Managers laid off by the WRHA face losing severance payments if they find new jobs

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This article was published 18/07/2017 (3010 days ago), so information in it may no longer be current.

A portion of severance payments offered to 73 recently terminated Winnipeg Regional Health Authority managers will be clawed back should they land a job during their severance period, the Free Press has learned.

A labour expert calls the measure “draconian,” but the WRHA says it’s acting responsibly with taxpayers’ money.

The health authority estimated last month it would pay out as much as $5.3 million in severance to the laid-off managers. The terminations were part of a provincial government-mandated effort to reduce WRHA costs by $83 million.

However, the only way terminated workers can collect their entire severance is if they do not land a new job before the severance period ends. Each manager received between three and four weeks of severance pay for each year they were employed. The minimum payment was 10 weeks of salary, while the maximum was 18 months.

One former employee, who asked not to be identified, expressed anger at the offer, calling it “a loan,” as opposed to a severance package.

“Why would you do that to someone?” said the former employee, who is the family’s sole breadwinner. “It’s incentive for you not to get a job. But I can’t sit here and stare out the window every day.”

Under a provision of the severance agreement, an employee given 30 weeks of severance pay would have to pay half of it back if they started a new job 15 weeks later.

David Camfield, a University of Manitoba labour studies professor, called the repayment requirement “draconian.”

“It’s extremely unlikely that any union negotiator would ever accept that in a proposal from management in the course of collective bargaining,” said Camfield, who noted he is less familiar with management agreements.

Garth Smorang, a local labour lawyer, said clauses involving repayment of severance “are not common.”

Most employers simply pay the severance agreed upon at the time of settlement, and whether or not the employee gets another job during the notice period, and at what salary, does not factor into the settlement, he said in an email to the Free Press.

“To the extent that these clauses do exist, I have only seen a term which requires the employee to pay back half of the remaining severance. This (WRHA) clause requires the employee to pay back virtually everything earned in the new job for the duration of the notice period,” Smorang said.

“This is virtually unheard of. It puts the employee in the position of taking all the risk.

“If they don’t get a new job within the notice period, then they face a period of time with no salary at all. If they do get a job, they are penalized by having to return a portion of their income back to the RHA.”

Dave Leschasin, vice-president and chief human resources officer with the WRHA, rejected the notion the repayment provision was unusual.

“Severance is pay in lieu of notice. They have an obligation to mitigate their own employment situation,” he said of the terminated employees.

Instead of offering a lump sum payout, the health authority could have simply given affected managers “working notice” of their termination, he noted.

Asked whether terminated employees should keep the severance in recognition of their years of service, Leschasin said: “It wouldn’t be a responsible use of taxpayers’ dollars to let people who are severed end up in a better financial position than if they had continued working with us. Severance pay is not a bonus payment; it’s pay in lieu of working notice.”

He also noted if a terminated employee finds a job that pays less than the amount they used to make with the WRHA, the amount owing — if they’re hired within the severance period — would be based on their new salary, not the old one.

A WRHA spokeswoman said the authority has always had some form of repayment provision in its severance packages and would continue to employ it.

“As severance payments are generally made to assist in the transition of staff to new employment, this type of clause is fairly standard in severance agreements once alternate employment has been obtained,” she said.

larry.kusch@freepress.mb.ca