By now it’s no screaming headline that the economic downturn has meant tough sledding for some areas of law - but for those practising in the labour and employment field it’s actually “very busy times,” a Toronto lawyer tells Law Times.
“I would say that the area we practise in is pretty recession proof,” says Michael Fitzgibbon, a partner at Borden Ladner Gervais LLP.
“When times are good we’re involved in hiring. When times are bad we’re involved in firing and restructuring.
It’s very busy times right now and as employers start to realize that they’ve got to really take a good hard look at their current organizations and figure out if this is where they want to be from a staffing perspective, we get engaged, and I see it as just being an incredibly busy year.”
Fitzgibbon tells Law Times that a simple shift of focus combined with being “creative” are the main tools to help survive the economic meltdown of 2009.
“Employers are doing many things to deal with trying to get through this,” says Fitzgibbon. “Some of them are straight out terminating employees.
Other employers are trying to take a more creative approach to it and trying to salvage jobs, albeit different jobs than existed currently. What that means is they are either doing wage freezes or cutting salaries, cutting benefits, job sharing arrangements, and there might be some temporary layoff arrangements.”
He says the latter are trying to “maintain their current employee compliment because I suppose they feel that it’s the right number of people that they need to command the business, both currently as well as at the end of this recession, but they need to do it differently in order to survive in this market.
So they are looking at other more creative ways of maintaining employees but at the same time achieving their economic and financial goals.”
The difficulty, however, is that there’s risk associated with it, including severance costs, and in a non-union workplace from a “constructive dismissal perspective because you may be fundamentally changing terms and conditions of employment.
In a union environment what we see happening currently where employers feel that they need to make some changes and are stuck with a collective agreement for some period of time, they might be going to the union in order to see if they can open up the agreement with a view to negotiating changes to the terms of conditions of employment that would apply to the unionized employee.”
Fitzgibbon notes that constructive dismissal lawsuits are still being pursued, though they “may be somewhat harder to make out these days given that judges are well aware of the economic circumstances.”
He adds that “both employers and employees are all in the same boat in that an employee faced with a constructive dismissal has a very difficult choice to make: they can leave and sue and then they’re in a job market that’s not that great, or they can stay on and try to manage through it just like the employer is, so in a sense they’ve got some common issues to deal with.”
One approach employers are taking to ward off that risk is engaging employees “in a discussion with a view to having them buy into what you’re doing in the short term and hopefully come out of this with you in the longer term. So get voluntary buy-ins with the employees in order to weather the economic storm.”
Fitzgibbon says one tip for lawyers practising this type of law to keep in mind, is not be “overly legalistic with it. There’s risk associated with these changes, but the clients that we’re dealing with are often faced with a very difficult situation where they either take a risk or harm the business, and so if you take a formalistic approach to the advice that you’re giving, you might simply be driving the client down a path that they are desperately trying to avoid.
And so clients these days are prepared to take some risk, maybe more so than they did in the past, they’re prepared to accept some of the risk, partially because they have no choice.”
Another helpful hint Fitzgibbon passes along is to “be creative in your thinking and recognize that there’s always a business issue behind the advice that we’re giving, but now the business issues are a little more pressing because they [employers] may not have any option.
They might have to take the risk associated with either terminations and being lean on severance or cutting compensation or cutting benefits because again they don’t have any option from a business perspective.
So, be a little more creative in terms of the advice and also be a little more engaged in understanding the business issues that rest behind the questions that we’re being asked.”
Meanwhile, Fitzgibbons advises employers against going it on their own.
“When you’re going through downsizing or restructuring of the nature that we’re seeing nowadays, I would say to do it without legal advice is a real significant risk,” he says.
“We are seeing it but we see it where we get called in to clean up as opposed to trying to manage the risk at the front end, and it’s always more difficult when you’re being called in after the fact than it is if you’re
involved from the very beginning.
But yes we are seeing that and again partially I would think that relates to the fact that employers are trying to do it as inexpensively as they can.”
Fitzgibbon says another “option that we’re starting to get questions on is job sharing or telecommuting arrangements where employees are being allowed to work from home whether it’s one or two days a week and the overhead is not as significant as it might be if you had to have an office for that person five days a week.
Again, that requires buy- in from the employee, and not only that but a commitment by the employer because it raises other management-type issues in terms of supervision.”
A lawyer comes into play in those instances by pointing out the “options and the risks associated with the different options and providing the client with alternatives.”
Fitzgibbon says he thinks the current economy is causing some to “panic” and that “forces them to look at their own organizations and ask themselves those hard questions: ‘Do we have too may employees?’ ‘Are we staffed appropriately given where we want to go?’ And, ‘Are we going to be able to weather this?’
The numbers coming out from an economic perspective aren’t good, so while I think there’s panic and I can’t say whether it’s overreaction, certainly I can say that people are looking at their organizations and they are making some very, very hard decisions. Whether it’s too much, time will tell.”
But, he says if companies work with their lawyers he thinks “there are plenty of opportunities for employers who are going to be creative to become stronger organizations through this.”