When Small Business Ignores HR Issues

In the pursuit of fast profits and efficiently, small business owners can choose to hire employees without considering all the potential pitfalls and Human Resource (HR) requirements. Too often, employers make fast decisions about employment and these decisions lead to serious consequences. Poor employment or business reputation, liability and legal issues and other serious business implications can arise if business owners ignore potential HR employment issues.

Without understanding the standers of employment, termination, compensation and more, employers can make serious issues for their business. Improper just cause, workplace harassment, falls employment roles, improper employment standards, and more can arise from ignoring HR issues.

These five hypothetical situations outline some of the serious issues that can become all too real do to lack of understanding of your employment and Human Resource standards. Don let any of these 5 issues come about in your business.

1. You Provide Unsuitable Reasons For Just Cause

Your small business is beginning to underperform due to major issues with a single employee. Being that you are a small business, you have developed a relationship with this individual and have not filed any formal employment complaints or documented any of their personal shortcomings. Regardless of your relationship with this employee, their performance is hurting your business and they have to go.

You tell this employee that his or her performance is unacceptable and they are no longer a fit fro this role. You tell the employee that you are firing them for just cause and thus they are not entitled to any form of notice.

The terminated employee then proceeds to file a lawsuit against your company. The employee hires a lawyer proves that you did not have just cause in court and also claim that you have caused the former employee mental distress, due to the termination.

The judge rules that you did not have cause and acted in “bad faith”. The judge then awards your former employee eight months termination notice and financial awards for your act of “bad faith” that cause mental distress. An issue like this could cost you upwards of $50,000 dollars.

Don’t let this kind of issues happen in your business. Work to completely understand the employment standards and HR issues for small business employees.

2. You Do Not Notice Harassment 

You have hired a core group of bright, exciting and hard-working employees and your small business is booming. Months later you decide to hire your company’s first summer student. This young woman is introduced to the business and begins working with your existing employees.

After her fist week, this young woman informs you of various instances that have made her feel uncomfortable in the office. She discusses inappropriate jokes and off-handed comments she has received. You know that this is not right but don’t want to cause issues with your high performing staff.

You tell this young woman that these are just “boys” and that theses issues are simply jokes. You inform her that these jokes have helped build a strong company culture and that she will need to get over her personal issues.

This young woman stops coming to work, so you assume she has quite and or found another job. Later you receive a letter from the human rights tribunal. Your company and several employees have been directly named in a formal complaint. Your employees are unhappy with the complaint and move to find roles elsewhere. You are now faced with finding new employees, meeting ongoing work demands and a human rights complaint.

This issue could cost you business several thousands of dollars and even force your business to go under. It is never a good idea to ignore your employee’s HR concerns.

3. You Falsely Deem An Employee A Contractor

You have started a successful small business and it is taking off fast. You need some employees to meet growing demands, so you interviews and choose some bright individuals. Each new hire states how they would prefer to be paid as a contractor to minimize their tax expense. This also provides you with a much more efficient compensation structure then dealing with a payroll and with Revenue Canada.

A time comes where you need to downsize your operations, so you let these contractors go. Months later you receive a notice from the Canada Revenue Agency. The notice states that none of your proposed contractors paid income tax while they worked for you and that these individuals actually never qualified as contractors. Your lawyer confirms these statements and informs you that these individuals will be deemed as employees.

You are now forced to pay out all the unpaid deductions and tax for the duration if these false contractors employment. You can attempt to contact these individual to retain some of the missed contributions, but these individuals can be unreachable at this point.

Your business could face enormous expenses and legal issues form falsely deeming an employee a contractor. Do not let this issue occur in your business.

4. You Do Not Uphold Employment Standards Obligations  

Your small business compensates its employees on a full-commission basis. You also provide a monthly draw payment for all employees that acts as an advance against the proposed commissions. When employees take holidays you continue with the draw and do not deduct commissions.

One of your experienced employees decided it is time for a change, so they quit and move across the country. Weeks go by and then you receive a letter from the Employment Standards Branch. The employee claims that you have not paid them for vacation or holidays. You feel, though that since you continued the commission payments and allowed for the employee to take the holidays, so you do not owe her any holiday pay.

The Employment Standards Branch does not agree and states that The Employment Standards Act provides that all employees are entitled to receive a certain percentage of their year’s wages as vacation pay. Commissions are considered wages and thus these payments cannot be classified as vacation pay. You are then obligated to payout the required vacation pay amounts in order to fulfill your statutory duty.

This expense could cost you thousands of dollars and even your entire business. Make sure you fully understand your employment and employee compensation standards.

5. You Fire Ill Or Injured Employees

One of your long-standing employees has recently developed carpal tunnel syndrome. The employee applies to be off of work for five months on short-term disability. For the in-term, you hire a temporary employee to fulfill the role. This employee is new, excited and performs wonderfully.
The five moths pass and your disabled employee inform you that they have been medically cleared to return to work. The new temporary employee is performing so well, that you do not want to let the new employee go. You inform the previous employee that they have been laid off and provide an amount for in lieu of notice payment.

A month goes by and you receive a letter from the human rights tribunal. The past employee states that you have terminated them due to a disability. The allegations finally go to court and you are unable to prove that you attempted to accommodate the employee’s medical condition. It is ruled that the employee’s termination was sparked by his or her disability. You are then ordered to reinstate the employee and provide payment for wages lost.

Depending on the employee’s role and compensation, this choice could cost you more than $70,000 dollars. Don’t force your business to carry this burden. Always make sure you adhere to employment and disability standards!