Top employment law mistakes made by charities and non-profits

publication date: Jul 6, 2016
author/source: Scott Chambers
Scott Chambers1.     Failure to have an Employment Agreement

The Employment Agreement is the contractual agreement between the employer and the employee and it governs the employment relationship between the parties. It is essentially the most important document that governs the working relationship. 

It is vitally important to have the employee sign an Employment Agreement before their first day of work.  It is very difficult to impose an Employment Agreement retroactively (or after the individual has started, even if only a few days after the start date), so it is best for charities and non-profits to set up a process in which all new hires are provided a standard Employment Agreement immediately upon being offered the position.

The Employment Agreement outlines the basic terms of the employment relationship, providing:

  • A brief job description – including roles and responsibilities;
  • Duration or term of the employment (if applicable);
  • Remuneration / compensation;
  • Benefits provided including health, dental, vacations, etc.; and
  • Termination provisions.

You cannot contract out of applicable Employment legislation, and for the Employment Agreement to be valid and binding it must comply with the Employment Standards Act, 2000.

1.     Failure to have a Termination Clause in the Employment Agreement

Termination clauses can range from simple to extremely complex and it should, at a minimum, outline the notice that will be provided to an employee on termination, without cause. The termination clause must comply with the minimum notice requirements under the Employment Standards Act, 2000.

The termination clause should explain the different legal obligations in the event of termination for cause or termination without cause. There is no requirement at law for an employee to give any notice of resignation from their employment. The termination clause could also outline the minimum expectations of notice that the employee should provide to the employer on resignation, i.e. 1 week per year of service, etc.

2.     Failure to Update the Employment Agreement on Promotion

An important and often overlooked aspect of the Employment Agreement is to update it upon changes in the employment relationship; such as the employee being promoted, provided a raise, or if the employee has a significant change of responsibilities. Consideration is required for the amendment to the Employment Agreement. It is not necessary to re-draft the entire Employment Agreement but a simple addendum specifying the changes in the position, salary, responsibilities, etc. and stating that all other terms of the Employment Agreement remain in effect is sufficient.

3.     Failure to have standardized and enforced Workplace Policies and Procedures

It is important for employers to have in place standardized workplace policies and procedures that are applicable for all employees. These workplace policies and manuals often fill in the gap between the formal employment agreement and the actual workplace conditions.

The enforceability of such workplace policies and procedures is often dependent on a number of factors, including:

  • Whether the written policy was actually provided to the employee;
  • Whether the employee agreed to be bound by the terms of the workplace policies and procedures;
  • Whether the policies and procedures are or were consistently followed by all employees;
  • Whether changes to the policies and procedures were brought to the attention of the employees; and
  • Whether the employee agreed to be bound by changes to the policies and procedures.

4.     Failure to accommodate under the Human Rights Code

Everyone in Ontario is protected by the Ontario Human Rights Code which essentially provides protection from discrimination on the basis of:

  • race,
  • ancestry,
  • place of origin,
  • colour,
  • ethnic origin,
  • citizenship,
  • creed,
  • sex,
  • sexual orientation,
  • age,
  • record of offences,
  • marital status,
  • family status or
  • disability.

The Human Rights Code, means, among other things:

  • That an employer must treat everyone equally in the hiring process and in the employment relationship, otherwise a complaint or claim under the Human Rights Code may be initiated by a disgruntled employee;
  • The employer has to provide reasonable accommodation to employees with disabilities by providing them the proper equipment, services or devices that will allow them to do their job;
  • The employer is required to provide for an employee’s religious needs, including prayer breaks, religious days off and dress requirements;
  • The employer cannot have height and weight requirements for its employees unless such policies were adopted for a purpose or goal that was rationally connected to the job being performed;
  • Alcohol and drug addiction is considered a disability under the Human Rights Code and addicted employees are protected from discrimination in the workplace under the Human Rights Code;
  • The Employment Agreement is the contractual agreement between the employer and the employee and it governs the employment relationship between the parties.
  • As a contract, the Employment Agreement must comply with basic contract law – there needs to be an Offer, Acceptance and Considerationn 

5. Termination for cause

There are two ways to terminate an employee:

  • Termination without cause; and
  • Termination with just cause.

Termination for just cause: employer is not required to pay the employee either statutory termination or severance pay under the relevant employment standards legislation, or common law pay in lieu of notice of the dismissal.  It is extremely difficult to establish “just cause” for termination. Examples include fraud, theft, sexual harassment, serious incompetence, intoxication at the workplace, etc.

The courts have consistently held that “just cause” is an extremely high test and that it is up to the employer to prove that it exists to justify in order to justify termination without notice.

Employer needs to assess:

  • Whether misconduct can be proven
  • Whether there has been an irreparable breakdown in the employment relationship

6.     Failure to provide an adequate Notice on Termination

If there is no “just cause” to dismiss the employee, then the employee is entitled to:

  • Statutory notice, or pay in lieu of notice under the ESA
  • In some cases: severance pay
    • Only if: 5+ years of service AND payroll in Ontario of at least $2.5 million OR 50+ employees being dismissed in 6-month period due to business closure
  • Common law notice (if there is no termination provision in employment agreement)

The statutory notice requirement is set out in the Employment Standards Act, 2000

  • 1 week of notice or pay in lieu of notice for every full year of employment up to a maximum of 8 weeks

In the absence an Employment Agreement, or an appropriate termination clause, an employee is also entitled to common law notice, which is the notice period that the Courts have determined is appropriate in similar cases . The Courts have continually held that the ESA sets out only the minimum notice requirements. As such, the Courts can (and have) dramatically extended the notice requirements that a non-profit or charity must provide to a dismissed employee.

Scott Chambers joined Blumberg Segal LLP in 2006 and became a partner at the firm in 2014, with a practice focusing on Shareholder and Partnership Disputes, Charity Law Litigation, Historic Sexual Assault Litigation, complex Family and Matrimonial Litigation, Product Liability Litigation, and Employment Law for both employers and employees.

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