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Grow-in Creates Termination Challenges

Ontario employers need to be careful when it comes to terminating employees who are eligible for grow-in benefits, says Greg Winfield, a partner in the pensions, benefits, and executive compensation group at McCarthy Tétrault. With the elimination of partial windups in the province, he told its second annual pensions client seminar, that grow-in is now triggered by an event such as a termination. While, employees who resign or are terminated for wilful misconduct or neglect of duty would not be eligible for grow-in benefits, employers need to be careful how they deal with the termination of employees who are near the threshold of being eligible for grow-in. Efforts to terminate before they qualify in a bid to reduce the cost of the termination could be viewed negatively by the courts. Employers need to start considering possible effects of grow-in on employees within 24 months of meeting the grow-in threshold and need strategies for dealing with terminations based on performance issue. It is possible to save costs if an employee voluntarily resigns in return for other compensation considerations. However, in court decisions where it is decided the termination was staged to avoid paying the grow-in costs to the employee, employers may be obliged to pay for the additional costs outside of the pension plan, he said.

Courtesy of Benefits and Pensions Monitor website News Alerts

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