/or severance in accordance with their minimum entitlements under the Employment Standards Act, the employee has the option of pursuing a claim under the Employment Standards Act or through the civil courts. An employee cannot elect to pursue a remedy under both. If an employee elects to pursue a remedy under the Employment Standards Act, any award will be limited to the maximum allowed under the Act. Alternatively, if the employee feels that they are entitled to a reasonable notice period beyond the statutory minimum, the employee would have to pursue a claim in the civil courts.
 
Example:

Kevin Keays was fired from a Honda assembly plant in Alliston, Ont., in March 2000. Three years earlier, he had been diagnosed with chronic fatigue syndrome, which led the 13-year employee to take time off work.

His employers at Honda recommended he apply for a program — run under the Ontario Human Rights Code — that would exempt him from being penalized for repeatedly missing work. Keays also saw a company doctor. After more workplace absences and a breakdown in his relationship with his employer, Honda Canada cancelled Keays' enrolment in the provincial program and ordered him to see another company doctor.

Keays, acting on his lawyer's advice, refused unless Honda officials first told him more about the purpose of the visit with the doctor. Honda fired Keays for insubordination.

The Ontario Superior Court ruled Keays was fired without cause and awarded him 24 months of salary in lieu of formal notice, and $500,000 in punitive damages for violating his human rights. It was the largest award of punitive damages in a Canadian employment case.

Honda, a rather large organization took a rather large risk and it was costly.  Can your small business afford to take a risk?

http://www.elevatedhr.com/

Wrongful Dismissals Could Mean the End of a Small Business

My major draw in supporting small businesses is the fact that they do not have the resources, the time, or the knowledge to deal with HR related issues.  That said - a small business has huge risks associated with their employees and most of the time they don't even know it!  Their employees are their greatest asset -- but also their greatest liability.

Small businesses rarely have employment agreements (other than those promises scratched across a napkin) but the risk of choosing not to have them could be costly for an employer. An employment agreement helps a small business to set out expectations as appropriate (reporting structure, salary, start date, probationary period),  it contains items that stops an employee from taking the knowledge learned to their competitors, outlines how the termination process will work and typically includes a job description that outlines minimum standards of work.  Once these are agreed to (signatures included) both the employer and the employee have a duty to act accordingly.  (I'm a huge proponent of employment agreements, and I can help you create yours without having to consult a lawyer!)

So now you've got this employee and he or she is not working out.  Let's say, you do in fact have an employment agreement where you have outlined the minimum termination package that is in line with the statute.  Unfortunately, even though you and the employee have agreed to this, there is no rule of thumb that this is an appropriate payout for a termination (but it does help!)  There are a few things you should keep in mind when terminating an employee and determining what you will pay them:

1.) Cause is almost impossible to prove.  So trying to pay anyone without notice is asking for trouble.  Unless those video cameras have caught the person red-handed stealing from your till and you can see their face beyond a shadow of a doubt, it's doubtful you have a case for cause.

2.) So considering there is going to be a payout, typically the best thing to do is never state why the employee is no longer wanted in the company.  The biggest danger is saying, "You're just not doing what I want. It's not working for me."  I Instead, when you are going to terminate someone, state, "Your services are no longer required."  A lack of performance, in the eyes of the law, is not a justifiable reason for termination without months and even years of demonstrating how this lack of performance hurts the business.  An employer must show a track record of support for the employee.

3.) So how much notice does an employer have to provide an employee when they no longer have a need for them? Unfortunately, there is no rule of thumb.  It just has to be "fair".  But if you're not fair - a judge could have a hay day in court with you, and a judgement against a small business could not only be costly, it could mean the end of the small business.  The items that determine a payout are as follows: the character of employment (what position was held), length of service, age of the employee and the type of work available in a similar position.  The higher position, the longer the service, the older the employee and a dreary job market makes a pay-out that much more. 

If you go online right now, you can type in Wrongful Dismissal cases.  I wouldn't want my name on that list, nor would I want to have to pay a lawyer, plus a settlement.  But if you need help when terminating an employee, Elevated HR Solutions can help.  Just contact me at michelleb@elevatedhr.com

The process can be brutal - but with careful planning and help, a small business can stay in control of both their business and their costs!

http://www.elevatedhr.com/