2 0 questions - Canadian Institute of Chartered Accountants

More documents

Recommendations

Info

ancestry, place of origin, colour, ethnic origin,citizenship, creed, sex, sexual orientation,age, marital status, family status and disability.Some provinces have additional groundsof prohibited discrimination, such as politicalbelief, language and social condition (economicstatus). Discrimination is prohibited inall aspects of employment, including hiring,compensation, promotion, lay-off, discipline ortermination.In some provinces, certain religious, philanthropic,educational, fraternal or socialorganizations that are primarily engaged inserving the interests of persons with certainattributes may be able to discriminate in limitedrespects, such as with regard to language, sexualorientation or religion. These organizationsmay only discriminate where it is reasonableto do so because of the nature of the employment.Additionally, the organization mustshow that otherwise discriminatory practice isnecessary, as well as legitimately and directlyconnected to the nature of the employment.• Harassment – Harassment (including sexualharassment) is also prohibited. Harassmentessentially involves a course of vexatiouscomment or conduct that is known or oughtto be known to be unwelcome. Where an isolatedincident is serious enough on its own, itwill also be found to be harassment.• Accessibility – Employers have an obligationto ensure that their employment practices andworkplaces are accessible and do not discriminateagainst candidates or employees with adisability, be it physical or psychological. 7Occupational Health and Safety – An employeris required to ensure the health and safety of itsworkers by taking every reasonable precaution tomaintain a safe and healthy workplace. Provinciallaws set out the employer’s obligation to providetraining, develop health and safety programs andpost health and safety policies in the workplace.Depending on its size, an organization may be7In Ontario, this obligation is even more extensive inlight of the Accessibility for Ontarians with DisabilitiesAct, 2005, which will require all organizations toensure accessibility for all persons with disabilities inthe areas of customer service, employment, buildings,information and communication, and transportation.This will include training employees on appropriateways to provide goods and services to, and communicatewith, employees and customers with disabilities.required to have a joint health and safety committeemade up of workers and management.• Workplace bullying and violence – In Ontarioand British Columbia, workplace harassmentand violence are specifically covered underoccupational health and safety laws. Employersare required to have specific policies andprograms in place and to conduct regularassessments of the risk of violence in theirworkplace.Worker’s Compensation – This statutory no-faultinsurance scheme compensates workers whosuffer from a work-related illness or injury. Membershipis mandatory for certain employers andrequires payment of premiums.16. What are the potential liabilities ofdirectors with respect to employees?Organizations which fail to meet their obligationsto employees can face investigations, lawsuits,fines and other penalties, which are levied againstthe organization. In addition, there are some lawsunder which directors could be held personallyliable for failing to fulfill their responsibilities.Directors of not-for-profit organizations are notheld to any lesser standard than directors of forprofitcorporations.Income Tax Act – The Income Tax Act providesthat where an organization fails to withhold and/or remit employee taxes on behalf of its employees,directors may be liable for a portion of thoseamounts, plus penalties and interest.Courts will consider the actions taken (or nottaken) by directors. In one income tax case,the directors of an organization were liable forpayroll deductions that they knew had beenwithheld from employees but had not beenremitted by the organization to the Crown.The court found that, as the failure to remitthe taxes was known by the directors and wasallowed to continue for nearly a year, they hadnot exercised the degree of care and diligenceexpected of directors and were therefore personallyliable.Occupational Health and Safety – A failure toimplement basic health and safety precautionscould result in charges being laid under either theCriminal Code of Canada or the provincial occupationalhealth and safety legislation.16
20 Questions Directors of Not-For-Profit OrganizationsShould Ask about Human ResourcesEmployment Standards – Directors’ liability for theorganization’s failure to comply with employmentobligations differs by province, but may includeliability for unpaid wages and vacation pay.Safeguard:• Some organizations require the ExecutiveDirector to certify in writing to the boardthe payment of all wages, source deductions,tax remittances and pension planobligations. This may be done monthly,quarterly or annually.• If there is a concern that the organizationis trending towards financial difficulties,boards may consider the creation of a designatedtrust account to segregate payrollamounts, source deductions, and accruedvacation pay.Pensions – Negligent administration of a pensionplan can lead to fines under pension legislation orcivil lawsuits.Criminal and other offences – Boards that authorize,permit or instruct the organization to commitoffences or break laws may be found guilty ofoffences under the Criminal Code or other legislation.In light of the potential liabilities, it is vital thatdirectors understand the organization’s obligationswith respect to employees and other serviceproviders. The board must satisfy itself that theExecutive Director or anyone else responsible formanaging human resources fulfills their dutiesand that the organization is in compliance with itsobligations.Appropriate indemnities and insurance can provideprotection for some of the above liabilities.For more information, see the CICA publicationLiability Indemnification and Insurance forDirectors of Not-for-Profit Organizations.17. What should the board ofdirectors know about terminatingemployment relationships?When an organization chooses to terminate itsrelationship with an employee, there are particularissues that directors should be aware of. Althoughthe termination of employee relationships is theresponsibility of the Executive Director, the EDmay seek advice from the board of directors. Inaddition, the board may find itself in the positionof having to terminate the relationship with theExecutive Director. As a result, directors shouldhave an understanding of the organization’s obligations.Termination for cause – When an employeeengages in conduct that can be legally justifiedas cause for termination, an employer has theright to terminate the employment relationshipimmediately with no notice or payment in lieu ofnotice. To constitute cause for termination, theconduct must constitute a significant breach ofthe employee’s contract. For example, seriousmisconduct or performance problems which havebeen previously addressed and documented bymanagement can constitute just cause. An organizationshould always obtain legal advice beforemoving forward with a decision to terminate anemployee on a “with cause” basis.Termination without cause – When an organizationwishes to terminate an employmentrelationship in the absence of behaviour constituting“just cause”, the organization must providethe employee with appropriate advance notice,in writing. Alternatively, the organization can providepayment for the amount equal to what theemployee would otherwise have earned over thatnotice period, known as “pay in lieu of notice”.The required amount of notice may be set outin the employment contract, or else determinedbased on legal guidelines which take into considerationthe employee’s age, years of service,salary and position. These rules may vary by province.In a unionized setting, the required notice isset out in the collective agreement.A terminated employee can file a complaint underthe employment standards legislation, labourrelations act, or human rights legislation dependingon the nature of the complaint and whetheror not the employee is unionized. If a court ortribunal finds that the employer did not providesufficient notice or otherwise did not meet itslegal obligations towards the employee, a monetaryamount, interest and possibly reinstatementcan be ordered. In cases where the terminationis conducted in a manner that shows bad faithon the part of the employer, there may be additionaldamages awarded against the organizationby way of compensation for mental distress orpunitive damages to punish the employer for thatconduct.Costs related to these types of claims can be significantso it is very important that any decision17
Page 8 and 9: 2. How should the board organize it
Page 10 and 11: deliverables. Feedback from this re
Page 12 and 13: PART B — CompensationThe issue of
Page 14 and 15: Pensions must be registered in acco
Page 16 and 17: salaries to attract employees, and
Page 18 and 19: Example 1: Nafisah is employed as a
Page 22 and 23: to terminate employment be made car
Page 24 and 25: Appendix 1 —The Employment Relati
Page 26 and 27: 20 Questions Directors Should Ask a
Page 28: 01 02 03 04 FnL1 OTYCOTIDMS41DElTQk

2 0 questions - Canadian Institute of Chartered Accountants

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?