HR error gives Sears worker unearned pension

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Be warned: Even having very clear policies in place doesn’t always mean your company will come out on top if your staff don’t understand the policies they’re reading – as Sears found out recently.

The company has a policy which offers some of its employees benefits after retirement, with one qualifier being that they have 20 years or more continuous full-time service. Audrey Bennett worked at Sears for 32 years, but just 10 of those years were full-time so she  should not have qualified for such benefits.

In 2005 Bennett asked the HR department whether she would be eligible for coverage by the policy and was told in an email that her part time service would be prorated, which meant she had a total of 17 years’ service at that point. This was inconsistent with Sears’ policy. Only after her employment was terminated in 2009 due to restructuring, did another HR person tell Bennett she did not qualify for the policy.  

However, the Ontario Court of Appeal recently confirmed a decision from the Superior Court that Sears was bound by the original HR representative’s misrepresentation of the policy.

To prevent such miscommunications, it was important that HR communication with employees was monitored, and that HR staff were encouraged to ask for clarification on any topic they weren’t sure about, Alex Sinclair from Filion Wakely Thorup Angeletti said. He also recommended a system where communication was centralized to make sure employees got a consistent message.

“This decision highlights the need to provide clear and consistent messages to employees and administrators regarding applicable benefits plans,” he said. “If employers institute a policy where one or two employees with greater expertise are responsible for responding to these sorts of questions it can reduce the risk of misinterpretation.”

Employers should have clear policies and consider providing HR staff and other administrators with explanatory documents or other interpretative aids along with the plan documents, Sinclair added.
 

 

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