Recently, we had Ryan Anderson and Grady Tyler of Mathews Dinsdale speak at our Breakfast Series Event. Ryan and Grady are both experts who are exceptionally informed about Employment Law and the upcoming changes to the BC Labour Relations Code and BC Employment Standards Act.
At our Breakfast Series Event, they shared their knowledge about the new legislation in effect regarding BC Workplace laws and BC’s Employment Standards. They also reviewed common HR pitfalls with our employees, clients and partners. We would like to share some of this knowledge with those of you who could not attend the event. In this blog post, we review what we’ve learnt as the top five common HR mistakes to take note of and avoid.
Employment Law: Top Five HR Pitfalls
As an HR manager, we know that work can get busy and that it can be difficult to stay on top of every task. However, being aware of pitfalls that are both costly and common occurrences can save your business both time and money.
Lure of the Independent Contractor
Your business may choose between paying an independent contractor or an employee to do the same job, but knowing the legal distinction between both positions may influence your decision.
It may be appealing to hire an independent contractor rather than an employee in cases where you prefer to have less commitment or less administrative burden. But just because you call someone a “contractor”, it does not ensure that they are deemed a contractor in court.
If you control where, when and what type of work a contractor performs, they may be seen as an employee in a court of law. This means the contractor may have the legal right to severance, overtime, and deductions like CPP and EI.
You can get most of the ease and advantages of a contractor, with an employer/employee relationship and an appropriate employment contract. If you truly want a contractor, make sure to review day-to-day practices to reflect a verifiable independent contract relationship.
Invalid Employment Contract
You may have given verbal or written confirmation of an employment contract but for that contract to be binding and enforceable, it must meet some basic conditions.
- There must be an offer and acceptance of the contract
- The terms of the contract must not be unconscionable or illegal
- There must be “consideration” (some benefit for each of the parties) for entering into the contract
It’s not uncommon when hiring a new employee to have them sign an employment contract a day or two after they have started work. The problem with waiting is that the “consideration” of a new job is no longer the “consideration” for signing the contract because they have commenced employment.
The best solution to fix this error is to offer consideration in the form of a gift card upon the signing of the employment agreement. The best practice moving forward is to have a prospective employee sign the employment agreement in advance of commencing work so that the new job is the consideration.
Furthermore, when a company promotes an employee or changes a contract, the employer should provide the employee with a new contract to sign prior to the start date of this change. By doing this, the company provides the employee with “fresh consideration” to make the contract enforceable. This may take the form of an increased salary, a gift card or additional benefits.
There is a chance that the new contract might be unenforceable if the signing occurs only after the promotion. In this case, the employee can argue that the terms of the new contract were not discussed pre-promotion and that they did not receive fresh consideration.
Not Having an Overtime Policy
Your employees have agreed to work overtime and you have made a deal with them. However, regardless of whether you have directly or indirectly asked employees to work overtime, you are liable for tracking and paying overtime accurately. Remember that weekly and daily overtime are two different things and banking OT does not change the rules.
It can end up costing you if you are not keeping track of OT, and if you don’t understand the rules. Avoid getting into a grey area with indirect overtime by having a policy about working hours. If you don’t currently have a policy or have not been diligent about paying OT, the quickest fix is to stop and change your course of action now.
Never Cause, So Why Bother?
As you may know, it’s very rare for companies to fire on just cause. Just cause for dismissal is a high standard, controversial, and often costly. Instances are often limited to theft, sexual harassment or other serious concerns.
However, in many cases, you have an employee who is just not working out for a variety of reasons but you don’t bother to speak to them about your concerns since documenting deficiencies may be time-consuming and confrontational.
The problem with failing to note performance or other issues is that a without cause dismissal may leave the perception that you have fired for discriminatory reasons or in bad faith. This can often hurt companies and risk their reputation.
“Surprise, you’re fired!” is almost never the best practice. A little bit of documentation goes a long way. Make sure that you set performance review meetings or issue warning letters for poor performance and misconduct.
Employer as Insurer
Whether an employee quits or is terminated, make sure you follow the proper procedures. Termination of employment also terminates health benefits, life and disability insurance. It is possible to request continuation of benefits during the notice or severance period.
However, most insurers will only continue health and dental benefits not the ones for catastrophic coverage such as life, disability or out of country claims. Make sure you do your due diligence and provide reasonable notice of the continuation of insurance and benefits to avoid any issues in the future.
This concern is routinely overlooked, as employers think they are not responsible for claims after terminating an employee, but a life insurance or LTD claim during the notice period can leave you on the hook for the entire claim.
Inform your terminated employees of benefits continuation or extension options. Having employees sign a waiver acknowledging that insurance coverage will not be continuing as part of the departure process can help avoid any future liabilities for employers.
If you are unsure that you have protected your company from liability, remember to always stop and assess the situation before jumping to the solution.
Be honest and (mostly) transparent, because cover-ups don’t usually work and your first mistake is often the cheapest. Making small changes to protect your business can save your company’s reputation and bottom line. If in doubt, get expert or legal advice - 10 minutes might save you thousands of dollars.