Employers cause themselves, employees grief by not maintaining proper records
When it comes to keeping records, employers can learn a lot from pack rats. Justice Rowe of the Tax Court of Canada summarized the unfortunate predicament in which many employers may find themselves if they fail to keep proper records.
“Many employers are causing themselves — and, more significantly, their employees — unnecessary grief by not maintaining proper records and otherwise failing to comply with applicable labour standards by refusing to pay workers promptly in accordance with those requirements,” he said.
Federal and provincial law puts the onus on employers for keeping and maintaining proper records. Failure to do so may result in liability for the employer, as was the case in one decision by an employment standards officer.
No records, no proof of payment
In Re Angelo Sacco and Angelo Mennona (c.o.b. Hair Centre Barber), the employer appealed an order to pay Maria Urpecz, one of its employees. An Ontario employment standards officer issued the order for the company’s failure to submit public holiday pay to Urpecz.
The employer said Urpecz had been paid everything she had earned while she had worked in the shop as a hair stylist. In response to questioning, the employer conceded that payroll and other employee records may not have been professionally kept and as detailed as required under Ontario’s Employment Standards Act, but those records which had been maintained accurately reflected the earnings and payments due to all employees. The evidence suggested that no detailed records had been kept of public holiday pay. But there were what were described as “rather crude notations” which suggested Urpecz had received all public holiday pay entitlement.
The employment standards officer testified that she had met with the employer, reviewed payroll records and found the records to be inadequate and incomplete. While the employer argued Urpecz was paid for public holidays, this could not be proved or substantiated on the basis of the records. The officer’s decision was based on the state of the employer’s records, which was upheld by the referee.
The referee held the onus is on the employer to provide proof of payment. If no such proof exists, it’s not possible for an employment standards officer to decide on behalf of the employer that payment has been made.
It is equally important for employers to keep records not only for purposes required under employment standards law, but for other types of legislation as well. The Employment Insurance Act requires that records be kept in order to aid the government in providing EI benefits.
EI liability increased
In Mahil v. Canada, the Tax Court of Canada reviewed an appeal where the Minister of National Revenue decided that a woman’s employment on a farm during certain periods was not insurable employment because the parties were related and the minister was not satisfied that the context of employment would have been substantially similar if the employer and the employee had been dealing with each other at arm’s length.
The appeal was allowed and the decision of the minister was altered to find the employee was employed in insurable employment during those same periods.
One of the major issues in this case was the records kept by the employer. The court found the records were disorganized and unhelpful. The employer was therefore liable for EI payments,
And it’s not just little things like EI that keeping records will help with. The lack of proper records can become a big issue in the context of major litigation.
Written records used as evidence
Written records are often used as evidence in employment law cases. Both the Canada Evidence Act and the Ontario Evidence Act define business records to be those documents found in the “usual and ordinary course of business.” To ensure that business records are admissible, they must be kept and maintained in the usual course of business.
Without clear, accurate business records, employers will not have any proof to offer when it comes to disproving an employee’s claim. One of the best examples of an employee record used in civil litigation is the record of employment. In wrongful dismissal lawsuits this document is of prime importance as it reflects the circumstance under which the employee either left or was terminated, as well as the time the employee worked for the employer and the amount of pay provided.
If this form is completed inaccurately, it could result in an admission by the employer of wrongdoing. The most obvious example of this is where an employer will complete the form showing that the employee’s employment was terminated, but the employer is alleging that the employee voluntarily resigned. A lawyer acting on behalf of the employee will quickly discover this error and seize upon it. The consequences of this can be devastating, resulting in costly litigation and settlements.
Although the length of time within which to sue for wrongful dismissal is two years in Ontario, this only went into effect on Jan. 1, 2004. Any claims arising after Jan. 1, 2004, will be subject to a two-year limitation period. But any claims which arose prior to Jan. 1, 2004, will continue to be subject to the six-year limitation period. Therefore employers should continue to keep records of employment for a period of six years, in the event the employee decides to bring action for wrongful dismissal.
Natalie MacDonald is an associate with Grosman, Grosman & Gale, a Toronto-based law firm specializing in employment law. She can be reached at (416) 364-9599 or [email protected]. Look for her next column in the Nov. 8 Guide to HR Technology.
Maintaining accurate records
Due to the importance of maintaining accurate information, it is recommended that employers:
•educate employees as to the importance of record keeping;
•ensure employees record information in clear and accurate format;
•ensure that employee records, like a record of employment, are completed in a timely and accurate manner; and
•implement a system whereby employment records are double-checked.
“Many employers are causing themselves — and, more significantly, their employees — unnecessary grief by not maintaining proper records and otherwise failing to comply with applicable labour standards by refusing to pay workers promptly in accordance with those requirements,” he said.
Federal and provincial law puts the onus on employers for keeping and maintaining proper records. Failure to do so may result in liability for the employer, as was the case in one decision by an employment standards officer.
No records, no proof of payment
In Re Angelo Sacco and Angelo Mennona (c.o.b. Hair Centre Barber), the employer appealed an order to pay Maria Urpecz, one of its employees. An Ontario employment standards officer issued the order for the company’s failure to submit public holiday pay to Urpecz.
The employer said Urpecz had been paid everything she had earned while she had worked in the shop as a hair stylist. In response to questioning, the employer conceded that payroll and other employee records may not have been professionally kept and as detailed as required under Ontario’s Employment Standards Act, but those records which had been maintained accurately reflected the earnings and payments due to all employees. The evidence suggested that no detailed records had been kept of public holiday pay. But there were what were described as “rather crude notations” which suggested Urpecz had received all public holiday pay entitlement.
The employment standards officer testified that she had met with the employer, reviewed payroll records and found the records to be inadequate and incomplete. While the employer argued Urpecz was paid for public holidays, this could not be proved or substantiated on the basis of the records. The officer’s decision was based on the state of the employer’s records, which was upheld by the referee.
The referee held the onus is on the employer to provide proof of payment. If no such proof exists, it’s not possible for an employment standards officer to decide on behalf of the employer that payment has been made.
It is equally important for employers to keep records not only for purposes required under employment standards law, but for other types of legislation as well. The Employment Insurance Act requires that records be kept in order to aid the government in providing EI benefits.
EI liability increased
In Mahil v. Canada, the Tax Court of Canada reviewed an appeal where the Minister of National Revenue decided that a woman’s employment on a farm during certain periods was not insurable employment because the parties were related and the minister was not satisfied that the context of employment would have been substantially similar if the employer and the employee had been dealing with each other at arm’s length.
The appeal was allowed and the decision of the minister was altered to find the employee was employed in insurable employment during those same periods.
One of the major issues in this case was the records kept by the employer. The court found the records were disorganized and unhelpful. The employer was therefore liable for EI payments,
And it’s not just little things like EI that keeping records will help with. The lack of proper records can become a big issue in the context of major litigation.
Written records used as evidence
Written records are often used as evidence in employment law cases. Both the Canada Evidence Act and the Ontario Evidence Act define business records to be those documents found in the “usual and ordinary course of business.” To ensure that business records are admissible, they must be kept and maintained in the usual course of business.
Without clear, accurate business records, employers will not have any proof to offer when it comes to disproving an employee’s claim. One of the best examples of an employee record used in civil litigation is the record of employment. In wrongful dismissal lawsuits this document is of prime importance as it reflects the circumstance under which the employee either left or was terminated, as well as the time the employee worked for the employer and the amount of pay provided.
If this form is completed inaccurately, it could result in an admission by the employer of wrongdoing. The most obvious example of this is where an employer will complete the form showing that the employee’s employment was terminated, but the employer is alleging that the employee voluntarily resigned. A lawyer acting on behalf of the employee will quickly discover this error and seize upon it. The consequences of this can be devastating, resulting in costly litigation and settlements.
Although the length of time within which to sue for wrongful dismissal is two years in Ontario, this only went into effect on Jan. 1, 2004. Any claims arising after Jan. 1, 2004, will be subject to a two-year limitation period. But any claims which arose prior to Jan. 1, 2004, will continue to be subject to the six-year limitation period. Therefore employers should continue to keep records of employment for a period of six years, in the event the employee decides to bring action for wrongful dismissal.
Natalie MacDonald is an associate with Grosman, Grosman & Gale, a Toronto-based law firm specializing in employment law. She can be reached at (416) 364-9599 or [email protected]. Look for her next column in the Nov. 8 Guide to HR Technology.
Maintaining accurate records
Due to the importance of maintaining accurate information, it is recommended that employers:
•educate employees as to the importance of record keeping;
•ensure employees record information in clear and accurate format;
•ensure that employee records, like a record of employment, are completed in a timely and accurate manner; and
•implement a system whereby employment records are double-checked.
