Canadian HR Reporter

CANADIAN HR REPORTER CANADIAN HR REPORTER February 24, 2014 February 24, 2014 NEWS NEWS 11 giving a detailed confi rmation let- ter, so really no qualitative state- ments about the employee such as ' ey're a great employee.' And we believe this is as a result of com- panies either being U.S.-based or -infl uenced. Quite often, U.S. companies don't give letters of reference," he said. Canadian trends Having a formal policy on sever- ance practices is more common with larger employers — and the majority of fi rms (75 per cent) have formal, written policies, found the survey. But a formal policy isn't necessarily the best option, according to Kenneth Krupat, a Toronto-based employ- ment lawyer. " ere are issues under Canadi- an law as to whether these formal severance policies are ultimately enforceable… generally, if the employees have signed a contract when they fi rst started that incor- porated the terms of those sever- ance policies, then that would be enforceable. But if they haven't... (the policy) is not necessarily al- ways binding on the employee when there's a dismissal," he said. e best way to incorporate a formal policy would be to include it in the terms of severance in the employment agreement or con- tract, said Minken. In Canada, there's been a trend over the past few years of older employees staying on in the hope of getting a package, said Natalie MacDonald, co-founder of Rud- ner MacDonald in Toronto and author of Extraordinary Damages in Canadian Employment Law, published by Carswell. "With the end of mandatory re- tirement, we're fi nding more older employees basically wanting to re- main for a package," she said. "More employers are terminat- ing with a 50 per cent clawback, so (they are) providing reasonable notice but making it subject to a 50 per cent clawback… So the em- phasis and the impetus is really on the employee to fi nd comparable employment." Continuing benefi ts ere are also issues around con- tinuing benefi ts, said Krupat. In Ontario, for example, employ- ment standards legislation re- quires employers to continue short- or long-term disability, or even life insurance, he said. "Being able to continue more of those extended health benefi ts is something employees often want, and sometimes can be a chal- lenge," said Krupat. "Sometimes, it doesn't cost the employers a huge amount of money relative to paying more months of salary, but it's viewed as a very helpful thing from an employee perspective." As a best practice, employers should strive to off er health ben- efi ts as long as possible, he said. "We generally try to convince employers that it's a good idea to continue extended health and dental benefi ts for as long as they can — many families rely on those benefi ts." Employers may also want to consider off ering outplacement services to displaced employees, something provided by more than two-thirds (68 per cent) of survey respondents. " e more outplacement coun- selling, the easier the transition will be for the employee, the easier they will fi nd work, so I think that is a good value for a company," said Minken. Outplacement is advantageous to both the employer and em- ployee, particularly when there are clawback provisions in the severance package, said Krupat. "It's a very good business practice for an employer to of- fer outplacement assistance to encourage the employee to show up right away, to start looking for work. And as soon as that em- ployee fi nds work, then of course the employer is going to be saving a whack of money on the continu- ing severance obligation. And the employee's going to be in a better position," he said. "It may well be quite a bit cheaper for the employer to pay for some kind of outplacement package then to pay for another month or two's salary." Providing outplacement sup- port is also critical in mitigating risk, said Bram Lowsky, group ex- ecutive vice-president, Americas, at Right Management in Toronto. It also reduces the chance the em- ployee will go to websites, such as Glassdoor, and post a scathing re- view of the company, he said. Crunching the numbers is cer- tainly important but, in the end, the most important factor is how the termination process is han- dled, said Minken. "Often, the biggest issue for the employee is not how much money is paid but how the termination is done," he said. "We know there's no perfect way to do this, but there's a number of good points to follow." Best practices Having a witness present, consid- ering timing and personal events in the employee's life, having the termination meeting face-to-face and handling the process with respect are all critical steps, said Minken. Also, keeping the meeting short, not going into too much detail about the reasons for ter- mination and giving the employee time — and, possibly, funds — to get legal advice about the package are also best practices. "Often, what really triggers em- ployees to be launching lawsuits and being all upset is the way they feel they were treated out the door — something that was said or the way it was handled or that they were just walked out of the premises summarily even when it was a non-cause dismissal and they would've liked the time to collect things, to say goodbye," said Krupat. "If it's really a situation where people aren't being let go for per- formance or as a result of some misconduct, then employers need to fi nd ways to deal with people as fairly as they can, and as profes- sionally as they can." If an employer can be shown to have acted in bad faith during the termination process, there is the possibility it will have to pay moral damages — and, in extreme cases, punitive damages as well, said MacDonald. But handling the termination process well doesn't end when the employee walks out the door. It's also important to provide support after the termination meeting has ended, said Lowsky. "People don't often remember everything they heard in that meeting because they just lost their job... (It's important) to have support, to have it in writing and to follow up with that, and to have a person that they can be able to connect with afterwards for any questions they might have." And having good severance and termination practices isn't just about avoiding lawsuits — they can also help to safeguard an em- ployer's reputation. "(Employers) need to care and recognize how important it is to protect their employer brand," said Lowsky. "In our age of social media, treating people with care and respect and sensitivity — that human element — directly ties back to your brand, as well as how you attract future employees." We see it all at once. Introducing a complete suite of tax and legal immigration services to help you overcome the challenges of a cross-border workforce - all in one place. kpmg.ca/law © 2013 KPMG Law LLP, a tax and immigration law fi rm affi liated with KPMG LLP, each of which is a Canadian limited liability partnership. KPMG LLP is a Canadian limited liability partnership and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. GLOBAL SNAPSHOT How much termination pay do top execs get? Number represents weeks of pay per year of service Global average 3.48 China 4.24 Japan 4.05 Netherlands 4.02 Singapore 3.95 France 3.9 Sweden 3.73 Spain 3.64 Germany 3.52 U.K. 3.51 Belgium 3.5 Canada 3.46 India 3.38 Italy 3.16 Mexico 3.27 Brazil 3.23 U.S. 3.16 Hong Kong 3.1 Switzerland 2.75 Australia 2.69 Source: Right Management Provide support for employees – not just cash Provide support for employees – not just cash TERMINATIONS < pg. 1 GLOBAL SNAPSHOT Severance around the world Which of the following are required or regulated by law in the event of employee terminations? Global Americas Europe Asia Pacifi c Length of advance notifi cation given to employees 62% 53% 63% 72% Notifi cation of unions 47% 45% 51% 45% Notifi cation of government 41% 34% 44% 44% Minimum time period an employee will receive termination benefi ts 47% 38% 51% 58% Minimum monetary amount of benefi ts 45% 35% 45% 55% Continuation of benefi ts 31% 38% 23% 35% Minimum tenure at company needed for employee to qualify 49% 38% 51% 57% Consultation process 35% 19% 40% 45% Provision of outplacement services 31% 21% 32% 40% Other/don't know/no answer 6% 14% 2% 2% Source: Right Management

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