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Written by: Pat Padilla

The dropping oil price has serious implications for many Oil and Gas companies but also for their vendors and service providers in general.

Oil & Gas companies specifically might have to conduct group terminations or “collective dismissals” which generally take place when a business closes or significantly downsizes. The issues surrounding group termination are similar to those encountered by employees who are terminated individually, except that employers have the added responsibility of notifying the Minister of Labour (or equivalent), the union, if applicable, and may have to provide employees with longer notice periods. Also, employers may have to take responsibility for organizing a joint planning committee to consider ways in which the terminations can be avoided, or to help employees find alternative employment. Most jurisdictions in Canada require employers who are terminating a group of employees (some specify 10 or more, others 25 or more) to give advance notice to employees.

A lay-off which entails workers being sent home for a limited time is a situation in which three conditions are present: 1. there is no work available for the employees due to loss or delay of a contract 2. management expects the no-work situation to be temporary and probably short term depending on economic trends and 3. management intends to recall the employees when work is again available. “Layoff” is not a termination which permanently severs the employment relationship. However, some employers do use the term “layoff” for discharge or termination.

In this case for the most part, seniority can be the determinant of who will stay; but seniority can give way to merit or ability but usually only when none of the senior employees is qualified for a particular job. Seniority is usually based on the date the employee joined the organization, not the date he or she took a particular job within the company. Because seniority is usually company-wide, an employee in one job is usually allowed to bump or displace an employee in another job, provided that the more senior employee is able to do the job in question without further training.

Also there are several alternatives to layoff, one being  a voluntary reduction in compensation. Other employers arrange to have all or most of their full time employees accumulate their vacation time and take their vacation during slow periods. Some employees agree to take voluntary time off, which again has the effect of reducing the employer’s payroll. Some big players in oil and gas use contingent employees, who may be laid off at any time. The use of contingent workers in Canada is growing and is expected to continue to increase. Finally, the Work Sharing Program available through Human Resources and Social Development Canada allows employers to reduce the work week by one to three days. Employees can claim employment insurance benefits for the time not worked. Also companies will consider other strategies to reduce staff by offering voluntary and involuntary early retirement, remobilization and redeployment.

For those employees who may consider early retirement, the company should provide some type of formal pre-retirement counselling aimed at easing the passage of their employees into retirement. Retirement education and planning firms provide services to assist issues such as lifestyle goals, financial planning, relationship issues, and health concerns.

Following are some best practices for employers forced to lay off or terminate employees:

Planning the termination meeting

  1. Schedule the meeting on a day early in the week
  2. Never inform an employee over the phone
  3. Allow up to 15 minutes for the termination
  4. Avoid Fridays, pre-holidays, and vacation times it at all  possible
  5. Use a neutral site, never your office
  6. Have employment agreements, human resources file, and release announcement (internal and external) prepared in advance
  7. Make yourself available at a time after the interview in case questions or problems arise
  8. Have phone numbers ready for medical or security emergencies
  9. Ask for  company equipment such as  cell phones and access cards to be returned

Preparing the letter

Prepare a termination letter that sets out very clearly that the employment relationship will be over on a specified date.  The Employment Standards Act requires employers to terminate employment in writing, and you want to avoid any miscommunication as to when the termination is effective and whether it was just some sort of temporary workplace discipline or time out. The document below is a sample template of a checklist in the case of an involuntary termination as a reference.