What’s Weird About Terminations in 2021?
Terminations are tough at the best of times. And we all know the last year has not been “the best of times.”
Along with a laundry list of other changes since the onset of the pandemic, employers have been forced to adapt to the unique challenges associated with employee terminations. Whether it is dealing with the virtual meeting setting or addressing employees’ heightened stress levels, terminations just seem harder this year. And it’s not just because of COVID-19: changes in case law and legislation have also impacted how we conduct terminations, how we assess termination entitlements, and how we settlement severance disputes.
So, what’s weird about terminations in 2021?
1. Conducting a termination meeting
Typically, in the Before Times, termination meetings were held in-person, in a particular boardroom, and with short notice. Since many employees are working remotely, or are otherwise observing physical distancing requirements, terminations are happening remotely more than ever before.
For employers that have not yet conducted a “remote” termination, here is a list of what to consider:
Whether the employee has appropriate internet access (if the meeting is happening via video), and whether there is a back-up telephone number in case the video cuts out
When IT will shut off access to various devices and accounts, which could interfere with the connection during the termination meeting
Whether having a termination discussion via telephone is more respectful and less emotional for employees than enduring the “spotlight effect” of a video call
How to collect employer property, especially if the employee is working away from their primary residence or is using expensive equipment
How to send the termination letter and other documentation to the employee, whether via e-mail or courier[i], and the impact of that decision on the effective date of the termination
What immediate supports should be available to ensure the employee is okay after receiving the news – e.g. EAP, follow-up from a trusted colleague, etc. – particularly because of the absence of customary in-person supports
The termination meeting is typically the most stress-inducing aspect of a termination for the HR team, but it is not the only aspect of the termination process that has changed in 2021.
2. Calculating initial separation offers
Over the last year, I have seen a shift in the way that employers are approaching the initial separation offer, including:
Greater recognition that contractual termination entitlements a mere starting point vs. a “lock and key”[1] following recent case law about contractual provisions, including the Waksdale v. Swegon decision
Using longer notice periods with a clawback if the employee finds other employment vs. discounted lump sum payments (although there seems to be a shift in this approach once settlement negotiations start, as set out in section 3 below)
Use of working notice to take advantage of CEWS top-ups to “fund” termination obligations
Anticipating challenges to restrictive bonus and stock option forfeiture clauses as a result of cases like Matthews v. Ocean Nutrition and Battiston v. Microsoft Canada
Contemplating issues relating to loss of benefit coverage, including requesting transition coverage or covering premiums for new coverage
Regardless of how employers frame the initial severance offer, there is often further negotiation before a settlement is reached. Those negotiations follow some of the above trends but are taking new turns in 2021.
3. Settlement negotiations for wrongful dismissal matters
Because of the financial uncertainty that many employees are facing due to COVID-19 and the economy, more employers are open to keeping the employee “whole” immediately after the termination and before a release is signed, including:
Continuing salary
Paying out earned variable compensation (e.g. vacation pay, outstanding commissions, etc.)
Keeping benefits active (subject to approval of the insurer)
Any eventual settlement can be subject to a set-off for these interim payments/perks, so employers should avoid using these uncontroversial entitlements as leverage in a negotiation.
Beyond these interim measures, there are a few other trends that I have seen in severance negotiations so far this year:
Requests for extended notice periods because of the anticipated “COVID bump”, although there have been no definitive court decisions showing that there will be a significant bump
More claims that an employee’s termination was due to discrimination on the basis of family status or disability because of their leave of absence or lower-than-target performance during various lockdowns in 2020
More careful consideration of the advantages of a discounted lump sum offer so that employees can take EI earlier and keep those payments given the Government of Canada’s new approach to EI repayment
Demands for historic vacation pay on bonuses and other variable compensation because of recent class action litigation
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The pivot is real in 2021. Employers have learned how to adapt to remote work arrangements; meet heightened health and safety precautions; and accommodate employees’ caregiving obligations.
Terminations are yet another area in which HR teams have been forced to adapt. While some of what’s weird about terminations will be pandemic-specific, like the COVID-bump and CEWS considerations, many of these adaptations will remain and will shape severance discussions for years to come.
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[1] Credit Patrizia Piccolo for this analogy
[i] If the employer sends the e-mail on a weekend or after 5:00 pm, then the “notice” is not considered to be “served” until the next business day. If the employer sends a courier, service is not deemed to be effective until “two days after the courier takes the document”. See section 95 of the Employment Standards Act, 2000 and subsection 4(1) of O. Reg. 288/01
