In our recent blog, we addressed boomerang employees and, specifically, the HR issues surrounding them. We know you’ve been eagerly awaiting part two where we promised to address the employment law implications of rehiring a past employee, so here we go! Below we will do a deep dive into the various legal issues that may arise when hiring boomerang employees.
1. Reference checks, past agreements & restrictive covenants
Employers may be eager to hire back a past employee for a seemingly easier transition and less training but it’s important for employers to do their background research into what the employee has been doing since they left your company. While a reference check may not be top of mind for an employee you know, it is a step that should not be overlooked. If the boomerang employee was fired from previous employment during the gap from their company, this is something you’ll want to know and the reasons will likely affect your decision to rehire them.
Depending on the nature of your business, it is also important to know what type of work the employee was doing during their gap. This can become a live issue when competing employers work with similar clients and/or intellectual property. You will want to know if the boomerang employee has entered into any specific agreements or if any restrictive covenants may apply. A lawsuit against a boomerang employee can have various financial and reputational effects on your business that you’ll want to avoid.
2. How to calculate a boomerang employee’s length of service
One of the biggest questions and potential issues is addressing a boomerang employee’s length of service. Do you count their months or years of previous service in their overall length of service? Or does the clock simply start fresh when they are rehired? These types of questions are important when considering vacation entitlements, benefits, and possibly termination pay or severance entitlements down the line.
Generally, an employee’s length of service accounts for all months and years worked for an employer for Ontario severance regardless of gaps in their employment but less so with other common law or contractual terms. It will depend on the length of the gap. For example, a 2-month gap will be ignored overall, but a 10-year gap may break up the period into two different employment periods.
When rehiring an employee, employers will want to specifically identify how they intend to calculate the returning employee’s length of service and set that out in the contract. If you intend to only calculate the length of service from the rehire date, this issue should be discussed upfront and detailed very clearly in an enforceable employment contract.
3. Probationary periods
While probationary periods are at the discretion of an employer and may be commonly overlooked when rehiring a past employee, it’s always a good idea to start with a trial period for boomerang employees. This allows time for an employer to reassess if the returning employee is (still) a good fit with the company. As probationary periods are not a mandatory requirement under the Employment Standards Act, you will want to be sure that any probation period is detailed in a new employment contract.
4. Pay grades and raises
Rehiring a past employee will be similar to hiring a new employee and will likely come with some negotiations around pay. A boomerang employee is more than likely going to ask for a higher pay rate than what they previously made with your company. As the employer, you’ll need to consider the money saved on hiring someone who already knows the business versus what the increased pay will mean for your company. Once the initial pay rate is agreed upon and detailed in a fresh employment contract, going forward any sort of raise will be at the company’s sole discretion and/or subject to the usual company-wide grids.
5. Can a terminated employee be rehired?
Technically yes, but this is likely something you will want to consider carefully depending on the context of the termination. While boomerang employees offer a sense of familiarity and invested time and money, you’ll really want to analyze the reason(s) the employee was fired in the first place and assess the pros and cons of bringing them back. This will need to be determined on a case-by-case basis, as all situations and reasonings will differ.
Takeaway
The moral of the story when hiring a boomerang employee is to be clear and transparent from the start about your expectations and to always, always, always start with a fresh contract that clearly details the employer and employee obligations going forward, while also addressing how the boomerang employee’s past service may come into play.
Do you have questions about your legal obligations with boomerang employees? Get in touch for a consultation.
