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Termination traps for employees

A look at some of the common mistakes made by workers when they're dismissed

By Stuart Rudner

Recently, I wrote about common mistakes employers make in the course of dismissal. Of course, the same concepts apply to employees since, typically, when an employer fails to provide an employee with her legal entitlements, the employee may fail to understand she has not received all that she is entitled to.

Here
are other common mistakes employees make when they have been dismissed:

Failing to ensure they receive all forms of compensation 

By default, an individual who is dismissed without cause and offered pay in lieu of notice is to receive all forms of compensation he would have received if he had continued to work during the notice period. This includes not only base salary, but 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 who 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 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 nine 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 who 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 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 they will not work with the outplacement counselor since they assume 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 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 one week for the individual to assess the offer and obtain legal advice. Employees who need more time should write to the company and indicate they require additional time to consider the offer and obtain legal advice. Any employer that chooses to withdraw the offer at that point does so at its own risk.

Accepting an offer" to resign

Sometimes, an employer will approach an employee, indicating it believes the employee has been guilty of misconduct, and offer her 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 who quits her job will not be entitled to employment insurance benefits. Furthermore, while the employee can always challenge the validity of the resignation later, if she wants to challenge the dismissal, she is simply creating an additional hurdle to overcome since she will first have to prove she did not resign voluntarily. While resigning will not preclude her from pursuing a wrongful dismissal claim, it will make it more challenging for her 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 count on only two hands the number of times I advised an individual 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 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, he will not understand he is leaving money on the table at a time when his primary source of income has been cut off. There is merit to the old expression 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 the individual can understand his 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.


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Stuart Rudner

Stuart Rudner is a founding partner of Rudner MacDonald LLP in Toronto. Follow him on Twitter @CanadianHRLaw. He can be reached at srudner@rudnermacdonald.com.
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