LEGAL MECHANISMS FOR EMPLOYMENT RISK AND CRISIS MANAGEMENT
Human resources has to deal with many issues, and those issues can turn out to be more complex when they go beyond daily operations such as legal non-compliance, misconduct, malpractice, fraud, or damage to a company’s property and reputation. Dealing with a problem may require comprehensive yet cautious measures, as there may be consequences and subsequent liability. Employment issues aren’t only caused by employees, but also by employers when they don’t comply with the law, possibly due to a lack of awareness of the legal implications. The available legal mechanisms are defensive, preventive and offensive, and these can help to prevent unexpected scenarios and minimise exposure.
Defensive — Legal compliance reviews: Given the number of complicated statutory laws and precedents governing the employment cycle from the early stage of recruitment until employment ends, a company must undertake regular legal compliance reviews of employment documents and its practices to minimise exposure and limit the company’s liability, including that of its management and stakeholders. More importantly, the legal requirements and implications vary within specific industries and may even become very detailed regarding health and safety. Legal documents such as work rules and collective agreements containing working conditions must be in place. A labour union is also a factor to consider when bargaining and/or implementing sanctions that must follow the laws.
Preventive — Whistleblowing centre: Even though complaint reporting and investigative procedures are compulsory terms within a company’s charter, it’s difficult to encourage a speak-up culture without a secure and efficient reporting channel for anyone lodging a complaint. A robust and trustworthy whistleblowing scheme run by a third party could prevent and limit issues by providing a direct and secure reporting channel through a non-conflict intermediary with a professional background.
Offensive — Disciplinary action and litigation: This is the last resort where termination of employment is the most serious outcome. Legal action may also be undertaken. Therefore, the process before any complaint has developed into a dispute must be to follow the law. It’s essential to maintain evidence that is robust and can be used if a dispute goes to court. Employment agreements, work rules, warning letters, termination letters, investigative reports, and witness statements must all be maintained. The professional handling and attention to potential exposure from an early stage of the employment cycle, and the implementation of a legal mechanism as a tool for employment risk management, helps to ensure impartiality and prevents costly outcomes and reputational damage.
Crisis management: More importantly, wise crisis management is essential since a simple situation may develop into a long-term one, especially where emotions (sometimes angry ones) may trigger the liability.
The employee can also make a counter-claim if the disciplinary action is illegal, or the legal action undertaken by the employer is weak. This usually happens where the employment is terminated by the employer with immediate effect. The claim for unfair termination is still valid regardless of duly paid wages, severance pay and payment in lieu of notice.
Even though the amount of the award for unfair termination is subject to the labour court’s sole discretion and the claim amount is basically formulated by the period of service from the commencement date until the effective date of termination, the unemployed period from the termination date until the commencement date of new employment, and even the remaining year of service until the retirement age if the employment wouldn’t have been terminated might be claimed by ex-employees.
The main authorities dealing with employment issues are the labour inspector and the labour court. The labour inspector is generally in charge of investigations and granting awards for any claim regarding overdue wages, severance pay, and payment in lieu of notice. The labour court has a larger remit to award compensation caused by unfair termination in addition to that of the labour inspector. A labour dispute may be filed with either one of these authorities.
In some fraud-related cases, unfortunately, the damage has already occurred and has become extreme before it is noticed, bearing in mind there is a counter-claim awaiting to be triggered when taking disciplinary or legal action. The release of employment and waiver of claim undersigned by the employee is one of the alternative arrangements to ensure a counter-claim is dropped in the first place when employment ends. The advantage of this legal document is it concludes negotiations and may include the implied acceptance of liability as well as a commitment to resolve the damage through legal enforceability that forms the terms and conditions of such a document.
Last but not least, prevention is better than the cure. Employees are the key to every successful business. However, employee issues and disputes often arise and become a frustration for day-to-day business operations. Dealing with the issues properly will help prevent labour lawsuits and claims. Preventing employee issues in the first place is always the best solution.