PEO CANADA

You’ve heard about it, seen it and potentially dealt with it. An employee with significant health issues trying to carry on working while struggling with a serious illness. You’ve also no doubt seen the impact on your organization.

Some managers/supervisors are able to be empathetic while still being responsible to their organizations – these managers are generally the ones that have had more experience and or may have been through a serious illness themselves. I have found time and time again proper handling of these situations is something you cannot learn from a text book. You have to learn by experiencing it.

It’s a fine line for a manager to walk: trying to balance goals and expectations with reduced coverage due to sick leave.

You may be familiar with this: “I need somebody who can be here, someone I can count on…”? I’ve heard this from many different supervisors, not from just one industry or demographic, this viewpoint seems to be universal. I like to remind managers that they should treat employees: “As they would like to be treated; with respect and dignity”. It’s not the manager’s fault that the employee is sick but they need to know how to handle it in the best way possible.

So how do we assist inexperienced managers?

Steps every supervisor should consider/discuss with their employee:

·               Ensure that the employee is receiving the assistance they need. Usually the health issue is dealt with by the provincial health care system but the psychological aspects may have not been addressed. Recommend the employee utilize all available resources such as: EAP, non-profit support groups, community groups etc.

·               Verify company policy with respect to sick time/disability and ensure that the employee fully understands what is covered and more importantly what is not covered

·               Sick time maybe needed sporadically after initial treatments and for multiple doctors visits – both supervisor and employee need to plan how to deal with these

·               Establish a protocol for additional sick time needed (e.g. sick note after x number of days)

·               Explore whether working reduced hours or working from home maybe an option to make the most of the best productive hours in the day for the person

·               Determine how much information will be discussed with other employees in the department

·               Establish guidelines on communication between employee and supervisor – e.g. updates weekly initially and monthly thereafter – situations can become unmanageable very quickly without good communication

Ok, so what’s the reward to spending time and effort assisting employees?

Planning – the more communication that happens the easier it is to plan

·               While the employee productivity may decrease during modified duty periods – some work is better than none – and the employee is better able to return to regular duties as they are not out of the loop completely

·               Retention and loyalty of the employee – employees who are treated well are more likely to stay with an employer – no retraining costs

·               Employee recognition – shows other employees how you treat illnesses

·               Employer recognition – bragging rights - my company looked after me

·               Ethics – employers have a certain responsibility under Human Rights legislation to accommodate

·               Good “karma” – it just makes you feel good to know that you did the best you could for an employee in a difficult position

So to recap, I have found that communication is the most critical key and that empathy breeds loyalty.

Recently I had a discussion with someone regarding the terms of a layoff, from a large U.S. based Multi-National Corporation. This individual was a Canadian employee, working in Canada, which placed the U.S. based corporation in a position to be bound by Canadian laws.

What was interesting was the use of terminology, which may be appropriate by U.S. Employment Standards, but do not correlate equally into Canadian legislations. The Termination Contract stated that the choice to exercise the option of Salary Continuance that would extend 8 weeks was desired by the U.S. Corporation, but when the pay stub was received by the employee, it had been coded as “severance pay” instead of salary. The individual had then contacted the employer and the response was that it is standard practice to regularly use the terms Severance and Salary Continuance to mean the same thing as they are interchangeable in the US.

However, in Canada, Severance and Salary Continuance are different and they are not interchangeable whatsoever. These are not only completely different terminologies, but they are taxed differently as well. A salary continuance, is not legislated, but can be defined as regular salary, including full company pension and benefits, paid over “x” number of weeks or months upon termination of employment. The employee-employer relationship is still deemed to exist, hence the amount of employment income is subject to CPP, EI and tax and is reported in box 14 of the T4. The ROE is not required until the end of this extended period since both hours and dollars are insurable.

A severance pay is reported on a T4A as a lump sum payment. In addition to that, a severance is not subject to CPP or EI deductions. Income tax on a severance payment is calculated on a fixed percentage as follows:

1)      0 - $5000.00 = 10%

2)      $5000.00 - $15,000.00 = 20%

3)      $15,000.00 and over = 30%

In the case of this individual, not only was the terminology incorrect between contract and payment, but the taxation as stated.

When the individual contacted the U.S. based corporation by email again to point out the errors in calculations, missing accrued vacation pay, (since vacation accrual should have been paid if this was a true severance) improper use of terminology, and various other items, the response was that the corporation was going to discuss it with the internal legal department.

These types of errors in employment and termination contracts are quite common with companies which employ individuals across borders.

By Canadian Labour Law, the contract is held as the agreement to which both parties are bound to legally. There cannot be interchanging of terminology, or exclusions because of standards that are practiced in countries outside of Canada. Situations such as these can become costly endeavours for both the employer and employee. The simplest solution would be to consult a Canadian HR/Payroll organization that specializes in labour law. Utilizing these organizations throughout the process from recruitment, employment, benefits and payroll will reduce cost and create a simple process for cross border employees.