Termination Issues: Who is Responsible for Professional Fees?
Over the past two weeks the Law Society has received telephone calls and emails from lawyers who are facing termination of their employment as a result of the economic impact of COVID-19.
One development of concern is that lawyers facing termination are being told that Law Society fees, ALIA indemnity levies, bar association fees and other pre-paid expenses are being deducted from the lawyer’s final pay cheque and severance. In some cases, this has resulted in the terminated lawyer being presented with a bill instead of a final cheque. In most cases, the issue is not considered in the employment contract. As a result, employers are reminded that the employment of lawyers and students-at-law is subject to the Alberta Employment Standards Code. Section 12 of the Code provides:
“12 (1) An employer must not deduct, set off against or claim from the earnings of an employee any sum of money unless allowed to do so by subsection (2).
(2) An employer may deduct from the earnings of an employee a sum of money that is
(a) permitted or required to be deducted by an Act or regulation, including a regulation under this Act, or a judgment or order of a court,
(b) authorized to be deducted by a collective agreement that is binding on the employee, or
(c) personally authorized in writing by the employee to be deducted.”
If an employee, including but not limited to a lawyer or student-at-law employee, has not authorized the deduction of specific expenses from the lawyer’s earnings in writing, to do so is a breach of the Code. Employers are discouraged from engaging in this type of business practice, especially in the present circumstances.
Instead, the parties should attempt to come to an agreement with the departing lawyer regarding any repayment of fees and insurance paid that covers the post-employment period. For example, the departing lawyer may agree to notify the former employer when they obtain new employment and agree to repay the fees on a pro-rated basis.
Both the employer and their employees are encouraged to seek legal advice with respect to any proposed termination or lay off.