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WHEN DOES AN EMPLOYEE GO FROM BEING A HUMAN RESOURCES ASSET TO A HUMAN RESOURCES LIABILITY?

Posted on 29 April, 2021 at 9:15

Darrell Smith CFE, ARM, CIM, FCSI

WHEN DOES AN EMPLOYEE GO FROM BEING A HUMAN RESOURCES ASSET TO A HUMAN RESOURCES LIABILITY?

There is an ongoing debate about whether an employee is an asset or a liability. Some say they are an asset because they add value, others say they are a liability because there is a cost to employing them through wages and benefits. Regardless of what position you take on this, there is one thing we all can agree on. Employees are essential for the businesses to function. So what happens when an employee’s actions or behaviours are contrary to the wellbeing of the company?

Fortunately, this is not an article to debate if an employee is an asset or liability. It is about identifying when an employee becomes a liability, the risk of that liability and what to do to manage that risk.

 

Before we look at when an employee becomes a liability, let’s go back to the beginning of when you hired them. Have you ever hired an employee that you wish you hadn’t? I have seen many employees hired by organizations that got the job because of a friend or family member working at the company, I have even seen an employee get hired over many other more qualified candidates because they were a great golfer. The company sponsored an annual golf tournament. When hiring new employees, you should be looking at answering three questions, 1. Can they do the job? 2. Will they do the job? 3. Will they fit into our organization? Qualifications and experience fall into these three questions and if you hire the most qualified person every time for the job. You have mitigated the risk of not only making a bad hire, but also reducing the risk of an unsuccessful candidate claiming discrimination and taking legal action. Conducting a through pre-employment screening check, will provide you with the information necessary to confirm your hire or look at the next most qualified candidate.

 

Because I write these articles mainly for small business and non-profits, I want to make sure that they have enough information on the whole recruitment, and selection process. As an example, some years ago I was brought in by a large national company to investigate two employees at different locations, who were suspected of theft. When we reviewed their employee file, the hiring supervisor, never checked prior work references for them as a matter of fact nothing was checked, they were just hired on the supervisors gut feeling. This company had very strict screening practices developed by their legal council, yet two locations were not following them. Turns out one of the employees was fired from his previous job because of theft. Make sure you do your due diligence on all new employee hires.

 

Ok so let’s get to why you clicked on this article. First of all what is the definition of a liability? According to Oxford English Dictionary “A liability is a state of being responsible for something especially by law” or “A person whose presence or behavior is likely to cause embarrassment or put one at a disadvantage.” Not only could the employee be a liability to your company, but your actions on how you deal with the wrongful behavior could also be a liability. As an example, accusing someone of theft without any evidence to back it up, can be a liability to the company. Another example would be to ignore a complaint about bullying or discrimination. Many general liability insurance policies do not cover employee law. So it is a good idea to ask yourself, can I be held liable in this employee law situation. Which is another reason to consult your legal counsel before taking action.

 

When does an employee go from being a Human Resources asset to a Human Resources liability? There are many reasons, they could become unproductive and their performance fall below other workers, they could also be violating company policies, become a liability by not following OH&S or environmental policies, disrupting the work place through harassment, discrimination or bullying. They could be stealing assets, committing fraud, using drugs or alcohol on the job or using company assets to post inappropriate comments on social media.

Of course not all of the above are cause for dismissal, if a good employee has suddenly become unproductive, there may be reasons for it such as physical or mental health issues or perhaps they are dealing with a traumatic event such as a divorce or the death of a family member. It is your responsibility as a small business owner or manager to identify the problem and take appropriate measures. However, some of these violations are clearly reasons for dismissal and need to be dealt with.

 

When you have information regarding an employee problem, you must determine the nature of the problem and decided action. As I have mentioned in a previous blog, evaluating Intelligence requires you to look at the source of the intelligence and the quality of the intelligence.

 

First thing is to ask why I think there is a problem?

Is it in the numbers, is productivity or sales down or is it because of another employee or customer made a complaint. How reliable is your information?

 

What type of violation or offense is it?

Is it a breach of Human Resources policies or procedures, is it a Code of Conduct breach. Is the behaviour a Criminal Code offense, such as theft, fraud, or assault? The type of violation is going to determine the seriousness of the complaint.

 

How does the violation or activity affect the company?

Does it affect employee morale, does it put an employee in danger, or will it hurt the reputation of the company? Is there a financial cost to the company?

 

Are people at risk of injury or physical harm?

This could be an Occupational Health and Safety issue, or it could be a physical threat or Workplace Violence.

 

 

Let’s be perfectly clear, this is not an article to provide you with Legal Advice. Its purpose is to give you guidance on identifying and analyzing potential employee problems. Every situation is unique and the only way to ensure you are taking the right course of action is to contact your legal advisor for advice. I understand that in this Covid 19 business environment that money is tight. But after you have identified the problem seek legal advice to ensure you are taking appropriate action. Finally make sure you follow the lawyer’s advice and don’t do something else.

 

Once you have determined that a potential violation exists, you need to act on it right away. Thinking in terms of the Who, What, Where, When Why, How and Action Taken. Will provide an investigation template to document your findings.

 

1. Who: Who are the victims, who are the witnesses, who is the subject of the complaint?

2. What: What is the offence,

3. Where did the offense occur? Location, department.

4. When did it occur? Time and Date.

5. Why did the offense occur? Reason for the offense being committed.

6. How did the offense occur? Lack of internal controls or something else.

7. Action Taken: After conducting your inquiry, are you referring it to a manager or the HR department for follow up and how will it be treated. Are you requesting outside help such as a Private Investigator, Lawyer, Police or another specialist.

 

 

Once you have conducted your initial fact finding and have determined that there is cause for concern. You then have to decide a course of action. Is there enough evidence or cause for concern that it requires immediate attention?

Two of the biggest mistakes I see when it comes to employers investigating complaints and violations is:

 

A. That the employer fails to act on the information immediately. This delay can increase the seriousness of the violation, causing it to escalate and create greater liability to the organization or increase its financial losses.

B. Owners and Managers fail to document the complaint and information gathered at the beginning and during the course of the investigation. This is critical for evidence purposes and to show you took action right away. Your personal notes may even be allowed as evidence in the court room, if you had to testify.

 

Some helpful Prevention Tips:

 

1. Have a code of conduct and ethics that lays out the expected behaviors of employees and the consequences for breaching those rules.

2. Have a Whistleblower Hotline so employees can report wrongdoing anonymously. Such as our www.workplaceviolationshotline.ca.

3. Pre-screen all employee before hiring.

4. When it comes to investigating complaints get evidence not explanations.

5. Don’t hesitate to get outside help if needed. Such as Lawyer or Private Investigator. Hiring a third party can ensure an unbiased investigation.

6. Only share the information with other managers on a need to now basis. This is not to only protect the investigation, (Loose Lips Sink Ships) but also to protect the employee’s privacy. If an employee is doing something wrong and they learn they are being investigated, it could escalate their behaviour putting people in danger or destroying evidence.

In closing, Covid 19 has changed the way we work, with more people working from home. But this will not change human behaviour, some employees will cross the line. Be vigilant and diligent, manage your assets and reduce your liabilities.

 

 


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