Cutting labour costs without layoffs

|Canadian HR Reporter|Last Updated: 11/30/2001

Not surprisingly, there’s been a lot more people calling about the Work Sharing program at Human Resources Development Canada in recent months.

As organizations struggle in a softening economy there is a great deal of interest in ways to cut costs without letting go of employees.

The Work Sharing program at HRDC enables employers to reduce the work week by one to three days and for the time not worked, employees can claim employment insurance.

“There is no question that activity has increased significantly in terms of interest,” said Mike Walsh, chief of the Work Sharing group.

Besieged airliner Air Canada has taken advantage of the program to save 129 flight attendant jobs and 67 machinists and Air Transat is using the program to save 12 jobs.

The program has been around for more than 20 years but utilization always goes up during periods of recession, said Walsh. There are currently more than 300 agreements covering more than 15,000 employees.

The program is for organizations that, for reasons beyond their control, face a significant downturn in business. It is not for organizations that were being poorly run and would have gone bankrupt even if there was no economic downturn, said Walsh.

Past performance is reviewed and employers have to outline steps to get back to recovery. “We have to be reasonably sure they will be able to do it,” he said.

Agreements can last for up to 26 weeks (with some extensions for 12 additional weeks) and applicants must present detailed plans for recovery in that time.

“If we don’t feel the plan is sufficient, if it is too broad, we work with them to get it more narrowed. Our expectation is that at the end of the 26 weeks all of the people that are on work sharing will be employed,” said Walsh.

Walsh said that although companies must be able to demonstrate a rigorous plan for recovery, “We accept far more than we turn down.”

The work share program

•Agreements can run from six to 26 weeks and work levels must drop by at least 20 per cent and no more than 60 per cent for affected employees.

•The minimum number of employees in a work sharing unit is two.

•To be eligible, an employer must have been in business for at least two years.

•Representatives of the workers must also sign the application.

•A detailed plan must outline how the company will return to normal hours of employment within 26 weeks. The plan must include: a detailed explanation of steps to increase business; a history of the business; a description of the market served; a comparison of sales in previous two years as well as sales for current year; future sales or business projections; the reason for the shortage of work.

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