A wonderful, striking, informative case that makes you wonder and provides some lessons on how not to do things:
A corporation finds itself awash in unpaid invoices. They decide to so something about this. They believe their lawyer is too costly (BIG MISTAKE) and decide to look into matters on their own (BIGGER MISTAKE). They find through some sheer coincidence a law student, about ready to start his articling and decide to have him work on these matters. This, the corporation believes, should be done through an outsourced company they work with for some functions.
As all parties know each other well, and are (ok, were...)at least acquainted, if not friends, they neglect to put things in writing. After a few weeks, the employment is terminated. Guess what? The law student now sues the corpration for wrongful dismissal and claims that they were the real employer. The termination was invalid, as a non-director had done so; further payments are also claimed.
The legal issue: in absence of a written contract, the employer has - effectively - the burden of proof. Which means, if the labor court even only is undecided, the employer looses the case. What is there to do, but negotiate a settlement?
The good thing: the client understands that hiring a lawyer usually is the best and most cost-effective way. That´s one lesson. The second one? If you mix business and friendship, business-rules should be followed. Had we had in writing the contract between the student and the outsourced company, no problem.
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