Five Myths About Job Loss
Five Myths About Job Loss
These days, the news is rife with stories about lay-offs: Bell, TD, Scotiabank, CIBC, Enbridge, Canada Post and a host of other companies have announced major reductions to their workforce.
Job loss is not uncommon – the likelihood that a person will be permanently laid-off (i.e. terminated) sometime in his or her career is extremely high. Nevertheless, many myths still persist about what an employer can and cannot do during the termination process. In this post, I shed light on 5 common myths.
Myth #1 – Lay-off blackout period
Many people are surprised to learn that the end of the calendar year is one of the most common times for employee lay-offs. Some employees believe that because of the holiday season, a compassionate blackout period exists at law to prohibit employee terminations. Unfortunately, no such period exists. The law gives an employer the ability to terminate the employment of any employee, at any time, for any reason. Though an employer might have a policy, which prohibits employee terminations during the holiday season, the law does not impose such an obligation.
Myth #2 – Reasons for Termination
Another common myth is that an employee is entitled to reasons for the loss of their job. In most cases, an employer is not required to provide reasons (and there need not be a reason) for an employee’s termination. By law, an employer can terminate an employee, without cause, for any reason at anytime, provided that the termination is not in violation of the Human Rights Code. Therefore, an exceptional employee, with solid performance reviews and without a previous disciplinary record, could still be permanently laid-off before other employees who might seem more ‘deserving’ of the lay-off.
In situations where an employer is alleging ‘just cause’ – which essentially means that the employee did something wrong to bring about the termination – the employer is required to provide reasons for the ‘just cause’ termination. That said, for the vast majority of employee terminations, which are without cause, reasons for the termination are not required.
Myth #3 – Posting of the lost job
The law gives employers flexibility to manage their business and employee resources as they see fit. Therefore, in most circumstances, an employer can permanently lay-off an employee on one day and turn around and recruit for the exact same position on another day – regardless of the reasons given to the terminated employee for the lay-off (e.g. shortage of work, downsizing, restructuring etc.). One exception to this rule is if an employee’s employment contract or collective agreement states that the employee will have first opportunity for an open position when one becomes available. Absent these contractual assurances (and some statutory restrictions), an employer is fully within its legal rights to post any open position and is under no obligation to re-hire a terminated employee.
Myth #4 – Severance package deadline
Most severance packages include a deadline for the employee to consider the package and sign-back their agreement (commonly one week). Employees often feel pressured to confirm their acceptance of the severance package before the deadline, for fear that they will lose the package offered altogether. However, nothing could be farther from the truth.
The deadline for an employee to confirm acceptance of a severance package is simply a date imposed by an employer: it does not have any legal significance and primarily serves the employer’s interest to conclude matters quickly. An employee can always ask for an extension to this deadline and in most cases the employer will agree to the request. Remember that an employer equally benefits when an employee confirms acceptance of a severance package after receiving every opportunity to be fully informed about the contents of the package.
Myth #5 – Working notice of termination
When an employee is terminated on a without cause basis, he or she is entitled to notice of termination, which can be:
- A lump-sum payment equal to the notice period;
- Salary continuance payments during the notice period, where the employee continues to receive his or her salary, but is no longer required to report to work;
- Working notice, where an employee is required to work for duration of the notice period; or
- A combination of any of the above.
It is completely possible and acceptable for an employee’s severance package to be entirely made-up of working notice. In some situations, an employee who has been provided with working notice of termination may still be entitled to a severance payment at the end of the working notice period. However in such circumstances, the working notice period would still count towards the overall severance package provided to the employee (i.e. the severance period would not be based on the severance payment alone.)
If you have lost your job, contact us for a review of your severance package. Though your severance package might seem fair, you might be leaving a number of entitlements on the table.
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[…] I have counselled many individuals through the process of job loss. Last year, I wrote a blog post, which served to clarify common myths about employment terminations. In this post, I share […]