As long time readers of this blog are aware, I recommend that an employer require that all new hires sign an employment contract with an enforceable termination clause.
When speaking with a client about other terms of employment that can be included in an employment contract, I always ask whether the organization has an Employee Handbook.
Why Employee Handbooks Often Offend My Legal Sensibilities
1. Employers inadvertently take away their own management rights
There is no legal requirement to create an Employee Handbook. At some point in time in an organization’s evolution someone usually decides it is a good idea to create an Employee Handbook. Depending on the size of the organization, there can be a number of good reasons for doing so. The trick is to create content that helps – as opposed to hurts – the organization. Sometimes someone decides to cut and paste a handbook from the internet or from another employer without any thought to whether the policies in that particular handbook are appropriate for the organization. This kind of handbook can hurt the organization.
Every term of an employment contract should benefit the employer. I think the same objective should apply to an Employee Handbook.
One example. Some employment contracts and Employee Handbooks state that an employee’s salary will be reviewed every year. Why? There is no legal requirement to do so. If, however, an employer promises to review an employee’s salary every year and the person does a good job then the employee will expect a salary increase. If your organization can afford to implement salary reviews every year and is committed to doing so then it isn’t a problem, but if you are a private sector employer who is losing money or a non-profit organization or a public sector employer then creating an expectation that an employee will receive an annual salary increase can adversely affect employee morale when salaries are not increased.
2. Employers do not follow or enforce the policies in the Employee Handbook
When I review policies in an Employee Handbook with a client it is not uncommon for my contact to tell me that certain policies are no longer being followed. For example, a policy may have been developed 10 years ago but over time a practice has developed that is not consistent with the policy but no one has changed the policy. It is difficult to legally enforce a policy if it is not consistently enforced. Inconsistent application of a policy is more likely to happen if the Employment Handbook is not reviewed regularly.
An example: There is a written policy that states an employee is entitled to an unpaid bereavement leave of up to 3 days for certain family members. A practice has developed in some departments that this time is paid but in other departments the managers strictly enforce the policy. What is the employer’s policy? Are employees now entitled to paid bereavement leave because of a long standing practice?
3. There are policies in the Employee Handbook that do not comply with existing law
Another reason to review and update an Employee Handbook regularly is because laws are changing regularly. In Ontario, there have been several amendments to the Employment Standards Act in the last 10 years. The Liberal government introduced many changes in 2017 and 2018 and the Conservative government repealed many of these changes in 2019. If an Employment Handbook has not been reviewed and updated since 2017 then a number of policies may not comply with the current minimum standard legislation in Ontario.
For example, in 2019 ten personal emergency leave days were eliminated in the Employment Standards Act and were replaced by three days sick leave, three days family responsibility leave and two days bereavement leave. Does your Employee Handbook still refer to personal emergency leave?
4. There are HR policies that should not be included in an Employee Handbook
There are good reasons to introduce some HR policies but an employer is not required to include all HR policies in an Employee Handbook.
For example, why would an employer include hiring policies in an Employee Handbook that is provided to existing employees? But some employers do so.
Similarly, why include a detailed performance review process in an Employee Handbook? An employer has the right to do performance reviews or not. If it chooses to do so then it can select whatever process it desires and it can change the process whenever it desires UNLESS it puts a performance review process in an Employee Handbook. Then the employer is required to follow this specific process. It is possible to change the process by giving employees adequate notice but why limit an organization’s right in this way?
For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him at 416-317-9894 or at [email protected]
The issue of whether a termination clause limits an employee’s entitlement to the minimum notice set out in the Employment Standards Act may be the most litigated issue in employment law over the past 5 years.
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