Managing Difficult Terminations

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Managing Difficult Terminations

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Managing Difficult Terminations

  1. 1. 1. Terminating for Cause 2. Terminating the employee on a protected leave of absence 3. Terminating the “Expensive” Employee Managing Difficult Terminations PRESENTER: LIOR SAMFIRU
  2. 2. Some General Rules a) If it’s not in writing, it does not exist b) If giving notice: must be clear, unequivocal and have a definite end date c) Never allow employee to accept severance offer on the spot d) Know what your contracts and employment policies say about termination entitlements e) Remind employee of post-employment obligations f) Just the facts ma’am… Managing Difficult Terminations
  3. 3. Termination for Cause The Problem: Can be very emotional for employee accused of wrongdoing. Employee not paid severance so more likely to pursue legal action.
  4. 4. Termination for Cause • Employer can terminate employment for cause, where employee’s conduct is inconsistent with the continuation of the employment relationship. • Can only happen when the employee is guilty of repeated and very serious misconduct. • Employer has an obligation to take other lesser forms of discipline before resorting to termination. • One incident of misconduct is almost never enough. • If employer establishes cause, no requirement to pay severance. In reality, very difficult to establish cause, and employer may be liable for damages for bad faith
  5. 5. Termination for Cause How does an employer “build up” its case? • Extremely important to document any incident of misconduct • Use the “confirming email” method • Use the “internal memorandum” method • Best way is to have employee acknowledge conduct, in writing
  6. 6. Termination for Cause Employer should discipline employees • Remember, employer can and should impose disciplinary measures, short of termination: warnings, suspensions, etc. • Disciplinary measures should escalate in severity • Should always have a written record of any disciplinary action taken • Employee should be warned, in writing, of termination risk • Employer may have to conduct workplace investigations to resolve conflict • Must never tolerate abusive, discriminatory or violent behaviour (Bill 168 imposes significant liability) • Meet with the employee to give opportunity to respond (confirm this in writing later)
  7. 7. Termination for Cause So you decided to terminate… • Are you sure….? How about a termination without cause? • Stick to the facts only, rather than personal attacks • Consider having a witness at the termination meeting • Use the word “cause” in the letter of termination • Provide history of conduct and disciplinary measures in termination letter • Employee to be immediately escorted out and all computer access revoked
  8. 8. Termination for Cause Remember: • Always follow your own policies regarding discipline and termination • Unless conduct is “wilful misconduct”, must still pay statutory entitlements • For statutory severance purpose, all service counts (not just last stretch of service)
  9. 9. The Law: An employer must take back employee at the conclusion of leave of absence and also must provide modified duties and accommodation to the point of undue hardship. The Problem: Potential violation or Employment Standards Act, Human rights Code and/or Workplace Safety and Insurance Act. Terminating Employees on Protected Leave of Absence
  10. 10. • Don’t be too proactive – can only assess ability to return employee to work at the END of the leave. Rather than terminate, consider notifying of potential loss of job at the conclusion of leave. • Confirm that employee has intention to return to work or the ability to return to work • “Internal memorandum”: ensure the reason for termination is documented, BEFORE employee is terminated. Terminating Employees on Protected Leave of Absence
  11. 11. • If must replace employee on leave – don’t terminate (but consider duty to accommodate) • Notify employee of replacement and of intention to return employee to work • Remember: employer is allowed do to what is required to operate its business, and does not have to let an employee go to make room for employee returning from leave • Termination decision must be based on a legitimate business reason, unrelated to the leave of absence and must be unavoidable. Terminating Employees on Protected Leave of Absence
  12. 12. Remember: • Cannot effectively give working notice • Employee may be entitled to enhanced severance package if unable to look for work • Must be prepared to have your decision making process scrutinized • Should consider timing of severance payout, so as not to effect other benefits received by employee. Terminating Employees on Protected Leave of Absence
  13. 13. Strategies to Consider: • Return employee to work so as to “distance” yourself from leave of absence • Consider offering “enhanced” severance package as incentive for acceptance • Ensure that letter of termination fully describes reasons for termination (you are writing it for employee’s lawyer) • May not need to terminate: employee may stay on leave (particularly if receiving disability benefits) Terminating Employees on Protected Leave of Absence
  14. 14. Terminating Employees on Protected Leave of Absence Frustration of Contract In some situations employment contract becomes frustrated due to a lengthy absence, allowing employer to treat relationship as being at an end. • Would have to be very lengthy absence (usually measured in years) • Not likely to return to work in the future • If employer has disability plan, lengthy absence within the contemplation of the parties
  15. 15. Terminating Employees on Protected Leave of Absence Is severance reduced by amount of disability benefits received by employee? • If employer exclusively pays for disability coverage, employer may reduce severance by the amount paid by insurer • If employee paid even a portion of the insurance premiums, the employer may not consider the amount of disability benefits paid to employee
  16. 16. Terminating Employees on Protected Leave of Absence Expensive Terminations The Problem: Employees often see severance as a windfall. This can be very costly.
  17. 17. Terminating Employees on Protected Leave of Absence When is a termination particularly expensive? • When employee has lengthy service • Older employees • Senior management • High salaried employees • Where employee recruited away from long term job • Where no termination clause at play
  18. 18. Terminating Employees on Protected Leave of Absence Expensive Terminations • Termination entitlements are based on an employee’s age, length of employment and type of position. • If no notice given, must put employee in the same financial position as if given working notice • Severance package must include everything: salary, bonus, commissions, benefits, stock options, vacation pay, etc.
  19. 19. Terminating Employees on Protected Leave of Absence How do you reduce cost? Give working notice • Employee may consider this to be less desirable, and may be willing to accept lesser severance • Consider whether you wish to have employee continue working • Notice must be clear, unambiguous and have definite end date • Must still pay statutory severance pay at conclusion of notice period
  20. 20. Terminating Employees on Protected Leave of Absence How do you reduce cost? The working notice “threat” • This may be used as a negotiating tactic • Employee may be offered possibility of working notice or severance payout • Employer can change its mind and choose to only pay severance
  21. 21. Terminating Employees on Protected Leave of Absence How do you reduce cost? Enter into new contract of employment with termination clause • Should be done before termination specifically contemplated • Allows employer to significantly reduce future termination costs • Must offer employee something in return for signature • Cannot compel employee to sign new contract
  22. 22. Terminating Employees on Protected Leave of Absence How do you reduce cost? The 2 option severance offer: • Salary continuance with regular job search reporting obligations; or • Reduced lump sum The “pay if unemployed” option • Guaranteed severance until a certain date, plus an additional payment if still unemployed on that date.

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