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EDITOR'S BLOG
Jun 29, 2015

HR has to be voice of reason

Loblaw latest victim of not doing the right thing the first time
    

By Todd Humber

I rarely miss an episode of The Daily Show, and last month guest Bill Clinton uttered a memorable quote from Winston Churchill: “You can always count on Americans to do the right thing — after they’ve tried everything else.”

Churchill was talking about the delay by the United States in entering the fight against Germany in the Second World War. But that same quote could be applied to employers in some circumstances — they eventually do the right thing, but only after doing some very silly things.

That’s one of the reasons I’m a voracious reader of Canadian Employment Law Today, a sister publication to Canadian HR Reporter. You often get a sample of its contents on page 5, where employment law editor Jeffrey R. Smith runs through the facts of a recent court case. I’m always floored by some of the strange things employers and employees alike do in the workplace.

Grocery giant Loblaw recently found itself on the losing end of a PR nightmare after it asked some of its workers in Surrey, B.C., to repay thousands of dollars after it discovered an error in the amount given to some workers following a store conversion.

In January, the grocery chain sent a letter to employees of an Extra Foods store that was being converted to a Your Independent Grocer (YIG) outlining options for the conversion. In a sample letter, addressed to Connor Greenwell, a part-time cashier with nine years’ tenure, the company gave the worker two options:

Buydown: Greenwell’s employment would switch to YIG, with different terms of employment and a different benefits package. In exchange for this, Greenwell was offered an estimated buydown of $15,000. The letter stated the maximum buydown for part-time workers was $15,000 and $75,000 for full-time employees.

Transfer: Greenwell’s employment would continue with YIG under the same terms as Extra Foods — including hourly rate of pay, current benefits entitlement (not necessarily the same provider), wage progression, pension contribution rate, vacation entitlement and premiums such as manager relief rate and night shift. Other terms of employment would shift, though, based on the differences in the employee handbooks between Extra Foods and YIG.

Greenwell chose the buydown option, and signed the letter on Jan. 29, 2015. On May 26, Greenwell got a letter from Loblaw advising of an “overstated estimated payment and subsequent overpayment.” It requested immediate repayment of $6,262.50. She had no more than 20 days to repay the money. If not, the employer would start legal action.

Greenwell wasn’t the only employee the company went after — there were about 20 in all who chose the buydown option and were overpaid, in Loblaw’s eyes.

Greenwell and some of her colleagues took their case to the media, where they found a very sympathetic ear in the CBC. Mainstream media love David and Goliath stories, so it didn’t take long until these confidential HR negotiations were on the six o’clock news.

Nor did it take long for the company to do a predictable about face — it quickly apologized to its employees, and dropped the repayment demands. In an email statement to the CBC, the company said:

"Through ongoing discussions with those employees, we understand that our request for repayment may have come across as insensitive, given that some employees may have made saving, spending or investing decisions relying on the overpayment. Accordingly, we have apologized for any inconvenience and will not seek repayment."

It’s not even clear Loblaw had much legal leverage in the first place. After all, workers had signed an acceptance offer for the buydown and been paid the funds in exchange for giving up certain terms of employment — including lower wages and a different benefits package. That certainly sounds like a contract.

The only thing the company should have done in this case is reprimand the employee(s) who made the error that led to the overpayments. Once the deals are signed, and the money is paid out, the horse is pretty much out of the barn. Lick your wounds and move on.

Loblaw did the right thing in the end. But it turned into a PR headache when it didn’t need to be. Hindsight is always 20/20, but it’s pretty easy to tell when the company is on a bad path. Not all of this is in HR’s control, but it needs to be the voice of reason at the table during conversations like this.

A CFO would want the money returned, no questions asked — finance simply wants the balance sheets to line up properly. But HR understands the big picture: Threatening legal action against your most valuable assets for a mistake you made may not be the best move, even if it helps the balance sheets slightly. When news like this hits the evening news, it’s not only bad for the brand — it’s also bad for the morale and engagement of the thousands of workers who are the backbone of the company.

It’s just another example of the critical role for HR professionals to play, and yet another hat you have to wear at the table as the voice of reason.


    
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