Should mass layoffs be done by video?

When Better.com’s CEO Vishal Garg laid off roughly 900 employees just before Christmas, the reaction and condemnations were swift and incisive as the mortgage provider company received harsh backlash from the public.

So, how could this unfortunate process be better handled? Canadian HR Reporter spoke with an HR expert and a lawyer on some of the dos and don’ts around mass layoffs.

The worst part of what happened in the Better.com case was the timing, says Natasha Bowman, founder and president of Performance ReNEW in New York.

“It was two or three weeks before the Christmas holiday and here he is laying off people after a very tumultuous year. So: ‘Happy Holidays, you’re being laid off.’ Although he gave them three months’ severance, we all know that’s not enough to maintain a household so therefore, instead of people using their holiday time to spend with their family, they’re having to use it to look for another job.”

By holding the termination meeting with a large number of people and firing them all at once, it showed exceedingly poor form, according to Robert Sider, partner at Lawson Lundell in Vancouver.

“Frankly, you owe it to the employee; you’ve got an obligation to treat employees fairly and terminating a person online, particularly doing it on Zoom and everybody clicks in, you’re likely able to see who is on Zoom, it’s nobody else’s business who’s getting terminated at a certain time,” says Sider.

Doing it this way was “just callous,” he says and is a clear violation of employee privacy. “My impression of the Better.com guy was he just didn’t want to take the time to have personal meetings with people, it was just easier for him to terminate everybody.”

As well, the CEO claimed he was sympathetic about employee feelings but his actions belied that assertion, says Bowman.

“Just [consider] the length of the Zoom call: it was about three minutes long and showed very little compassion, empathy and just explanation of why this was happening. We’ve really made the employees feel like they were very disposable and discarded, and then him even saying, ‘Usually I cry during these conversations but I’m not going to cry this time.’ Showing that ‘I really don’t care about you’ was the other part of it.”

A recent survey showed that Canadian CEOs are making near-record pay rates that are averaging almost 200 times that of the average worker.

Legal considerations to mass layoffs

When such a situation arises, especially as COVID and the Omicron strain rages and forces many workers back home, terminations must be handled delicately, says Sider, or this could mean potential future legal jeopardy.

“Almost all the statutes across Canada require notice of termination to be in writing so carrying out a termination orally simply over the video, without some sort of written correspondence at the same time, doesn’t typically meet statute statutory requirements. You need to be careful about that.”

While there may be situations where it isn’t advisable to travel to dismiss a remote employee, there are some other areas that might trip up an employer or manager who is carrying out that firing and issuing written notice remotely.

“In terms of an email, in many jurisdictions, that should be sufficient but you do have a potential evidentiary issue as to whether or not the employee received the notice,” says Sider. “When you’re doing an in-person [meeting], you don’t have that issue: you hand the notice of termination to the employee and there’s no issue about the employee getting it because you have a witness. When you’re doing it by email, there’s no guarantee that the employee will get it unless they confirm that they’ve received it.”

In that case, it might be more prudent to arrange for a courier to deliver a letter, he says.

HR’s role in employee terminations

In addition, HR should play a key role in any types of terminations, according to Bowman.

“[The CEO] should have used that consultant that he’s bringing in now, after this backlash… to help guide him through how the conversation should have gone… more importantly, there should have been more resources.”

“He said, ‘HR will be in contact with you.’ It should have [involved] maybe some sort of therapy or something like that, knowing that people are already dealing with so much mental health issues due to everything else that’s happening, and now he’s adding on to this… I feel very sympathetic for the people that went through this,” she says. “There are some other resources he could have provided in terms of mental health advocate, EAP, something like that to help them with the emotional part of this.”

The HR team could have also provided empathy and compassion, says Bowman, while managers, who are closer to the staff on a day-to-day basis, could instead deliver the message.

Cineplex recently had to temporarily lay off around 6,000 workers in Canada, due to COVID lockdowns.

Generally during dismissals, a termination letter should be written and read out word for word by the employee’s direct manager, says Sider, which makes the process run quickly and smoothly.

“It’s always easier in my view, for an employer to meet with the employee in-person with a letter and follow the script in the letter, when you basically read the letter to the employee so that no one makes any mistakes and you have everything set out in a script beforehand.”

There are, however, challenges when large number of employees have to be let go at the same time, says Sider.

“It becomes a practical issue if there’s issues of potential damage to property; there’s always a concern about confidential information; there’s the impact emotionally on the employee having to sit around and wait — those are all bad things, in my view, and I think that judges generally would take a dim view of that sort of arrangement. So it’s to be avoided but I do appreciate that there may be circumstances where you can’t avoid it.”