Elon Musk's recent moves questionable from employment law, HR standpoint
Like almost everything in the employment context, there is a right and wrong way to terminate someone’s employment. Doing things the right way can minimize liability and costs — doing them the wrong way can attract liability and possibly reputational damage.
Recent events in the unfolding story of Elon Musk’s purchase of Twitter provides an illustration of how not to dismiss someone.
One of Musk’s most recent moves was particularly egregious from an employment law and HR standpoint. Musk tweeted about an aspect of Twitter that was not working and attributed the cause to a coding problem. A long-time Twitter employee and head of the team responsible for the function in question responded to his tweet, stating that the issue was unrelated to the code involved. One of Musk’s Twitter followers brought this to his attention by responding to the tweet and tagging Musk. Musk then fired the individual, and tweeted this out to the world.
This employee’s location is not clear — however, for purposes of discussion, let’s proceed on the basis that they were working in Ontario. What did Musk do wrong in carrying out this dismissal and what consequences might he face?
Do not embarrass your employees
Whatever the reason for the employer’s decision to dismiss an employee, it should be conducted in private. Similarly, the reason for the dismissal should not be widely known — an email indicating that the person is no longer with the organization is sufficient, without going into detail. Finally, unless there is a legitimate safety or security concern, there is no reason to have a security guard march them out of the door in full view of their colleagues.
Establish the behaviour you want your employees to comply with by policy and training — not by making a public example of someone who is already having a horrible day.
After the dismissal, the employer must observe its obligations at law — issue a Record of Employment (ROE) within five days of the interruption of earnings, and pay out the employee’s statutory entitlements in the appropriate timeline. While additional amounts may be offered in exchange for a release, the statutory entitlements should be paid within the timelines.
Case study: Consequences for breaching the law
The recent case of Pohl v. Hudson’s Bay Company provides a good example of an employer acting egregiously in the dismissal process — and the price it paid for doing so.
In Pohl, the employer terminated his employment without cause. Despite not asserting any misconduct on his part, the employer directed Pohl’s supervisor to immediately walk him out the front door. The employer then failed to issue Pohl’s ROE in the correct timeline, failed to pay him his statutory entitlements upon dismissal for an extended period, and “offered” him another job, allegedly as mitigation. However, this job would have guaranteed Pohl zero hours of work per week, and would have required him to sign an employment agreement which removed his entitlement to common law reasonable notice.
The court reviewed the company’s post-dismissal misconduct, and awarded Pohl a total of $55,000 in damages — $45,000 in moral damages, and $10,000 in punitive damages, all to address the further wrongs done to him by his former employer. Twitter may face something similar should this employee choose to proceed with a wrongful dismissal suit against it.
As we know, an employee has a duty to mitigate their losses after dismissal by making reasonable efforts to find suitable employment; if they decline reasonable opportunities, their compensation can be reduced. A strategic employer may want to offer re-employment and, if the employee declines, use that as a basis to reduce their severance payments.
However, the former employee will not be expected to return if it would not be reasonable to do so.
It is difficult to imagine a better example of a scenario where a reasonable person would refuse to return to a workplace than one where the employer publicly humiliated and fired them.
An employer who ignores the proper process in dismissing someone faces not only the prospect of an award of damages against it, above the employee’s reasonable notice, but may also find that it is prevented from offering the employee their job back as a way to reduce its notice obligations.
Outside of the monetary cost, an employer who does something along these lines damages its reputation in a competitive employment market and will certainly not be seen as an employer of choice. Few people will be queuing up to work for a company that has a reputation for publicly humiliating its employees — particularly when it’s done on social media.
Improper dismissal practices can also have a negative impact on employee retention and morale. If every employee knows they could be next to be fired and the treatment they can expect when it happens they have little incentive to remain onboard — and may be looking for an exit at any time.