Can backfire if not fastidiously managed — particularly within the public sector

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By Howard Levitt and Chase Frazer
Price hikes have affected affordability, the job market is extra aggressive, and distant work is the norm for a lot of organizations and industries. Since employment prospects now not rely on the place you reside, the market is flooded with younger, extremely educated, tech-forward millennial and generation-Z prospects keen to start out their skilled lives after being starved of that chance for a while. They might dwell wherever on the earth, and so they might discover Canadian salaries, and even half of what employers used to pay, very interesting.
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Whereas this will sound beneficial for employers looking for to fill positions, the brand new technology of staff has confirmed itself extra agile than up to now and isn’t afraid to “cross the road” if alternative strikes and presents one thing a present function doesn’t.
Employers haven’t any selection however to prioritize worker satisfaction, retention and recruitment; in any other case, they may discover themselves stripped of their finest and struggling to fill the gaps left behind. Savvy employers know that one of the best ways to draw and retain expertise is to supply better-than-average compensation, together with incentive pay.
Efficiency-based pay is likely one of the finest methods for employers to draw expertise and a strong software for aligning worker targets with firm ones. Bonuses, whether or not short- or long-term incentive plans, are designed to spice up worker satisfaction, retention, and general enterprise success by tying rewards to particular, target-based targets supporting progress.
However bonuses can backfire if not fastidiously managed. That is very true within the public sector, the place compensation is intently scrutinized each by workers and outsiders. Missteps can result in public outrage and inside discontent, as seen within the current controversy involving the Canadian Broadcasting Company (CBC).
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CBC’s determination to award $18.4 million in bonuses throughout a wave of layoffs sparked a public relations debacle. The broadcaster distributed bonuses to 1,194 workers, together with over $3.3 million to 45 executives — averaging greater than $73,000 per government — surpassing the median household revenue in 2022.
The choice was not properly acquired by the general public and led to important backlash from taxpayers and members of Parliament. CBC’s board of administrators has publicly acknowledged the poor optics of awarding bonuses throughout substantial layoffs.
At first look, it’s simple to query why the bonuses got out the identical yr CBC introduced the elimination of tons of of positions. However the story shouldn’t be that easy. Had the CBC didn’t pay these bonuses, every worker entitled to the payout might need had grounds to carry a declare for damages on the premise of constructive dismissal — which they doubtless would have performed if the bonus entitlements had been baked into their employment contracts or had been supplied as a matter of observe such that they’d an affordable expectation of receiving them.
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Constructive dismissal happens when an employer unilaterally alters the phrases of employment. Whereas adjustments to compensation are certainly not the one means by which a constructive dismissal could be established, it’s the one we see most incessantly. It ought to be no shock that workers are fast to hunt authorized recommendation when their earnings are affected, so employers should navigate this terrain fastidiously by asking workers earlier than altering bonus or commissions plans with out their consent.
A failure to pay important bonuses can open the door to authorized motion. Had CBC not fulfilled the phrases of these contracts for concern of unfavourable public response, they might have probably confronted tons of of dismissal claims. It appears the broadcaster weighed its choices and located the price of public outcry much less troublesome than doable authorized actions. This assumes the workers had a proper to those bonuses by contract, representations made to them, or observe. Any of these may kind the premise of a lawsuit.
The CBC debacle underscores a lesson for employers: readability and transparency in compensation are important. Bonuses are efficient motivators however can simply turn out to be liabilities. Employers should make sure that the phrases for incentive pay are clear, detailed, and communicated successfully to keep away from disputes and unfavorable public notion.
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But when handled accurately and the contracts in place shield the employer, bonuses are an efficient retention and recruitment software.
Cash talks, and when it does, you may be positive somebody is listening.
Howard Levitt is senior companion of Levitt LLP, employment and labour attorneys with workplaces in Ontario, Alberta and British Columbia. He practices employment legislation in eight provinces and is the creator of six books, together with the Legislation of Dismissal in Canada. Chase Frazer is an affiliate on the agency.
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