Employment lawyer Stuart Rudner: “Contract is the cornerstone of the employment relationship”

On August 23, 2016, award-winning employment lawyer Stuart Rudner spoke at an event with the theme Recruiting Talent: Trends Dominating the HR Landscape, organized by the York Small Business Enterprise Centre at the Cardinal Golf Club in King, Ontario.

Rudner focused on the importance of ‘getting it right’ when drafting employment contracts and termination clauses, and on the role of social media in the hiring process. In Rudner’s view, employers have two choices: spend a lot of time putting out fires and dealing with claims, or focus on taking a proactive, strategic approach by putting contracts and policies in place.

Rudner opened by stating that employers often don’t realize the risks in the hiring process, especially the exposure that comes with creating employment relationships haphazardly.

“When employers ask whether a contract or termination clause is enforceable, my answer is usually ‘It depends’,” said Rudner. “There has been a rise in cases and the outcome is unpredictable. Since it’s uncertain, the employer has to make the effort.”

Even if an employee signs a contract, it is not necessarily enforceable. The employee needs to have time to review before actually committing and showing up for work. This is where consideration is critical: both parties need to give something up. A case that illustrates the importance of consideration is Trusty Francis v. CIBC. Mr. Francis only signed his contract of employment after starting to work for CIBC. CIBC tried to rely on the termination clause in the contract to provide minimal severance at the time of dismissal. At trial, the court found that Francis’ contract had been consummated when he accepted the offer of employment and, because nothing of new value was given to him when he showed up for work, the forms and agreements he was told to sign were unenforceable.

stuartrudner-1“A contract is an opportunity to dramatically reduce the employer’s severance obligation,” stated Rudner. “If you don’t have a contract, Common Law applies. This means that you need to give reasonable notice when letting an employee go. An employer may contract out of reasonable notice, but you need clear, unambiguous, express language. And, of course, this has to be the deal from the start or, if it’s too late, the employee has to be given something “of value” in exchange for their agreement. The cornerstone of the employment relationship is the contract. It will always cost you less to avoid problems. You can limit severance with a well-written termination clause.”

According to Rudner, courts will enforce termination clauses, even if these are harsh. Courts will, however, find reasons not to enforce, such as ambiguity, lack of consideration, breach of employment standards – including the employer not continuing benefits in case of termination – or if the employee was not given reasonable time to obtain independent legal advice.

“Don’t communicate anything to suggest that the individual has joined the organization until they sign,” cautioned Rudner. “Many companies jump the gun: they have ordered business cards for the employee, set up an email address, sent an announcement, told everyone, or started the on-boarding process already, so, apparently, there already was an agreement.”

“Also, employers need to be aware that the Human Rights Code applies to all stages of the hiring process, including the short walk between the elevator and the interview room. Employers are allowed to discriminate on the basis of Bona Fide Occupational Requirements, or BFORs, which are skills and attributes essential to a job. It is OK to ask whether a candidate has the legal right to work in Canada, but asking for Canadian experience is discriminatory unless the employer can show why this is required. Also, you should not ask seemingly innocuous questions like ‘Where are you from?’ or ‘What did you do this weekend?’, as it’s easy to fall into conversations about protected grounds like country of origin and family status.

Social Media

As Rudner expressed, social media can be a valuable tool in the recruitment process, but also creates several risks, including:

  • You run the risk of seeing inaccurate info (maybe not the right person);
  • You have to take everything you see with a grain of salt;
  • You run the risk of stumbling on information that is inappropriate (things you don’t want to know, such as race or age).

To mitigate these risks, best practice is to have non-decision makers filter the information and make sure that reports are as objective as possible and contain only information relevant to the hiring process, log reasons for hiring and not hiring people, and follow a consistent protocol for every applicant.

“Don’t get any more information than you have to,” cautioned Rudner. “And social media is a place where you can easily get more information than you need. For example, it is easy to find out that someone is disabled, or has young children. And then the rejected applicant can allege that this was a factor in the decision not to hire them.” It is best for the decision maker to honestly say that they never knew about those facts.

Rudner advises employers to address the topic of social media both in policies and contracts. Post-dismissal, an employee has the duty to mitigate. He or she has to look for work and if work is found, the employer’s obligations are reduced. The employer needs to learn when the individual has mitigated and can use social media to monitor. The former employee may forget to tell the employer he or she found a new job, but employers can check on LinkedIn or Facebook.

“Laws and courts tend to be employee-friendly. Having a policy always makes the employer’s case stronger. Produce a written policy and make it part of the employment contract. Communicate the policy and tell your staff ‘Here’s why’. Discipline matters. Don’t condone. If you have a policy and it’s routinely breached, it’s not an enforceable policy. You can’t use a policy to fire one employee if it was never followed. Also, make sure you update your policies; not once every ten years”.