Restructuring of companies has a significant adverse impact on the employment of baby boomers. How do boomers protect and preserve their termination rights? This lecture provides three simple answers.
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Welcome everyone. This is Amer Mushtaq from You Counsel. Today we will talk about termination rights for boomers and the three things that you must know if you are a baby boomer. I was specifically asked to cover this topic by some of my clients who fall into this category and they thought it would help other baby boomers in the future. While the lecture is specific to boomers, the principles that I talk about in this lecture equally apply to people of different ages as well. So you can benefit from this regardless of whether you are a baby boomer or not.
We will start with a disclaimer that this course is not legal advice. If you've any specific questions, you must contact a lawyer or paralegal.
Most of the termination letters that he will find these days will indicate that to an employee that you know Joe or Mary your employment is being terminated without cause due to business restructuring or corporate restructuring. That's a very common reason for dismissal these days. And so what on earth is this restructuring.
Restructuring is a very simple concept in business and essentially what it means is to make certain changes to the business so that the business becomes more sustainable and more profitable. That's essentially what a restructuring means. And so restructuring could be done in a variety of ways.
For example, you can come up with new ideas, new innovations, you can change your business model, you can create processes which are more efficient, so on and so forth. But one of the elements of restructuring is related to employment law. And that’s what I'm going to talk about today. You will notice that the easiest way to restructure a business, make it a bit more profitable, or sustainable, or make it look profitable, is to reduce the business expenses. And when you're looking at business expenses, if you are dependent on a large number of employees then employees become an easy target for a restructuring. If you reduce the workforce or you make the workforce cheaper, then you will be easily able to show that the business is doing well. So that's sort of the one of the easiest way of restructuring and actually the most common one.
There are three ways that restructuring is commonly done in Canada and one example is you know outsourcing work, or offshoring work which is the most common one. And I'm sure everyone of you is familiar with that. The idea here is that if you're paying eighty thousand dollars to someone in Canada to do a job and if you can hire someone across the world somewhere else and pay that person ten thousand dollars for the same job then the math is straightforward and the answer is simple - eliminate that job in Canada and pass it on to the person who lives elsewhere. so that's outsourcing offshoring, and it has been going on for a while.
The other option is that you replace that worker with another, or reduce the workforce, or a combination of both. And this is essentially replacing that worker with another human worker, and the example of that could be that again the employee who's been there for twenty years, who makes eighty thousand dollars and then why not find somebody who you can hire for forty thousand dollars ie, half the salary, half the age - say twenty five years old, and who may be able to work twice as much, so maybe twenty hours a day eighteen hours a day etc. That's one way of changing the workforce and then reducing it obviously because if you're making the new employee work for two employees previously, then you're already reducing the workforce.
The third way is why be dependent on human being at all and just replace the human with a machine, whether it's artificial intelligence whether it's a robot or whatever machine or software that you want to use to replace or reduce that human element.
As you can see, all three of these factors all three ways of restructuring affect all of us regardless of our age, regardless of our positions, regardless of our expertise. But option number two that I'm talking about today ie. replacing/reducing with another human has a significant impact on aging population and baby boomers and this may impact them more than any other category of people. So I want to talk about that a bit more today and explain that. I can tell you that outsourcing/offshoring has been around for a long time and there has been a lot of criticism of it. There is a general trend overall at least in the western world to reduce the outsourcing/offshoring, if you're familiar with the political environment these days.
I believe as an employment lawyer that the number two is going to continue to be on the rise because it's easier to justify, for example, to say that I'm a Canadian company or we're a Canadian company and one hundred percent of our workforce is Canadian and nothing is off-shored but then what you have done is you have replaced or reduced the workforce by someone you know who is half the age half of an older worker, earns half the income and works twice the hours. I believe this approach is on the rise and is happening more frequently than people realize.
So if you're a baby boomer, you're definitely falling in this category. And I can tell you, the way I see the employment law world, and I've been practicing for ten years, and I'm constantly seeing this kind of restructuring, I can tell you with certain assurance that if you are a baby boomer, your employment is absolutely on the chopping block and in the near future because of this approach towards restructuring.
The issue is simple for an employer, get rid of that older, more expensive employee, hire somebody half the age have the income, and then make the person work twice as hard.
But there's a problem with this approach. And the problem for the employer is that in Canadian law employees have rights on termination. And one of the significant rights on termination is getting reasonable notice of termination. I've spoken about this in a separate lecture in quite detail. If you're unclear about this concept of reasonable notice of termination then by all means check those lectures.
So what does this mean. I'll give you example in terms of the monetary value of this option. If you have an employee, a baby boomer who's been working for twenty years, is fifty years old and makes eighty thousand dollars. If you have to let him/her go, terminate his employment on the basis of providing a reasonable notice, then potentially you may have to spend hundred sixty thousand dollars plus to get rid of that employees.
That's a large amount of money for terminating one person. If you have to let go of a number of people then that cost could be millions of dollars. The employer who's trying to save costs, is trying to save money, would really not like to spend that much money in letting go an employee. So what do you do as an employer to save the money while terminating older employees.
All kinds of solutions are devised to sort of go around the problem. And I'm going to go through the most common three solutions.
Number one is to revise contracts. What I mean by that, and I've seen this happening here, it's not something that happens elsewhere in the world and not in Canada. And in this situation when the employer realizes that they want to let go a person and his or her entitlement on termination is significant, hundreds of thousands of dollars. Sometimes what they will do is they will try to revise a contract either by increasing that employee's salary or changing the employment duties or somehow making certain changes. And in that new contract, the employer will sneak in a termination clause which will limit the employee's terminations right significantly.
So I can give you an example in Ontario. If that contract ie. new contract puts in a termination clause that says if we terminate your employment, your entitlement on termination is limited to what's stated in Employment Standards Act, 2000, that means that this employee who was there for twenty years, making eighty thousand dollars, who could have been entitled to one hundred sixty thousand dollars, now based on the application of the Employment Standards Act may only get two months of pay 8 weeks of pay. So it's like a significant reduction in the terminations right. This is one way that the employer may go around this problem of providing reasonable notice and revise the contract. If you are faced with this kind of situation you have to be alert.
The other approach is again pretty simple. Why don't we make the employee leave because if an employee leaves, or employee resigns, then he or she is not entitled to any reasonable notice as it's resignations, and there's no severance payment that is triggered by resignation and so some of the ways the employer will do it and I can tell you I've corporate clients and they don't do these kind of things and I would never you know advise them to do these things but it is not to say that this doesn't happen. This happens enough that I am putting this in lecture and I'm saying that you have to be watchful of these things.
So the employer creates an environment, a poisonous environment for the employee, start criticizing him, start harassing him in on benign things, making just his day miserable, or her day miserable on a on an ongoing basis to the point that the employee just can't stand it and decides to leave the workforce or resigns. And then you don't have to pay any reasonable notice and severance on termination.
And the third approach is if the employee is not leaving, then you start attacking employee’s performance. So what that means is start documenting, start issuing warnings notices to employee saying that he or she is not performing up to the required standards. Maybe put the employee on performance improvement plan, things like that. So the employer is starting to build a record so that it can use that record to maybe justify dismissal for cause.
And as you may know, in dismissal for cause cases, the employee is not entitled to any termination or severance pay.
So these are examples of three ways, the employer may try to impose to reduce its obligations on terminations, for example, from hundred sixty thousand dollars in our example to literally bringing it down to ten fifteen thousand dollars or zero. Is this legal? Of course not.
If an employer is doing any of these things, there is a legal issue obviously in Canada because we have certain laws that protect the employees. Therefore, two legal issues arise from this kind of behavior.
One is obviously discrimination. In Ontario, we have human rights code which prevents discrimination on the basis of a number of grounds age being one of them. So if you are in a situation or if you notice that an employee is being discriminated because of his or her age, and these are some of the actions that the employer is instituting to either terminate the employee or to put him or her in a position that the employee leaves, then it could be an issue of discrimination.
The second issue is the larger issue of bad faith conduct. Obviously if an employer is putting these kind of plans into action, this is a bad faith behavior to curtail its lawful obligations towards that employee. So obviously this kind of conduct can give rise to legal issues, if you are alert to it and if you are keeping track of what's going on with you.
So that's why this lecture is important and you need to protect yourself. So that's the key thing: if you're in a work force, or if you're in a workplace where you expect that any of these things may happen or you start noticing changes that are unusual, then you want to protect yourself.
I can give you three suggestions to keep in mind.
Number one is document, document, document. I cannot emphasize enough that when you start noticing changes in your workplace that are not positive, either it's unnecessary criticism of your workforce or your work performance or anything else that you think is unusual, you start documenting. And the way you document is, not to document it on your work computer, but you document it at home and on your personal computer and you keep evidence. If there are documents, memos or e-mails that prove your case then you want to keep records of that because you would need those if you are terminated.
The second point I want to emphasize is that if your performance is being criticized improperly unfairly you must dissent, you must raise the issue in writing. I would prefer in writing. But if not in writing, then orally or in meetings, stating that you do not agree to the performance issues that are being raised because if you don't dissent, if you don't raise the issue, then by conduct by not raising, it maybe considered that you agreed to those criticisms.
So you must dissent, if there is performance issues being raised against you.
The third thing, the larger part of that is you want to keep an eye on is what's happening to other employees and you would realize let's say if you notice that there was a wave of terminations that took place and you you know you see a theme there, you see a common element that majority of the older employees have been picked who are terminated then you can gather that information you can write down their names so that you can use that as evidence to indicate that there may have been an age discrimination going on in the workplace. So you want to keep your eyes open and see what's happening to other employees in your workplace. So that you can gather that information and use it if you need to do.
So these are at least three things that you can do to ensure that you can protect your rights on terminations. If you're faced with a new employment contract, you must not agree to it unless you review it with one of the employment lawyer to make sure that you are not giving away your significant rights on terminations.
So hopefully this was helpful for the boomers and for other people whose workplaces may be going through employment restructuring and you want to guard yourself and protect your rights on termination.
If you want us to address a specific topic please send us an e-mail or put comments in on You Tube and we'll be happy to have those in the next lecture. Thank you for watching.