You are here

Labour & employment law column by Robert Smithson

Employees signing a release should expect to be bound

Employees forced to leave their employment are often provided with a payment in lieu of working notice, also known as a "severance package". The employer will often demand that, as a condition of making that payment, the employee must sign a form of release.
 
The purpose of a release is to provide the employer with comfort that the individual will not commence any future court actions or complaints relating to the employment. Typically, an employment-related release is intended to protect the employer against all manner of civil actions (such as wrongful dismissal) as well as administrative complaints under statutes relating to human rights, employment standards, and personal information.
 
The release usually applies to all circumstances relating to the employment (and the cessation thereof) regardless of whether those circumstances are presently known to the individual. The release will often compel the individual to keep the terms of the settlement confidential.
 

In support of the simple severance settlement

When employees are forced to leave their employment, it is common for the employer to offer a payment in lieu of working notice of termination. This is frequently referred to as "severance". I am an advocate of keeping the structure of these severance payments as simple as possible.
  
Many lawyers and many employers seem to favour a fairly complicated severance structure which creates ongoing tasks and obligations for both parties. These settlements can span over a substantial period of time
and (in my view) serve only to drag out the cessation of the relationship.
  
A commonly used structure is based on a salary continuance arrangement. The employer continues paying the former employee's salary (and, often, providing ongoing benefits coverage) for some defined period of time.

Employees in federal jurisdiction still face mandatory retirement

Casual followers of the news can be forgiven for experiencing some confusion when reading this week that Air Canada pilots can be forced to retire at age 60. With all the news about the abolition of mandatory retirement across this country, it is easy (but incorrect) to assume that mandatory retirement is a thing of the past.
  
While a number of provinces have now announced, or implemented, legislation to end mandatory retirement, other Canadian jurisdictions have yet to follow suit. The federal context, governed by the Canadian Human Rights Act, is one such  jurisdiction. This has resulted in a checkerboard of mandatory retirement rules across the country.
  
In B.C., the provincial government has passed legislation which will render illegal employers' policies imposing mandatory retirement at age 65. While the B.C. Human Rights Code has always prohibited discrimination on the basis of age, that prohibition only applied to persons 19 years or older and less than 65 years.
  

Employee not responsible for “dine and dash” customer

A recent letter to the editor in a Kelowna newspaper dealt with the situation of a restaurant employee who was held responsible for a customer's "dine and dash". The employer apparently compensated itself for the lost revenue by deducting the amount from the employee's wages.
 
This letter reminded me that, now and then, employers need to be schooled on the fundamental employment standards rules. At least in B.C., the rule is that the employee's "pay packet" is not open to unilateral deductions by the employer.
 
The B.C. Employment Standards Act governs permissible payroll deductions. Aside from the normal statutory deductions, the range of permissible deductions is extremely narrow. All deductions must be permitted by the Act and the types of permissible deductions are listed in the Act. 
 
Employers may make deductions which are required by any statute of B.C. or Canada. This includes, for instance, the usual deductions for income tax and for employment insurance and Canada pension plan premiums.
 

Employees’ general knowledge is their own to exploit

The battle between employers and their former employees over the individual's right to engage in post-employment competition is an ongoing one. While court decisions seem to sway back and forth, favouring one side or the other at various points in time, one area which consistently favours the individual relates to exploitation of her general knowledge of the industry. 
 
The challenge is in establishing a dividing line between the employer's confidential information and the individual's general knowledge of the business. 
 
The scenario in which this question must be answered is fairly common - an employee leaves his long-time employer and obtains employment with a competitor in the same industry. The former employer is vulnerable to competition by the individual because that person possesses a range of information about the industry, the company, and its customers. The individual proceeds to compete and, in doing so, has a negative impact on his former employer's business.
 

Black’s litigation stance mirrors that of many employers

The story of Conrad Black's recent conviction has now been told, thoroughly, by way of every news medium in this country. Black, defiant to the end, rode a losing case to what could only be described (assuming his appeal doesn't change things) as a disastrous result.
 
Lord Black was once a powerful corporate mogul, but now faces as much as 35 years in prison (although likely much less) as a result of his misdeeds. His battle against U.S. prosecutors and his own shareholders will, almost certainly, be his financial ruin.
 
 Now, of course, I don't know precisely why or how Conrad Black ended up where he is now. I don't know what instructions he gave to, or was given by, his legal counsel along the way. What I do know that he ended up a convicted felon when, surely, there must have been opportunities along the way to have mitigated the impact a conviction would have on his life. 
 
Black clearly thought he had a winning hand and he was willing to ride that hand to conclusion. In the result, it is apparent that he misjudged the strength of his position. Although Black's case arose in a different context, his handling of his legal situation bears definite parallels to the way many employers react to litigation by former employees. 

Conrad's tale serves as a warning to corporate executives

One chapter in Conrad Black’s battle with American authorities came to a close last week. Lord Black came out on the losing end but perhaps he can rationalize the result on the basis that it could have been a whole lot worse.

Black was found guilty by a Chicago jury on 4 counts (3 of mail fraud and 1 of obstruction of justice). He was acquitted on 9 other charges against him (various mail fraud, wire fraud, tax fraud, and racketeering charges).

Class Actions May Be Coming To Employers Near You

The class action lawsuit is a relatively new phenomenon in Canada. In the employment context, there are precious few examples of this form of litigation. As a result of some recent court decisions, however, employers near you may soon be the target of class actions.

Class action lawsuits allow many plaintiffs to band together to pursue their claims. Typically, each individual claim is small in scale, sometimes small enough that it wouldn’t be worth pursuing at all on its own.

Strange Tales From The Employment World

It’s time for my semi-annual roundup of the weirder things going on in the world of employment.

In London, England an employee at the Madame Tussauds wax museum got into trouble with his employer because he seems to love his work just a little too much.

Photographs were revealed to his employer showing him groping wax figures of celebrities. One shot caught him pulling down the pants and kissing the buttocks of the wax figure of singer Kylie Minogue. In another photograph, he is shown fondling the wax figure of Penelope Cruz.

Are Compensation Cuts The Trend Of The Future?

News reports out of the United States this week indicated that auto parts maker Delphi Corp. has reached a tentative deal, with the United Auto Workers, involving substantial pay cuts for employees. I’m here to say that we should all get accustomed to headlines of this type because they aren’t likely to end with Delphi.

Delphi is the former parts arm of General Motors Corp. which was spun off into a separate company in 1999. General Motors is still its biggest customer, but Delphi supplies other car manufacturers as well.

Pages

Subscribe to Labour & employment law column by Robert Smithson