Howard Levitt: Some employers are manipulating terminated employees with lowball settlement offers. Here’s how to fight back
If your boss is pushing you to sign a settlement on a short timeline, ask yourself why.
Being terminated is a difficult, traumatic experience. It induces self-doubt, gives rise to concerns relating to financial obligations, anxiety about future employment and fears of reputational harm. COVID-19 has exacerbated these worries as the prospect of re-employment appears more remote.
Many employees are often too shell-shocked when dismissed to realize that some employers intentionally use their fragile emotional and financial state to convince them to accept inadequate settlements.
What are those strategies?
The first is insisting upon unreasonably short timelines for employees to sign settlement offers. When that occurs, employees should ask themselves: why the rush and why is their employer threatening to pull their package if they do not sign immediately?
Often, the employer hopes to take advantage of the employee’s distraught emotional state, threatening to pull the offer quickly to dissuade them from seeking legal advice. After all, few employees have employment lawyers on speed dial and the increasingly ubiquitous severance calculators, websites and other apps are no substitute. Finding a suitable lawyer can take time and the employer ensures that the clock is ticking fast.
The fear of losing the original offer is baseless. Few employers provide their best offer initially and are anxious for it to be accepted, before or after the meaningless deadline.
Another strategy deployed by employers is to suggest to the employee, a few months prior to termination, that they have performance issues. The employee is provided neither sufficient time nor support to address the often trumped-up issues, and is then terminated shortly thereafter — without alleged cause but with an insufficient settlement offer.
This is manipulative, since it subtly implies, but does not rely upon, the employer having cause to terminate. It suggests to the employee that there is something wrong with their work and they should be grateful that the employer is terminating without cause and not relying upon it so as to damage their future prospects.
The effect of this approach is that employees are even more fearful that, if they don’t take the parsimonious, without cause, offer right away, the employer may change its mind and rely upon cause or otherwise assert the supposed performance issues if the employee fights back. I have had many employee clients who will not let me sue, even when cause is not asserted, as they do not want allegations of their poor performance on the public record.
Some vocational communities are insular, with a vibrant grapevine. Even the whiff of an assertion by the employer that an employee’s performance is not up to snuff can easily undermine the employee’s reputation. Take healthcare as an example where patient safety is paramount and one mistake can be life-altering or even cause death. Healthcare employees understand that even inferred or indirect hints about their performance being sub-par can taint their reputations and affect their job prospects. But reputation is also key to survival in many other industries.
In addition to short timeframes, often these coercive offers state that if the employee does not sign by a certain date, they will only be offered the dramatically lower compensation (relative to what a court would award) required by the Employment Standards Act.
Employees sometimes mistakenly think that they then lose their rights to higher common law notice requirements. This is not the case. Obviously, the terms of any contract are relevant but, if common law entitlements are owed, then the employee’s claim is not lost by missing any deadline, but the onus does fall upon the employee at that point to enforce their rights. Employers have knowledge of what is legally required and are usually willing to reasonably settle if the employee has good counsel who pushes back against the original offer.
There are a few warning signs employees should look for if they believe they are being unjustly pressured to leave their position. An employee with an otherwise solid performance record may suddenly find that insignificant, even false, ‘performance concerns’ are suddenly raised. When these performance concerns are discussed with the employee in a meeting with a human resources representative present, that’s an obvious red flag.
If this meeting is followed by written correspondence reiterating fallacious or over-inflated concerns, and perhaps a performance improvement plan, warning bells should reverberate. When an employee is noted as ‘needing improvement’ but not provided support or time to improve, termination is likely nigh. If the employer is unwilling to listen to valid reasons why the concerns are inaccurate or recognize the employees’ perspective, dismissal may not be far off. Similarly, if management seems uncomfortable in their presence and they are suddenly excluded from meetings and projects, that is a warning sign and an often intended hint to look elsewhere.
What can an employee do when they fear they are being set up for termination? Document. If unsubstantiated concerns are being raised by your employer, write back and outline why these concerns are inaccurate. If this termination is part of a larger campaign of bullying, harassment or discrimination in the workplace against you, lodge a complaint with human resources concerning the conduct you are experiencing. That will ultimately be helpful to show the court or human rights tribunal that you attempted to use the system in place to address your concerns.
Finally, reach out to an employment lawyer early. It might lead to an agreed settlement on reasonable terms, often a relief for such an employee. When the employer realizes that it will not succeed in building a case and that you are prepared to sue, it may welcome the opportunity to negotiate your departure. You should not conduct such a negotiation alone.
Employers may insinuate that they are acting fairly because they are ‘choosing’ to take the termination-without-cause route, despite performance concerns. In reality, the employer knows it has no grounds to terminate for cause. It’s almost impossible legally for an employer to prove that poor performance constitutes just cause and thereby avoid termination pay.
Claiming just cause where none exists can result in not only wrongful dismissal damages, but also additional damages. So, if you find yourself terminated with an unreasonably low offer and an unreasonably short period with which to sign off or risk ‘losing’ the offer, consider whether your employer is preying on your fear. And consider with counsel whether you can claim additional severance for the employer’s bad-faith conduct.
Got a question about employment law during COVID-19? Write to me at [email protected].
Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers. He practises employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada.