HR Practices in a Recession: Exploring the Options

OMHRA: September 17, 2009

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Union vs. Non-Union Options

• More control over non-union employees• Measures are often directed at non-

union employees• Collective agreement will largely dictate

measures that can be used

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alternatives to termination

Cost Cutting:• reduced or time-limited health benefits• training and development restrictions• reduced travel budgets

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alternatives to termination

Cost Cutting:• demotions • salary freezes• bonus controls

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alternatives to termination

Maintaining Staffing Levels:• vacancy management• hiring freeze• redeployment

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alternatives to termination

Working Hours:• reduced work hours• work sharing • overtime control• managing absenteeism

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alternatives to termination

Staff Reductions:• temporary lay-offs • voluntary unpaid leaves• voluntary retirement

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alternatives to termination

Be Careful of Constructive Dismissal!

• unilateral changes: on consent on notice with consideration

• otherwise, potential constructive termination of employment

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alternatives to termination

Considerations:• impact of constructive dismissal • employee’s duty to mitigate by accepting

the change

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alternatives to termination

Duty to Mitigate in a Recession:• reason for change• manner in which change is

communicated• one employee or several affected

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alternatives to termination

Overall Questions:• can it be seen as humiliating? • is it an attempt to avoid severance

obligation?

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alternatives to termination

Cost Cutting:• potentially lesser impact • employees may be more amenable• can provide significant savings• don’t be short-sighted

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alternatives to termination

Cost Cutting:• is it humiliating? fundamental?• disproportionate impact on certain

employees?• pay increases a fundamental term of

employment?

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alternatives to termination

Demotions: • in context of restructuring• coupled with offer of severance• again…mitigation issues• morale issues

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alternatives to termination

Redeployment:• moving employees to open positions• terms of employment – stay the same

or based on position• union cooperation• voluntariness important

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alternatives to termination

Reduced Work Hours/ Work Sharing: • shared amongst several employees• Work Sharing 2009 – Service Canada• voluntary participation• what if they don’t agree?

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alternatives to termination

Reduced Work Hours/ Work Sharing:• back to normal after the recession• humiliating?• potential claims

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alternatives to termination

Overtime Control and Absenteeism:• assertively managing absences to avoid

overtime• managing strenuous workloads• wellness programs• changing expectations re: work

outcomes

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alternatives to termination

Temporary Lay-offs and Unpaid Leaves:

• lay-offs per Employment Standards Act• in employment contract or collective

agreement?• common practice?• if not, deemed termination at common

law

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Temporary Lay-offs and Unpaid Leaves:

• practical risks/rewards• morale issues• timing the layoff

alternatives to termination

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Voluntary Retirement: • human rights concerns• individually targeted• available to all employees?• what about key employees

alternatives to termination

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basic legal framework

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basic legal framework

Types of Termination Payments:

• Employment Standards Act:• notice/pay in lieu of notice• severance

• Common law:• reasonable notice

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basic legal framework

Employment Standards:

• minimum only• employee can’t agree to less• must continue all benefits and forms of

compensation

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basic legal framework

Common Law:

• bridge between jobs

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basic legal framework

Common Law:

• factors for notice period:• length of service• position• age

• no standard formula

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basic legal framework

Impact of Employment Contract:

• can establish notice period• governs on termination• limits exposure and need to litigate

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structuring the package

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structuring the package

Structure:

• working notice vs. pay in lieu• lump sum payment vs. salary

continuance

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structuring the package

Working Notice or Pay in Lieu:

• working notice rarely works• demoralized employees aren’t

productive• pay in lieu best option

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structuring the package

Making Working Notice Work:

• more than one person affected • retention bonus• resignations during working notice

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structuring the package

Lump Sum vs. Salary Continuance:

• length of the notice period• <4 months’ pay as lump sum• prospects of re-employment • clean break

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structuring the package

Salary Continuance:

• incentive to find new employment• bonus on alternate employment• definition of alternate employment• confirmation of employment status

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structuring the package

Assistance with Mitigation:

• providing reference letters• offering outplacement counselling

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strategy

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strategy

Reductions in Force:

• using formulas• based on position

• bump up for age

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strategy

Cost Savings Can be Risky:

• some employers just giving ESA minimum

• employees may be more likely to litigate

• may face class actions• at least give a small top up

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strategy

Negotiating:

• leave room to negotiate• time can be your best defence• negotiate only after signing date for

all employees

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strategy

Employees on Leave:

• using restructuring to get rid of employees on leave

• impact of media hype • legal risk – ESA and human rights• when to notify the employee – timing

is everything

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strategy

What To Ask For:

• signed release• restrictive covenants

non-solicitation confidentiality

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delivering the news

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delivering the news

• how to address reductions in force• when and how to deliver the news• minimizing the pain and uncertainty

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after the termination

• keep notes of the meeting• provide a timely ROE • cause = M (dismissal)• without cause = K (other)

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after the termination

Unconditional:

• letter of reference (at the termination meeting)

• ESA payments even if negotiating• outplacement counselling

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Questions: