Risky approach? Employment lawyers discuss potential increase in liability during festive season
In Charles Dickens’ classic story A Christmas Carol, miserly businessman Ebeneezer Scrooge threatens to fire his employees if they don’t work on Christmas Day, before reluctantly agreeing to a partial day off with the expectation that they report to work the following day that much earlier. His “bah humbug” attitude toward the holiday season leads to some frightening encounters with the spectre of his deceased business partner and three other ghosts who make him see the error of his ways.
Employers who take a similar attitude towards the holiday season when considering terminating employees may not necessarily be visited by literary phantoms, but they could potentially face extra legal liability if they don’t proceed with care. Employers have considerable legal obligations when employment at any time, and things can get more tricky around the holiday season.
Krista Siedlak, an employment lawyer and workplace investigator at Turnpenney Milne in Toronto, suggests that employers give the holiday season a wide berth when it comes to cutting staff.
“Generally speaking, I tell my employer clients to avoid terminating in December at all - I have a Dec. 1 cut-off that I don't like my clients going into,” she says. “The risks are that, in some instances, courts have awarded additional damages - aggravated or moral damages with respect to terminating at this time of the year, or they've extended the notice period by bumping it up by a couple of months.”
Calgary-based labour and employment lawyer Laura Dunnigan of Mathews, Dinsdale and Clark, agrees with setting a no-go period for terminations around the holidays.
“I always tell my clients that if you can avoid it, please don't engage in termination within three weeks before or after the holidays,” says Dunnigan. “I know that's not always practical in all circumstances and in all operations, but I think the ‘soft’ factors around terminating someone during the holidays can play a huge role [in increased damages].”
Longer notice entitlement?
Even if an employer’s conduct and intentions are above-board, a termination coming near the end of the year could result in a longer common law notice period entitlement for a dismissed employee, based on the typical Bardal factors used by courts to calculate the length of reasonable notice.
“There's almost a blackout period, so to speak, in December and possibly into early January, when employers aren't posting for positions, so there are essentially no jobs available for which candidates to apply during that period of time,” says Siedlak. “Another aspect is that the holiday season is an expensive time of year for some, so you're putting the individual in some financial difficulty.”
A Scrooge-like lack of compassion around the timing of employee terminations can lead to not just an increased notice period, but an increased risk of aggravated damages if the employer doesn’t proceed carefully and respectfully, according to Siedlak.
She refers to an Ontario Superior Court of Justice decision - Horner v. 897469 Ontario Inc., 2018 ONSC 121 – where an employer was ordered to pay $20,000 in aggravated damages and $10,000 in punitive damages in a wrongful dismissal case where it fired a worker on Dec. 28 after the worker had made a harassment complaint on Dec. 22. While there were several factors that contributed to the aggravated and punitive damages – including firing the worker after the harassment complaint and the fact that the employer left the termination letter stuck in the worker’s door in a cold and inconsiderate manner – the timing of the termination while the worker was celebrating the holidays was a significant factor that likely increased the damage award, says Siedlak.
The Horner decision and another Ontario case involving aggravated damages - Zesta Engineering Ltd. v. Cloutier, 2010 ONSC 5810 - are examples of how bad faith in the manner of dismissal can be magnified because of proximity to the holiday season.
“There was a bunch of factors that came into play and the timing just made it worse,” says Siedlak.
Holidays: bad timing for termination
Sometimes an employer is faced with circumstances that necessitate employee termination in December or early January, such as a big loss of a client that requires immediate action on the employer's part, the shaky financial viability of the employer, or situations of cause when somebody's done something so egregious that immediate termination is necessary. But before making the decision, it’s a good idea to give the matter some thought, Siedlak says.
“When my clients express a need to terminate somebody in December, I have a candid discussion with them as to why it has to happen now and can it conceivably wait until January,” she says. “In most cases, there's not really a good reason for it being immediate, so I advise them to delay in situations where the reason is valid.”
Siedlak believes that HR professionals are in a good position to help their organizations mitigate or avoid extra legal risks during the holiday season. If people in the organization are coming to them and suggesting that they foresee terminations coming down the line, HR can get into conversations around the timing and being mindful of getting too close to the holidays.
“HR can get their organizations to target getting it done in November and build out a timeline that they can work with their business units or clients in order to achieve their goals, while at the same time trying to protect the organization from this type of legal risk.”
Generous termination packages
HR can also ensure that their organizations follow best practices around termination that can help reduce liability at any time while recognizing risks when the holiday season is approaching. Siedlak identifies two key best practices – more generous termination packages near the holidays and transparent communication with those affected.
“When you're developing an appropriate termination package, even if [the employee] has a valid termination provision in their employment agreement, still give some thought and consideration to the fact that they’re likely not going to be able to look for work for a certain window of time in December and early January,” she says. “Roll that into a package and add in some additional notice by virtue of the timing.”
“And if you’re talking to employees about the reasons for termination and it's legitimately financial reasons, then absolutely tell them in the termination meeting and termination letter that it wasn't a personal decision,” adds Siedlak. “That level of transparency and openness might help the employee at least understand where the employer is coming from and why they reached the decision that they did.”
It's also not a bad idea to offer something extra in exchange for a release, so that there’s finality surrounding the termination, she says.
Ideally, employers can avoid worrying about extra precautions by avoiding the year-end and holiday season completely when terminating employees, because it’s a factor that will be considered by courts, according to Dunnigan.
“Be mindful of the time in which you're terminating someone, whether that's in a hard economic climate, around the holidays, or at other special times of year,” she says. “Especially if you don’t abide by your obligations under the employment agreement - you're probably going to be at risk of enhanced damages.”
“And I think there's also a compassionate, human argument to it, in terms of letting somebody go at a time that you know is supposed to be a happier, celebratory time of year,” adds Siedlak.
