HR Practices in a Recession:
Exploring the Options
OMHRA: September 17, 2009
Union vs. Non-Union Options
• More control over non-union employees
• Measures are often directed at nonunion employees
• Collective agreement will largely dictate
measures that can be used
3
alternatives to termination
Cost Cutting:
• reduced or time-limited health benefits
• training and development restrictions
• reduced travel budgets
4
alternatives to termination
Cost Cutting:
• demotions
• salary freezes
• bonus controls
5
alternatives to termination
Maintaining Staffing Levels:
• vacancy management
• hiring freeze
• redeployment
6
alternatives to termination
Working Hours:
•
•
•
•
reduced work hours
work sharing
overtime control
managing absenteeism
7
alternatives to termination
Staff Reductions:
• temporary lay-offs
• voluntary unpaid leaves
• voluntary retirement
8
alternatives to termination
Be Careful of Constructive
Dismissal!
• unilateral changes:
 on consent
 on notice
 with consideration
• otherwise, potential constructive
termination of employment
9
alternatives to termination
Considerations:
• impact of constructive dismissal
• employee’s duty to mitigate by accepting
the change
10
alternatives to termination
Duty to Mitigate in a Recession:
• reason for change
• manner in which change is
communicated
• one employee or several affected
11
alternatives to termination
Overall Questions:
• can it be seen as humiliating?
• is it an attempt to avoid severance
obligation?
12
alternatives to termination
Cost Cutting:
•
•
•
•
potentially lesser impact
employees may be more amenable
can provide significant savings
don’t be short-sighted
13
alternatives to termination
Cost Cutting:
• is it humiliating? fundamental?
• disproportionate impact on certain
employees?
• pay increases a fundamental term of
employment?
14
alternatives to termination
Demotions:
•
•
•
•
in context of restructuring
coupled with offer of severance
again…mitigation issues
morale issues
15
alternatives to termination
Redeployment:
• moving employees to open positions
• terms of employment – stay the same
or based on position
• union cooperation
• voluntariness important
16
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?
17
alternatives to termination
Reduced Work Hours/ Work Sharing:
• back to normal after the recession
• humiliating?
• potential claims
18
alternatives to termination
Overtime Control and Absenteeism:
• assertively managing absences to avoid
overtime
• managing strenuous workloads
• wellness programs
• changing expectations re: work
outcomes
19
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
20
alternatives to termination
Temporary Lay-offs and Unpaid
Leaves:
• practical risks/rewards
• morale issues
• timing the layoff
21
alternatives to termination
Voluntary Retirement:
• human rights concerns
• individually targeted
• available to all employees?
• what about key employees
22
basic legal framework
23
basic legal framework
Types of Termination Payments:
• Employment Standards Act:
• notice/pay in lieu of notice
• severance
• Common law:
• reasonable notice
24
basic legal framework
Employment Standards:
• minimum only
• employee can’t agree to less
• must continue all benefits and forms of
compensation
25
basic legal framework
Common Law:
• bridge between jobs
26
basic legal framework
Common Law:
• factors for notice period:
• length of service
• position
• age
• no standard formula
27
basic legal framework
Impact of Employment Contract:
• can establish notice period
• governs on termination
• limits exposure and need to litigate
28
structuring the package
29
structuring the package
Structure:
• working notice vs. pay in lieu
• lump sum payment vs. salary
continuance
30
structuring the package
Working Notice or Pay in Lieu:
• working notice rarely works
• demoralized employees aren’t
productive
• pay in lieu best option
31
structuring the package
Making Working Notice Work:
• more than one person affected
• retention bonus
• resignations during working notice
32
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
33
structuring the package
Salary Continuance:
•
•
•
•
incentive to find new employment
bonus on alternate employment
definition of alternate employment
confirmation of employment status
34
structuring the package
Assistance with Mitigation:
• providing reference letters
• offering outplacement counselling
35
strategy
36
strategy
Reductions in Force:
• using formulas
• based on position
• bump up for age
37
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
38
strategy
Negotiating:
• leave room to negotiate
• time can be your best defence
• negotiate only after signing date for
all employees
39
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
40
strategy
What To Ask For:
• signed release
• restrictive covenants
 non-solicitation
 confidentiality
41
delivering the news
42
delivering the news
• how to address reductions in force
• when and how to deliver the news
• minimizing the pain and uncertainty
43
after the termination
• keep notes of the meeting
• provide a timely ROE
• cause = M (dismissal)
• without cause = K (other)
44
after the termination
Unconditional:
• letter of reference (at the termination
meeting)
• ESA payments even if negotiating
• outplacement counselling
45
Questions:
46