Follow Me on Twitter

Guest Blog: Wozniak on Dismissing Employees

 

   Last week I noted an interesting case out of Ontario called Stowar v.  Telehop.  That’s the case in which the HR Manager made an error in the termination letter, offering 5 months’ pay instead of the ESA minimum of 3 weeks’ pay.  When the employer noticed its mistake, it refused to pay the 5 month’s notice, and the employee successfully sued to recover that money. The Court ruled that the letter setting out the the promise to $5000 was an enforceable contract.  But  I noted in my posting that since the employer was required to pay ‘reasonable notice’ to the employee as a term of the employment contract, the $5000 could also be considered satisfaction of the employer’s contractual obligation.  Paying an employee the minimum statutory notice in the Employment Standards Act does not satisfy the employer’s contractual obligation to pay the (usually) larger period of ‘reasonable notice’.  In other words, the employer who pays an employee ESA minimum notice is usually also required by any greater amount of notice required by the contract, unless the employee signs a release waiving the contractual entitlement to the greater contractual notice.

Ryan Wozniak was the lawyer representing the successful plaintiff (the employee, Stowar) in that case.  He works at a leading Toronto employment law firm called Ball & Alexander .  In this latest segment of our Guest Blog feature, Ryan comments on the Stowar case and the lessons in it for employers and HR managers in particular:

In many ways, this case is an ideal teaching tool. In addition to highlighting some key employment law principles, including the critical distinction between the period of notice required by minimum standards legislation (i.e. the ESA) and the “period of reasonable notice” available at common law, the decision raises two very important practical considerations. 

 

First, every employer should, to the extent possible, secure written contracts of employment with its workers that contain unambiguous termination provisions; that is, terms which expressly set out the period of notice, or pay in lieu thereof, that the employer must provide to an employee on termination. The cost of doing so may seem high, but it pales in comparison to the cost of litigating disputes over notice periods, or worse, negligently drafted termination letters, which disputes can go on for months, perhaps years. The contract should also set out the amount of notice an employee must provide to the employer should he or she wish to leave.

 

Second, employers should always obtain legal counsel before communicating with employees about the terms, or proposed terms, of their severance. Many employers, no matter how sophisticated, fail to appreciate that oral and written communications made during the course of discussions regarding severance can have contractual force. More importantly, if an employer fails to obtain a release from an employee, then it leaves itself exposed to other employment related claims, such as a claim for damages for alleged human rights violations. I recently settled a case involving an employer who gave an employee sufficient notice of termination but failed to secure a release because “it did not want to spend thousands of dollars on lawyers”. The employer ended up paying over $10,000.00 to the employee, plus thousands more in legal fees, to settle a residual human rights complaint.

 

As one author put it, anyone who thinks talk is cheap should get some legal advice.

Good advice indeed.  Thanks for this Ryan, and nice job on Stowar case, which will now be added to my course readings in Employment Law.


RSS

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>