Muneeza Sheikh says cost-cutting terminations are targeting senior staff across industries
Companies are increasingly shedding senior talent through questionable means – not just to restructure but to cut severance costs. Legal professionals are not immune to this trend.
This is according to employment and labour lawyer Muneeza Sheikh, who says she increasingly sees employers manufacture misconduct claims or performance issues as a pretext to avoid paying full severance packages to long-serving executives.
She says the trend has become particularly visible in the past two years, with more employers using these tactics as deliberate cost-saving strategies.
“These are people in their late 40s or early 50s, who’ve worked at the company for 15 to 25 years,” she says, “and who, until recently, had spotless records.”
Now, more of them are being accused of sudden underperformance – usually just months before being terminated “for cause.”
From a business standpoint, it may make sense to direct resources toward current employees through bonuses or raises rather than spending large sums on people leaving the company. But, as Sheikh says, the law is clear on what grounds justify termination without severance.
“These employees work at executive levels for 15 or 25 years without incidents, and then in the six months preceding their departure, all of a sudden, there are all these allegations of misconduct or performance issues.”
While many assume legal professionals might be safe from these tactics, Sheikh says she sees the same strategies used against lawyers and paralegals in corporate legal departments and law firms.
“I deal with lawyer terminations all the time,” she says. “Law firms and in-house departments are just like any other part of the business. At the end of the day, it all comes down to the bottom line.”
Although legal professionals may better grasp employment law, that knowledge doesn’t necessarily offer protection. Both sides often understand the legal mechanics so well that exit packages are carefully structured to appear fair – even when they’re not, she says.
Some packages are presented as generous lump sums. Still, they often hinge on the assumption that the employee – particularly a lawyer – will quickly find new work, allowing the employer to avoid further severance obligations under salary continuation clauses.
Despite these pressure tactics, senior-level employees don’t usually attempt to resolve the situation alone.
“These are sophisticated individuals,” Sheikh says. “They’ve been in leadership roles, and they understand something is off as soon as the tone shifts internally.”
Many seek legal counsel before they’re officially terminated – often when a new leadership structure is introduced, or performance reviews suddenly take a turn. These early red flags, Sheikh says, are usually the first signs that a case is being built against them.
“By the time they come to me, they’ve already picked up on the writing on the wall.”
She points out that it’s not uncommon for companies to drag out negotiations, hoping the employee will land another job. “It’s all part of the strategy,” she says – employers offer bad deals, delay resolution, and wait for mitigation to kick in so they can pay less.
The downside of pushing back is time. Employment law cases can take months – even years – to resolve, but Sheikh urges employees not to let that deter them.
While the litigation process can be lengthy, Canadian courts are attuned to bad-faith terminations and willing to award significant compensation where appropriate.
“On one hand, you can be afraid of the long wait without a pay cheque. But on the other hand, if the offer is very low-ball, speak to a good lawyer. While it can be a little bit painful in terms of the wait, ultimately, you're going to come out with a much higher severance package.”
