Layoff shock: How employers can soften the blow

After recent announcements that scores of employees would belaid off from Target Canada and Tim Hortonsacross the country, controversy boiledover how management made their decisions.

Target Canadas CEO severance package matched that of all 17,600 laid-off employees, and at Tim Hortons, a laid-off manager has said the abrupt layoffs there were "really shocking."

While such announcements can provoke anger among employees, management experts say companies can take a humane approach in the face of downsizing that hits employees hard.

• Tim Hortons layoffs blindsided workers, manager says
• Tim Hortons layoffs: Long-time employees escorted out the door
• Target's package for ex-CEO matches package for all 17,600 Canadian workers

The No. 1 thing is to treat people with respect in the process. These are human beings that youre talking about, says Fraser Johnson, a professor at theIvey Business School at Western University in London, Ont.

According to internal memos provided to CBC News, Tim Hortons management said it tried to do that.

"Our top priority throughout this process has been one thing respect," read a memo to employees.

A corporate manager, who witnessed people filing out the door of the Oakville, Ont., head office, said that was hardly the case. Just days before the axe dropped, she said,the company played downmedia speculation about the layoffs and gave employees the impression they shouldnt worry.

Tim Hortons confirmed on Thursday that, in total, 350 jobs were cut at corporate offices across the country.

Its very shocking to know that you have no information up to a certain date and then suddenly your job is gone.- AnilVerma

While the employees may have felt blindsided, a professor at the Rotman School of Management at the University of Toronto says thats common practice.

Of course it comes as a very abrupt and rude shock. Its very shocking to know that you have no information up to a certain date and then suddenly your job is gone, says Anil Verma.

Its kind of messy and what the employers want is that theres a clean break a big bang moment at which everything happens and you are no longer part of the organization.

The Ivey Schools Johnson says that abruptness is part of established management practice, which is to go through layoffs effectively and in as short a time as possible.

What you dont want to do is have it drag on for a protracted period of time. Then you get people looking over their shoulders saying, Am I going to be next? says Johnson, whos also supply chain management chair at the Ivey Business School.

Warning bells

Some critics had sounded warning bells as Tim Hortons and Burger King worked towards their $12.5-billion merger. The deal is backed by Burger King owner 3G Capital, a Brazilian investment firm known for its ruthless cost-cutting.

But while initial cost-cutting announcements may be shocking, there are actions employers can taketo soften the blow of a termination.

One is to provide retraining, especially for older workers.

An example is a 45-year-old worker steel worker who spent, lets say, 20 years with a company. Its very hard, says Verma, for the worker to have the up-to-date skill sets that todays broader job market requires.

However, he says there is a very small number of cases where companies would actually provide or pay for retraining for their employees.

Itstypically the responsibility of the individual, he said, but noted that there are federallyfunded retraining programs for displaced employees.

Career counselling

The employer could also pay for outplacement agencies to step in and assist workers with retraining, as well as provide career and financial counselling services, added theIvey Schools Johnson.

You can walk someone out to the door and give them a cheque, but if they dont have the tools and the skills and the capabilities to look for a job, then I think youre creating a problem for individuals involved, he said.

Johnson says another way for employers to treat the individuals with respect is by giving them a competitive financial package so that they dont have to spend a lot of time with lawyers to try to negotiate a better deal with companies.

In reality though, laid-off employees may not always get a fair shake, according to an employment law expert.

Lawyer Daniel Lublin says that a lot of packages are usually at the bottom of the reasonable range or even slightly below.

In other words, its not a total rip-off but its not a really fair deal either, says Lublin, a partner at employment law firmWhitten & Lublin in Toronto.

If you get a severance package, you have to understand that what youre being offered is what the employer thinks youll agree to, not necessarily what youre entitled to, he says, adding that most people cant be harmed by negotiating for more.

Lublin says severance packages should be in writing, especially in situations of downsizing and mass layoffs, and that workers should be given some time to consider the package. If an employer asks you to sign on the spot, dont. Thats duress, Lublin says.

The right to sue

Verma says its been established that severance pay reflects how long a person has been working at the company and how difficult it is to find the next job. The Canadian norm for longtime employees, he says, is about two to three weeks of pay for each year of employment.

And if you, the employee, dont like what happens during a negotiation, says Lublin, you have the right to sue.

Lublin also commonly informs his clients that provincial and federal legislation gives people a minimum amount of severance that theyre entitled to unconditionally.

Theres a government-prescribed payment that youre entitled to and that should cover you for the immediate future after your termination, he says.

Youre being paid right now to look for another job so it could be worse, Lublin says. In other countries, you dont get paid severance at least not this much.