Technology and terminations

The KPMG 2022 CEO Outlook showed that many organizations are planning to downsize this year, continuing a trend that, over the past few months, we have already been seeing in the tech sector. Yet, over the long term, the same CEOs expect to grow and face labour shortages. Taken together, I think it’s apparent that companies have an interest in protecting their reputation by ensuring downsizing is carried out respectfully.

There have been many negative media reports relating to terminations over the past two years—of sending pre-recorded messages, of delays in sending follow up information, of using social media apps, of taking to video conferences for mass firings of 700+ employees. Many of these reports have harmed the employers’ reputations and ability to attract future talent.

So, what’s the right approach? Is there one?

A test of faith
Until recently, termination meetings had a similar playbook. Ask the employee to meet in a boardroom (or sometimes an offsite meeting room), communicate the news alongside an HR business partner, deliver the termination letter and ask for the return of company property. The employee could return to their desk to retrieve their belongings—or, in some cases, wait for a box to be handed to them.

Over the past two years, this practice has changed or at least put on hold during pandemic-related lockdowns. Many employers, if not the majority, now communicate layoffs virtually, by email or over the telephone.

The big question for me is whether this practice exposes companies to legal or reputational risk.

In truth, there isn’t a single, definitive answer to whether terminations should take place in-person versus remotely. What matters most is that the employer thoughtfully considers the best interest of their employees. For example, in-person meetings are not necessarily “better” or more respectful. Examples abound from employment litigation in which the courts have held that the manner of in-person terminations, such as publicly walking the employee out the door, is insensitive and demeaning. Both moral and punitive damages have been awarded against employers in cases like these.

The legal obligation in Canada is to ensure the termination is carried out in the utmost good faith, which requires being mindful of the employee’s circumstances and ensuring communications are respectful and clear. This obligation applies whether the termination occurs in-person or remotely. Failing to act in good faith—and to address any reasonably foreseeable outcomes—can result in additional damages for mental distress.

In other words, there is nothing inappropriate per se about using video conferencing or some other technology for terminations, as long as the employer acts in good faith.

Best practices to meet this bar include ensuring the employee has access to a private space, following up to see if the employee has support at home, maintaining confidentiality of the discussion, clearly communicating the timing and next steps, and avoiding misrepresentations about the reasons for termination.

Rules of the road—and the room
Context, too, is important. Sometimes, remote terminations are in the best interest of the employee. For example, if an employee normally works remotely and would otherwise have a long commute, it is arguably less respectful to terminate in person. Asking an employee to commute to the office for a brief termination meeting only for them to then have to make the long trip home again could be more upsetting than a virtual meeting.   

In contrast, if the employee normally works in a physical workplace or office, that kind of setting might be the best place for the meeting. When the meeting is in person, the factors to consider are ensuring the location is private, discrete and confidential.

If companies are laying off a significant number of people at the same time, another aspect to think through is whether the termination should be communicated en masse—in a town hall, for example—or to employees individually. From a legal perspective, individual meetings aren’t required. Again, the test is good faith. However, the employer should be thoughtful about who is communicating the message, the notice given to employees, and the follow up steps that will be taken.

It could be a better experience to have the employees’ manager speak to those impacted as a group and then follow up individually, immediately afterwards, with their severance packages and other information. Advising employees that they will be terminated in a large group setting, and not following up right away, could be seen as bad faith.

Do you have to talk to employees? Is an email communication enough? While there’s no rule against sending an email or other electronic communication, there are too many unknowns about this form of communication. The employer can’t know where or when the employee receives the information, which makes it very difficult to plan for privacy, mitigate distress and respond to questions in good faith. An email should be a last resort—in cases, for example, where attempts have already been made but have failed to reach the employee. Finally, training your HR business partners and managers, whether the layoffs are remote or in-person, is important for ensuring they are prepared to handle terminations respectfully.

Ultimately, the options for approaching terminations—in-person, virtually, group, individually—will continue to evolve from a standard playbook to an individual approach, which requires careful thinking and planning in advance. If you could use some help with that, let me know.