Ask the ExpertLay-Off Employee Due to Work and Organization Restructure
hri_Admin Staff asked 5 years ago

My company is going to combine two sections to form a new department, so as to focus more on business which is better for our business development. After review the organisation structure of the new department, we can re-post all employees of the previous two sections into the new department, except one manager, who is found surplus. Can we lay-off the surplus manager by giving him sufficient notice pay in accordance with the BC Employment Standard Act, i.e. wages of 3 weeks plus one week’s pay per each service year, and the maximum is 8 weeks. The manager has worked in the company more than 20 years. So the termination pay will be 11 weeks’ wages. Is that right ? I am worrying that does his long-term services, more than 20 years, will imply a different approach under the Law ? Do we need to pay more to him ? Will there be a possibility that the manger will raise a legal litigation towards the company due to this lay-off ?

3 Answers
Glenn Demby Staff answered 5 years ago

Administrator

This is more a question about this employees ability to find comparable work than the minimum required termination/lay-off notice/pay. The courts will look at how easy it was for the Manager in question to find comparable work at comparable pay when determining if the compensation was adequate.

I assume that the Manager in question, given his/her 20 year tenure, is at least in his/her 40s. Does the Manager have up-to-date skills in the new hiring environment? Do they have degrees and experience that make them an attractive hire, or are their skills very niche to your industry, or your company? Usually when an employee has been with a single company for so long, there skills are not as transferable as you would think. Lastly, how competitive is your Industry? Could they go to your competitor and get a job, or do you have a non-compete.

The long and the short of it is that you are going to have to pay more than the minimum if you want to avoid a future nightmare… it will happen.

You can look at structuring your compensation as a combination of pay and working notice to lessen the direct financial burden. You can also look at offering retraining or other services to lessen the time to find comparable employment.

You should also add a rider to your letter that states that when comparable employment is found, working notice/termination payments stop if you structure it with ongoing payments. You don’t want the employee to double dip.

I understand the complexity of the situation you are in, but without knowing the specifics of their job, we have to offer advice in the worst possible scenario – and with that perspective, the courts will and have always sided with a long tenured employee that is older than the median hiring age when deciding on whether the minimum termination pay was adequate.

Glenn Demby Staff answered 5 years ago

Anita Lau

Thanks for the advices. They are very useful.

The employee in question is now around 63-65 years old, and I doubt he will prepare to find another job in the same industry, if after lay-off.

The new department of the company will focus more on use of new social media, e.g. facebook, websites, wechat, cell phone, etc. to develop our products. The employee in question should not have enough knowledge with the new technology.

My question is: Will the termination with no cause and lay-off be treated the same ? We have sufficient background documents (e.g. business strategy and proposal) for valid reason of re-structure and not special pin-point the employee in question,

If we agree to pay the employee in question more than minimum required by the law, that is, 11 weeks, then how much more we should pay, so as to avoid possible litigation ? Given he has worked in the company for 22 years

Glenn Demby Staff answered 5 years ago

Administrator

It is tough to say exactly how much more to give, because it depends on their current compensation and the economic landscape. Given the employees age, they may opt for early retirement with a rich enough buy-out.

You need to look at your business and see what is fair for you to offer. I can advise you that it is very likely the employee will pursue some type of action if you only offer the minimum – and it is very likely that the employee will win the action given the circumstances you have described.

Ask yourself, how much are you comfortable paying and treat it as a negotiation to get to that point.

Administrator