Recently, I wrote about common mistakes that employers make in the course of dismissal. In my latest Canadian HR Law blog post, I addressed common mistakes that employees make when they are let go. This is a crucial time for individuals, as their primary source of income has been interrupted and, in many cases, their careers sidetracked. It is critical that they make sure they understand their rights before agreeing to anything.
Failing to ensure that they receive all forms of compensation
By default, an individual that is dismissed without cause and offered pay in lieu of notice is to…
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By default, an individual that is dismissed without cause and offered pay in lieu of notice is to receive all forms of compensation that they would have received if they had continued to work during the notice period. This includes not only base salary, but also medical and dental benefits, life insurance, disability benefits, perquisites such as car allowance, bonuses, commissions and other variable pay. While there may be contractual provisions or policies in place that will limit this entitlement, the onus will be on the employer to prove this. Otherwise, the employee is entitled to all forms of compensation. This can be a significant factor, particularly for employees that receive a substantial portion of their income through variable pay. I have often heard people talk about how they received “X months of severance”, but upon greater scrutiny, it became apparent that they were only receiving half of their income during that time. As a result, by way of example, the 18 month severance package was really only worth 9 months.
Failing to pursue or replace disability coverage
As discussed above, by default all employment related benefits are to continue during the entire notice period. However, most insurers will not continue disability coverage beyond the statutory notice period. The typical severance package, if it offers any pay in lieu of notice beyond the statutory period, will indicate that most benefits will also continue, but will exclude items such as disability coverage and life insurance. Employees that fail to take this into account may leave themselves at risk of a disability when they have no income replacement available. Needless to say, this is a tremendous risk.
Failure to take advantage of outplacement counseling
Wise employers will offer outplacement counseling in appropriate circumstances in order to assist the employee in obtaining new employment. Unfortunately, I have seen many individuals fail to take advantage of this offer, either out of laziness or mistrust. In some cases, I have heard employees proclaim that they will not work with the outplacement counselor that the employer has offered to provide, since they assume that everything they do will be reported to the company. Our firm works with many outplacement counselors, and while there are bad seeds in every bunch, the vast majority conduct themselves ethically and professionally and will not reveal any personal information to the employer, even if they are paying the fees. By foregoing this offer, which the employer does not have to make, the employee may be passing up an opportunity to find new employment more quickly.
Being pressured by arbitrary deadlines
Severance packages will almost always include a deadline for acceptance. These deadlines are completely arbitrary, and are included simply to attempt to ensure that the matter is dealt with quickly. Employees should not feel as though they will be giving up their legal rights if they do not respond by the deadline imposed by the employer. Employers should provide at least a week for the individual to assess the offer and obtain legal advice. Employees that need more time should write to the company, and indicate that they require additional time in order to consider the offer and obtain legal advice. Any employer that chooses to withdraw the offer at that point does so at their own risk.
Accepting the “offer” to resign
Sometimes, an employer will approach an employee, indicate that they believe that the employee has been guilty of misconduct, and offer them the choice of resigning or being fired. In many cases, both parties are operating under the mistaken view that the worker will be in a better legal position by resigning. However, that is not accurate. To begin with, an individual that quits their job will not be entitled to Employment Insurance benefits. Furthermore, while the employee can always challenge the validity of the resignation later, if they want to challenge the dismissal, they are simply creating an additional hurdle to overcome since they will first have to prove that they did not resign voluntarily. While resigning will not preclude them from pursuing a wrongful dismissal claim, it will make it more challenging for them to do so.
Failure to obtain legal advice
This is the biggest and most common mistake. I have reviewed thousands of severance packages and can still count on two hands the number of times that I advised the individual that there was no way in which the offer could be improved. While some offers are quite generous, there are almost always aspects that can be addressed. Even if the advice that the individual receives is that the package is fair, I have had many people explain that being advised of this provides them with peace of mind that was worth the cost of obtaining the opinion. In most cases, the package will be deficient in one or more aspects, and if the employee fails to obtain legal advice, they will not understand that they are leaving money on the table at a time when their primary source of income has been cut off. There is merit to the old expression that one can be “penny wise and pound foolish”; while there is a cost to obtaining a thorough opinion from an employment law expert, it is a cost that is almost always worth incurring so that the individual can understand their legal rights and properly assess the severance package. While it may be tempting to avoid spending money on legal advice, it is a short-sighted decision.
Individuals should never assume that a severance offer is fair
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Our lawyers have advised thousands of individuals that have lost their jobs,whether the dismissal was for cause or without. In almost every case, we have identified aspects of the termination that were not as they should be, and in the vast majority of cases, we have assisted the individual in securing a better severance package. Individuals should never assume that a severance offer is fair, even if it comes from a large organization or because they were told that it is. While some offers are better than others, almost all can be improved. At the very least, the individual should understand what is being offered and what is lacking. We can then discuss options and strategies with them.
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by Stuart Rudner
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