Exiting or laying off employees is never an easy decision or process for an employer. However, once the decision is made, the manner in which the termination occurs and the accompanying paperwork can protect the employer from claims by the employees.
The first step is to review the employment agreements, company policies and practices, legislative requirements and common law obligations. This review will identify what the employer’s obligation is on involuntary termination or layoff to the employees.
Many employers are uncomfortable including language in employment agreements, offer letters or annual compensation statements that address outcomes when an employee leaves the organization involuntarily. Employers prefer to present the positives in hiring documents. But leaving these matters out can result in higher payments and be more costly in employee departures.
The courts have increasingly provided for inclusion of either short-term bonus or long-term incentives in termination payments, even where there is language in plan documents or agreements requiring the employee to be actively employed on the payment date of these incentives. However, there are strategies to limit exposure to higher payouts through careful drafting.
Once the employer has determined its obligations to the employees on the termination or layoff, a well drafted termination or layoff letter and release sets the stage for a properly executed exit process.
Making sure employees are treated well on their departure and the severance or layoff offer is fair protects the employer from claims in the future.
If you haven’t recently reviewed your employment agreements, plan documents and termination documents, our employment lawyers can assist you. As experienced legal counsel, we can help you draft clear and unambiguous language in these documents to protect your company when an involuntary termination or layoff is required.
After 25 years advising large companies as in-house legal counsel, Carmelle Hunka has joined
Walsh to bring her business and employment law experience and practical approach to our
clients. Carmelle has extensive experience in all areas of employment law including policies and
plan documents, employment agreements, executive compensation including public disclosure,
incentive plans, terminations, human rights matters, ethics and business conduct matters
including investigations and anti-corruption and anti-bribery matters and advising companies
regarding employment law matters in merger and acquisition activity.
