The economic cost of over-protection

While employees need protection, it’s time for the pendulum to swing back a bit
By Justine Laurier and Evert Akkerman
|Canadian HR Reporter|Last Updated: 01/30/2019

When a dismissal turns sour, employers can often gain unwanted media attention and blame, even if they have not committed any fault, per se. When it comes to employment relationships that have gone bad, most cases before tribunals are focused on employees who were mistreated or neglected by employers that allegedly dismissed them unfairly.

Of course, there are employers that do abuse employees, and government inspectors and judges rightfully crack down on unacceptable behaviour if it’s not settled out of court.

Conversely, there are also employees who treat their employers and their employers’ representatives inadequately, who play the game and the system, knowing they may be rewarded for crying wolf.

The court of public opinion tends to side with employees, without knowing all the reasons or justifications that led to the dismissal. The public often thinks the employer has the benefit of unlimited resources to pay the employee off or to fight the employee to the end to justify its business decision.

This lack of balance in perception has tipped too far to employers’ disadvantage. Emboldened by legislation and jurisprudence, some employees have turned into habitual grievers or, worse, vexatious litigants.

For disgruntled employees, there is no real downside to suing their employer, especially when they are represented free of charge.

Imagine how many cases would never see the light of day if the “loser pays” rule were to apply.

Anecdotal evidence suggests some employers prefer to leave positions open rather than risk the high cost of making the wrong hiring decision, which includes the potential cost of litigation, the cost and effort of recruitment and training, and the possibility they will eventually face the costs of another termination, with or without cause.

Instead, these employers redistribute work internally or procrastinate, relegating hiring to a permanent spot on a to-do list to be dealt with later.

Falsely accused

While employers large and small carry the economy by adding value and creating jobs, they can feel consistently thwarted. Often, they take people at their word and do business on a handshake. This includes hiring decisions: Business owners often make employment offers without adequately protecting themselves and limiting their exposure. They don’t always have time for drafting, reviewing, negotiating and executing employment and restrictive covenant agreements.

However, when things go wrong, they are faced with much longer notice periods and higher termination costs than necessary. And that is just the financial side of the issue.

As an example, an employer in Ontario with a stellar reputation found himself in hot water recently, through no fault of his own. He had owned a 500-employee company and then went on to start another smaller company.

Everything was going well until one of the 15 employees gave two weeks’ notice. Apparently, she only realized later that a resignation doesn’t generally qualify someone for employment insurance (EI) benefits.

The solution? The woman engaged the services of a lawyer who crafted a letter in which the business owner was accused of being physically threatening and verbally abusive to the employee as well as others.

An eight-page statement of claim, with a full accounting of the alleged misdeeds, vices and transgressions, was added to the employee’s file with Service Canada. The employee’s stance was that she had been forced to resign because of the toxic and threatening environment at the employer.

Ergo, she was approved for EI benefits. Service Canada advised the employer of this decision but did not grant him the opportunity to review the claim made against him.

While the former employee later admitted, verbally and in writing, to the court that she had made it all up to secure funding from Service Canada, the owner continued to be in Service Canada’s books as a bad employer. The entire legal process cost him about $20,000 and many hours to defend his reputation.

Strength in teams

Many employees are looking for greater flexibility in their workplace. And provincial legislators, attentive to the needs of employees, have promoted greater work-life balance.

When Ontario introduced 10 personal emergency leave days (with two paid days), as of Jan. 1, 2018, it was a challenge for many employers. One, for example, said that by February, 80 per cent of his 1,200 workers had already taken the two paid days off, wreaking havoc on his shifts and production schedule.

While some larger employers may not feel any disadvantages from these initiatives as they have the means and resources to get around the problem, small and medium-sized enterprises are feeling the negative effects.

Society definitely needs basic protection for employees, but the ever-increasing obligations that are being laid at employers’ feet can come at a real cost to the economy.

Employees need to share responsibility with employers and demonstrate accountability towards them. Employees have the right to ask to be accommodated, but employers have the right to run a profitable business.

If employers start questioning the rationale of setting up business in Canada, we would all be in big trouble. While employers should not be granted the right to fire employees at will, it is time for the pendulum to swing back a bit.

The strength of a team is each individual member: They make the team grow and ensure its success, and everyone must work together to find the right balance.

Justine B. Laurier is a lawyer and partner specializing in labour and employment law at Borden Ladner Gervais in Montreal. She can be reached at jlaurier@blg.com. Evert Akkerman is an HR professional based out of Newmarket, Ont., and founder of XNL HR. He can be reached at info@xnlhr.com.

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