It has been reported by various news sources such as the CBC that Rogers Communications Inc. is planning to offer approximately 10,000 of its employees with voluntary departure offers. The aim of these offers is an attempt by Rogers to reduce its capital spending by about 30%. The company has set out that a difficult regulatory setting and a competitive environment are factors necessitating a reduction in its costs.

So, what does this have to do with employment law? There are several important employment law implications for many employees when an employer offers an employee an “buy out” or “exit” package. This blog seeks to look deeper into what those employment law implications may be. We discuss what exactly are these sorts of packages (often called “buy out” or “voluntary departure” or “exit” packages or offers), the release clause contained in those sort of offers, federal employees and, finally, we will look into how a voluntary departure offer or package is in comparison to a severance or termination package.

What are “Buy Out,” “Exit” or “Voluntary Departure” Packages?

A “buy out,” “exit” offer, or “voluntary departure” package includes an offer of compensation prepared by the employer and offered to an employee and once excepted by the employee, the employment relationship will come to an end. The compensation offered generally contains income, benefits, pension or retirement benefits, stock options, bonus or commission entitlements, etc. What is crucial to understand is that the employee is under no obligation to accept these types of offers. As such, if an employee does not accept the package offer by the employer, their employment will continue. In other words, an “exit package” is voluntary by the employee and mutual to both parties.

The Release Clause

A key clause in a “voluntary departure” package or “exit” offer would be the release. Generally, once signed, a release in these documents will probably prevent the employee from pursuing a wrongful dismissal claim in the future which may include claims not just related to termination or severance pay but also discrimination or human rights. Before accepting, employees should understand what they are being offered, what they may be giving up, and whether the package is fair.

As such, it is very important that employees who are contemplating accepting these sorts of offers from their employer approach an employment lawyer to review their case. An employment lawyer can look to see if the offer presented by the employer reflects an employee’s rights to severance or termination pay or whether or not the offer presented includes other forms of compensation that the employee might be owed like pension or retirement benefits or commission payments.

Employees should not feel rushed to accept these types of packages or offers by a certain “deadline.” Often these sorts of deadlines set out by the employer are artificial and used as a pressure tactic to get employees to accept the package quickly without the assistance of an employment lawyer.

Why do Employers Offer “Exit Packages” or “Voluntary Departure Packages”?

Typically, an “exit” offer or a “voluntary departure” package will be offered by an employer when an employer does not have an imminent need to terminate an employee, but it may do so in the future. In the event of an “exit” offer, an employer will typically get a “discount” on what it would otherwise be expected to payout in the event of a dismissal. This is because the employer leaves the option to the employee to reject the package and continue his or her employment with the employer. Essentially, a “voluntary departure” package is a cost-saving mechanism to the employer.

However, in certain situations, “exit” offer may also be introduced by the employee, in which case, the employer may reject it or negotiate its terms. Employees who seek to present an exit package must be extremely cautious in so doing to avoid the package being considered a resignation (in which case they will not be entitled to any form of compensation other than outstanding wages, etc.). The dynamic of exit packages is a delicate one and neither party should engage in it without the benefit of obtaining legal advice.

Rogers Employees are Federal Employee

To remind our readers, Rogers employees fall within Canada’s federal jurisdiction. Federal employees are employees who work in industries that are federally regulated like telecommunications. Federal employees that work in non-unionized workplaces have their own specific legislation that sets out their employment statutory standards and entitlements called the Canada Labour Code, 1985. The Canada Labour Code is similar, but not identical to Ontario’s Employment Standards Act, 2000 which set outs the employment standards for provincial employees. If you would like to read more about federal employees, you can review our blog titled “Am I a federal employee?“.

Is Accepting a “Voluntary Departure” Package the Same as a Severance or Termination Package?

“Voluntary departure” packages are optional and in comparison, to severance or termination packages, they are not upon dismissal. The employee still has their job. However, the financial issues and even legal issues that may result from accepting or even refusing a “voluntary departure” package may be similar (or even identical) to that of a severance or termination package.

Again, as we set out above, employees should approach an employment lawyer before accepting any sort of “voluntary departure” package or “exit” offer in order so that employee can fully understand what they are getting in terms of compensation, whether that compensation is fair and accurate and whether they should be pursuing alternative courses of action. There can be advantages to accepting the “voluntary departure” offer of the employer. For instance, the employee has stability in terms of knowing in a structured way what compensation they will get and when they are leaving their job. However, a disadvantage is that usually a “voluntary departure” package does not meet compensation that could get if they have been wrongfully dismissed and are claim full entitlement to termination and severance pay.

How can Zeilikman Law Help?

Approaching an employment lawyer will be very helpful to both employers and employees when there are issues surrounding voluntary departure or exit offers or buyout packages. Employment lawyers like the ones at Zeilikman Law can assist both employers and employees by reviewing the facts surrounding these issues and help them determine what the next best steps are to take given what the law states.

For more information about related employment law issues like voluntary resignation, please visit our blogs entitled:

• Consequences and Questions Regarding Voluntary Resignation in Employment Law
• What Should an Employer Do When an Employee Resigns?
• Learn Why You Should ALWAYS Get an Employment Lawyer to Review Your Termination or Severance Package

Employers and employees can contact our office at (905) 417-2227 or online here to schedule their own confidential consultation with Zeilikman Law.