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1. Policy objective

To assist members of the Executive Group, and certain senior excluded levels of other occupational groups, in making career transitions when their Public Service employment is being terminated involuntarily due to a lack of work or the discontinuance of a function.

2. Policy statement

It is the policy of the Treasury Board to make every reasonable effort to provide alternative employment opportunities within the Public Service to indeterminate employees of the Executive Group and other senior excluded levels (see Application section) whose services are no longer required due to lack of work or discontinuance of a function.

The employer, through the placement efforts of departments and the priority referral services of the Public Service Commission, will endeavour to identify alternative employment at the same level within the Public Service for the affected Executive.

When the only placement opportunity available is to a level outside the Executive Group to which a lower salary range maximum applies, the Executive will be subject to salary maintenance (details at Appendix A). When placement within the Public Service is not possible, the employer may make available a variety of financial and non-financial elements to assist the affected Executive in making the transition to another employment sector through a combination of benefits under the Executive Employment Transition (EET) policy.

No additional costs are to be incurred in departmental operating expenses as a result of terminations under this policy. Departments may not use personal services contracts or hire Executives on indeterminate or specified-period appointments to perform duties which were formerly the responsibility of an Executive whose services have been terminated involuntarily.

This policy was effective from September 1, 1992 until March 31, 1995 and was reinstated effective April 1, 1998. It applies to all surplus situations involving Executives and other senior excluded employees (see Application section) during these periods. If enhanced employment security or indefinite salary protection was extended to an Executive under the Work Force Adjustment (WFA) directive of December 15, 1991 prior to the coming into force of the EET policy, the individual will continue to be covered by those WFA provisions.

3. Delegation of authority

The deputy head is authorised to approve the composition of individual termination settlements and the amounts of the lump sum payments, within the limits prescribed by this policy. The settlements will relate to the Executive's circumstances and will take into consideration such factors as age, length of service and prospects for re-employment outside the Public Service (see Appendix A for guidelines). This authority is reserved to the deputy head and may not be sub-delegated to a lower level in the organization.

4. Application

The Executive Employment Transition (EET) policy applies to employees appointed on an indeterminate basis to the Executive Group, levels EX-1 through EX-5 and GX; excluded officers of the Defence Scientific (DS) Service group, levels DS-7A, DS-7B and DS-8; excluded members of the Law group, levels LA-3A through LA-3C; and excluded members of the Medicine group, Medical Officer sub-group levels MD-MOF-4 and MD-MOF-5 and Medical Specialist sub-group level MD-MSP-3. It has effect in that portion of the Public Service specified in Schedule 1, Part 1 of the Public Service Staff Relations Act (PSSRA) and for which the Public Service Commission (PSC) is the sole appointing authority.

The term Executive as read in this document encompasses all of the foregoing groups and levels subject to the EET policy.

5. Exclusions

The EET policy is to be used only for involuntary terminations created by the lack of work or the discontinuance of a function. It is not for use in separations involving poor performance or personal incapacity.

None of the features of this policy is to be used to supplement the benefits available to Executives who voluntarily terminate their employment, as in resignations or retirements.

Where any benefit is paid under the EET policy to a person who is not eligible for a termination settlement, the amount of the payment is a debt owed by that person to Her Majesty in right of Canada.

The EET policy does not provide for substitutions or exchanges once an Executive is declared surplus.

6. Policy provisions

When placement within the Public Service (Schedule 1, Part 1, PSSRA) is not possible or is waived by the Executive, a variety of financial and non-financial elements may be available to assist affected Executives in making the transition resulting from termination of employment.

Deputy heads have delegated authority to negotiate one of two options, within the limitations prescribed in the Appendix to this policy:

7. Bridging provisions

Deputy heads may authorise periods of leave without pay to permit an Executive who does not meet the age and service criteria under the Public Service Superannuation Act to accumulate additional service for pension qualification.

For the employee who is interested in pursuing a career outside the Public Service the deputy head may authorise a transition assignment in another employment sector, which may lead to permanent employment (see section 4.5, Appendix A).

Such arrangements shall respect the overall value and limitations of the EET policy regarding notice and other benefits and will be no more costly than a negotiated cash settlement. It is essential that the settlement agreement confirm the Executive's understanding that there is no provision for return to the Public Service at the end of the period specified in the agreement. Further, the Executive must submit a letter of resignation at the outset of the arrangement and waive all priority consideration for reintegration to the Public Service.

8. Administrative guidelines

Appendix A provides salary administration instructions for the affected Executive who is appointed to a position within the Public Service but outside of the Executive Group. Appendix A also provides guidelines for the composition of individual settlements or alternative cash settlements to be approved under the deputy head's discretionary authority.

9. Resourcing

Departments are responsible for funding all expenditures under the Executive Employment Transition policy from within their own operating budgets. There will be no access to the Treasury Board contingency fund for supplementary resources for any component of the individual settlements negotiated under this policy.

As stated, the EET policy will be used in cases of involuntary termination due to lack of work or the discontinuance of a function. The expectation is that actions taken in these circumstances will decrease the number of Executive Group employees in the initiating department.

10. Consultation with Treasury Board Secretariat

Departments are required to consult with the Executive and Excluded Groups, Human Resources Branch of the Secretariat before entering into contracts for transition assignments for Executives under the Interchange Canada program or any other exchange programs.

Departments are required to consult with Treasury Board Secretariat officials prior to offering a lump sum payment in compensation for a reduced pension benefit.

11. Monitoring requirements

Departments are to report the specifics of all terminations concluded under this policy to the Secretariat within ten working days of finalizing negotiations for the settlement with the Executive.

The reports on individual termination packages will be used to review departmental compliance with the policy and with the criteria for composition of settlements as provided in Appendix A.

12. Enquiries

Enquiries about this policy should be directed to the responsible officers in departmental headquarters who, in turn, may direct questions concerning policy interpretation to:

Appendix A – Guidelines for the Administration of the Executive Employment Transition Policy

1. Purpose

This appendix will assist departmental officials in determining the appropriate mix of components and the amounts which may be negotiated under the Executive Employment Transition (EET) policy in individual termination settlements with affected employees.

2. General

The EET policy was approved by the Treasury Board effective September 1, 1992. It replaces previous Treasury Board authorities concerning separation benefits for Executives and other senior excluded levels on involuntary termination from Public Service employment due to a lack of work or the discontinuance of a function.

This policy is intended for use when an Executive or an employee in any of the other occupational levels specified in the policy, (see page 2) who is appointed to the Public Service (Schedule 1, Part 1, Public Service Staff Relations Act and for which the Public Service Commission is the sole appointing authority) on an indeterminate basis, becomes surplus to a department's operational requirements. Further, there should be no additional full-time equivalent (FTE), salary or operating cost incurred in having the work done in any other way during a period for which an Executive has received a payment in lieu of notice.

This policy cannot be used in situations such as performance problems, work force rejuvenation, or as a voluntary early retirement incentive.

3. Re-employment within the Public Service

The first objective of this policy is to secure indeterminate employment for the affected Executive within the Public Service, preferably at the same level although the possibility of appointment to a higher or lower level in the Executive Group exists. When employment within the Executive Group is not a viable option, an appointment to a non-Executive position is an alternative.

Departments are required to observe the normal notification procedures to advise Executives of their affected or surplus status. The deputy head shall advise the Executive in writing that his or her services will no longer be required. The letter will communicate the notice period which may be up to 52 weeks.

An Executive may choose to work the notice period while exploring other employment opportunities. However, if no alternative employment is found, the Executive will be laid off with no other EET benefits. As a lay-off, the Executive will have one year of priority for reinstatement to the Public Service.

Departments will exert every reasonable effort to place the Executive within their own organisation whenever possible and will cooperate with Public Service Commission (PSC) officials for referrals to interdepartmental employment opportunities.

Departmental officers will provide the PSC with information concerning affected Executives, in accordance with the Commission's requirements. This will ensure that PSC staffing consultants can refer Executives who do not choose an accelerated lay-off to vacancies in other departments through the priority administration system. Executives are expected to co-operate with central agency and departmental staff in these job search efforts.

3.1 Salary administration and terms and conditions of employment

(See Salary Administration Policy for the Executive Group)

4. Termination of employment with the Public Service

When the first objective of the policy cannot be met, that is, placement within the Public Service is not possible or is waived by the Executive, a variety of financial and non-financial elements may be made available to assist the affected Executive in making the transition through a combination of benefits under this policy.

Deputy heads have sole delegated authority to negotiate, within the limitations prescribed in this policy, either an individual settlement comprising a variety of financial and non-financial elements, or an alternative cash settlement.

In exchange for a negotiated settlement, the Executive must resign from the Public Service and waive priority referral rights.

4.1 Cash elements

This section identifies the cash compensation components of the EET policy and provides guidance for deputy heads to establish the amounts which might be offered to an affected Executive.

4.1.1 Notice period or payment in lieu of notice

When reemployment within the Public Service is not a viable option or when the affected Executive chooses an accelerated lay-off as an alternative to continuing in the employ of the Public Service, the Executive may offer to resign before the end of the notice period. In such cases the deputy head may, under delegated authority, approve payment of a lump sum amount of up to 52 weeks of the Executive's basic salary, inclusive of any official notice period already provided to the Executive. Age, experience, length of service and skills may be indicators of the difficulty the individual can anticipate in making the transition to a new employment sector. These considerations, as well as the adequacy of normal severance benefits, and the context of an alternative service delivery initiative, should be factored into the decision about the size of the payment.

Exceptional individual circumstances may justify a lump sum payment in lieu of notice which exceeds 52 weeks. When the deputy head believes that such an amount is warranted, the proposed settlement must be submitted to the Executive Director, Executive and Excluded Groups, Treasury Board Secretariat for prior authorization.

4.1.2 Payment in lieu of forgone benefits

The terms of the authorities governing Public Service medical, dental and life insurance programs prohibit the continuation of certain employer-paid benefits once the employment relationship has ended. The Treasury Board has authorised deputy heads to approve a lump sum payment up to 10% of salary to enable the purchase of comparable private insurance, medical and dental coverage from a private source.

4.1.3 Lump sum compensation for pension benefit reduction

Compensation to offset a pension reduction may be offered only when the termination is involuntary; it is not available, under any circumstances, to those who leave the Public Service by their own choice.

The Public Service Superannuation Act (PSSA) has a provision to waive the pension reduction penalty in cases of involuntary termination when the Executive is age 55 or more and has at least 10 years of service. However, waivers are not possible for employees under age 55.

To offset the pension penalty for Executives who are between age 50 and 54 and are eligible to opt for an immediate allowance under the PSSA, the deputy head may authorise a lump sum payment of up to 30% of salary. The amount should take into account the size of the penalty, as determined by the normal calculations of pension reductions related to age and service. For example, someone who would be subject to a 5% reduction should not receive a 30% lump sum payment, whereas when a greater reduction applies one might see a larger benefit awarded.

Although the deputy head is authorized to approve this feature, departmental officials are required to consult with Treasury Board Secretariat officers concerning the present value of the actuarial reduction to the annual allowance prior to offering a lump sum benefit. This is necessary to ensure that there is a clear understanding of the value of the lost pension benefit.

4.2 Non-cash elements

The non-cash elements may be provided with the approval of the deputy head in combination with any of the notice and/or lump sum payments permitted within the policy. All elements of a settlement must be agreed to and documented by the parties before the agreement is activated. Once the terms have been established, nothing is to be added to the contract of termination.

4.2.1 Waiver of actuarial pension reductions

Under the Public Service Superannuation Act (PSSA), the Treasury Board has the authority to waive the actuarial pension reduction for employees who are being terminated involuntarily, are 55 years of age or older, and have a minimum of 10 years of full-time Public Service employment (service under reciprocal transfer agreements or periods of prior service other than Public Service which the Executive is buying back are not to be included in the determination of eligibility based on service).

Waiver eligibility and the administrative requirements of the related process are provided in section 4.3.4 of the Superannuation administration manual.

4.2.2 Outplacement counselling

Surplus executives who will not be in receipt of an annual allowance or an immediate annuity on leaving the Public Service may negotiate a provision for outplacement counselling benefits, in advance of termination of employment, that includes job training expenses to a maximum of $7,000, as part of a termination agreement. The lack of a training benefit will not increase any cash amounts payable under any negotiated settlement.

When outplacement services are approved the termination agreement should reflect the amount of money to be allocated for this purpose. This negotiated amount (including retraining) may not exceed 20% of the Executive's base salary.

The affected Executive should be given access to outplacement counselling services as early in the notice period as possible. Although the department and the outplacement counselling firm are the parties making the contract, the Executive should be involved in the selection of the firm: the "chemistry" between individuals, that is between the client and the counsellor, is frequently the key to a successful placement.

The firm selected should be equipped to provide counselling to assist individuals to deal with their affected or surplus status in the initial period. The capacity to provide re-employment counselling and advice on marketing one's personal skills and experience to prospective new employers is also essential. A good outplacement firm can also offer valuable assistance to the Executive who is considering self-employment, through the skilful use of evaluation tools to assess personal suitability for entrepreneurial undertakings.

There are many new and established firms in most major Canadian cities that can respond to the need for these services. A Master Standing Offer for outplacement and financial counselling may be accessed through Public Works and Government Services Canada (PWGSC). The Treasury Board Secretariat does not endorse the services of any firm and will not make referrals to one or another.

Before a department agrees to a contract, it is recommended that human resources officers ask the agency under consideration to provide references from other clients, preferably including some other federal employers. While it would be inappropriate to discuss the details of a specific case, the references, when contacted, should be able to discuss the range of services available from an agency they have used and the degree of satisfaction from the employer's and the Executive's points of view.

Outplacement counsellors may be hired under the deputy head's authority for personal services contracts, through the normal procedures established by PWGSC. Most firms establish their fees as a percentage of the individual's salary. Outplacement contracts should detail the requirements for progress reports to departmental management to ensure that all parties – the department, the Executive and the consultant – clearly understand the nature and frequency of these reports. The confidentiality of the Executive's situation must be respected; thus, reports should be of a general nature rather than addressing the specifics of the individual's job search activities or placement. In all cases, however, the final report from the counselling firm should include information about the individual's success in gaining employment and the length of time it took.

4.2.3 Financial counselling

The Executive may be given access to the services of a professional financial consultant to review the potential tax implications for any settlement amounts, particularly the lump sum payments which might be awarded under the EET policy. Financial counselling is for purposes of personal tax planning to assist the Executive to make informed decisions concerning the immediate disposition of settlement funds. It is not meant to provide extensive, long-term investment counselling and personal estate planning.

Once again the contracting parties are the department and the consulting firm, but the individual should be consulted in the choice of an agency.

4.2.4 Travel expenses

Reasonable expenses for pre-authorised travel to interviews with non-Public Service employers, incurred within one year of the termination date, may be reimbursed when they are not paid by the prospective employer. Only those travel and accommodation expenses that are within the provisions of the Treasury Board travel directive may be claimed, to the amount negotiated in the termination package. The agreed maximum amount should be specified in the agreement as well as the timeframe within which it is to be used.

4.2.5 Relocation expenses

As part of the termination agreement, the deputy head may approve the reimbursement of reasonable removal expenses for relocation to accept a firm offer of employment with a non-Public Service organisation. Receipted expenses, including realty fees, may be paid for a relocation undertaken within one year of ceasing to be employed in the Public Service, if this cost is not borne by the new employer. Relocation and realty costs must be in accordance with the Treasury Board relocation policy. The termination agreement should specify the pre-authorized limit and the timeframe within which the benefit is to be used.

4.3 Alternative cash settlements

There may be instances when the affected Executive does not want to take advantage of the foregoing counselling and job search benefits of travel and relocation expenses, but is interested in negotiating a cash settlement. In these circumstances the deputy head may authorise a lump sum payment up to 15% of the Executive's current base salary. This may be combined with a notice period or payment in lieu of notice, and/or with a lump sum payment in recognition of a reduced pension benefit. It is not to be offered with any other cash or non-cash element of the EET policy besides these two.

4.4 Executives on leave without pay

Executives on leave without pay (LWOP) are ineligible for a lump sum payment in lieu of notice if they become surplus during the period of leave due to the discontinuance of a function or a lack of work. It is an inappropriate use of the EET policy to offer any payment in lieu of notice or to reappoint the Executive for the purpose of providing a paid notice period or payment in lieu of notice. There are two exceptions to this provision.

4.4.1 Short-term leave

It may be appropriate to provide paid notice or pay in lieu of notice under the EET policy to an Executive who becomes surplus at the end of the period of unpaid leave only where the Executive has departed on LWOP with a guarantee of return to the same position – for example on return from maternity leave or when the approved period of leave is short-term and the Executive's position has not been staffed.

4.4.2 LWOP to work for international organizations

It is the general view that Executives who accept assignments to further Canada's foreign policy objective of being equitably represented in the Secretariats of international organizations should be assured of some support for reintegration to the work force upon their return to Canada. When management supports a proposal for an Executive to work for an international organization because it will benefit the department or respond to the government's obligations within the international community, the Executive will normally be required to take leave without pay to accept the assignment. Good human resource management practices require extensive planning to ensure reintegration for employees on LWOP and to avoid redundancy situations. However, if at the end of the period of approved leave, the home department is unable to offer the Executive a position, the deputy head may grant the Executive a period of paid notice under the EET policy, to a maximum of 26 weeks, upon the Executive's return to Canada.

Paid notice may be given in these circumstances only where there is a formal agreement that documents the purpose of the leave, as well as management's endorsement of the international assignment. In addition, the agreement should be clear that the department will make every reasonable effort to reintegrate the Executive. However, if there is no suitable job available, a paid notice period up to 26 weeks to explore other employment alternatives may be offered, at the deputy head's discretion.

When an Executive who is on LWOP to work with an international organization voluntarily decides to remain with that organization permanently, the Executive will not be eligible for any period of paid notice, or pay in lieu of notice, upon the termination of employment. Only the normal entitlements applicable to a voluntary resignation will apply.

Executives whose unpaid leave began before the Public Service Reform Act of June 1993 are entitled to a period of priority for reappointment to the Public Service resulting from their surplus status. At the end of the surplus priority period these Executives will be laid off from the Public Service; as employees terminated by lay-off, they will have a further year of priority for reappointment. Executives whose LWOP commenced subsequent to the passage of the Public Service Reform Act are entitled to one year of priority (a return from leave of absence priority) at the end of which their employment is terminated if they have been unable to secure employment within the Public Service.

4.5 Transition assignments

An alternative use of the Interchange Canada program may occur in a limited number of cases where an Executive, senior management in the department and officials of the outside organization agree that an assignment will afford an opportunity for a surplus Executive to make a transition to continuing employment outside the Public Service. The Public Service Commission and the Treasury Board Secretariat have agreed to consider proposals for assignments leading to the termination of employment for Executives subject to the EET policy and will provide advice and guidance to departments in the appropriate design and implementation of agreements for this purpose.

Assignments intended as transition vehicles to employment outside the federal Public Service must respect the limitations on notice and other benefits available to surplus Executives under the EET policy. An assignment with an outside employer must not represent any cost increase over the value of a negotiated settlement for cash benefits payable in exchange for the Executive's immediate resignation. It is a condition of these assignments, as with other negotiated settlements under the EET policy, that the Executive must resign at the end of an agreed period and waive all priority consideration for reintegration to the Public Service.

Departments are to consult the Executive and Excluded Groups, Human Resources Branch, Treasury Board Secretariat, before entering into any contracts for transition assignments for Executives under the Interchange Canada program or any other exchange programs. As the Treasury Board Secretariat will be party to the final terms of the settlement, the Executive Director, Executive and Excluded Groups will be included as one of the signatories on all exchange agreements intended to serve as transition vehicles.

5. Deputy head approval

It must be emphasised that there is no automatic entitlement to any benefit under this policy. The maximum amounts which have been specified for the lump sums in lieu are not the standard amounts to be awarded; they identify the upper limit for negotiations with an individual concerning the terms of a personalised termination package.

No minimum notice period or minimum payment amount has been identified so the deputy head can determine the size of a settlement. This leaves open the possibility of awarding nominal amounts where this is considered appropriate.

6. Funding for EET payments

Departments will absorb all costs for payments or benefits awarded under the Executive Employment Transition policy within their own operating budgets. There will be no access to Treasury Board contingency funds for these payments.

7. Reimbursement of lump sums

Lump sum payments in lieu of notice must be reimbursed to the Receiver General for Canada on a pro rata basis if the former Executive (or other specified senior levels subject to this policy) returns to employment in any organization listed in Schedule I, Part I, of the Public Service Staff Relations Act during the period covered by the pay in lieu. This applies to appointments on a continuing basis or for a fixed period (term employment).

8. Contracts with government departments

A former Executive who returns to work on a contract basis shall be subject to a cumulative $5,000 ceiling for the period covered by the lump sum payments. After the period covered by the lump sum payments expires, those receiving pensions under the Public Service Superannuation Act shall be subject to the Treasury Board's fee abatement policy on contracts for a further 12-month period following the period covered by a lump sum payment.

9. Documentation of settlements

Once the details of a termination package have been finalised, including consultation with Treasury Board Secretariat officials when required, they should be conveyed by the deputy head to the Executive in writing, to be acknowledged and confirmed by the Executive's signature on the agreement.

10. Consultation with Treasury Board Secretariat

Departments are required to consult Executive and Excluded Groups, Human Resources Branch of the Secretariat before entering into any contracts for transition assignments for Executives under the Interchange Canada program or any other exchange programs.

Departments are required to consult with the Secretariat before making a lump sum payment as compensation for a reduced pension benefit.

Departmental representatives may consult with TBS officers concerning current practices in composing settlements and the average amounts of lump sum payments.

11. Monitoring of policy administration

Treasury Board Secretariat officials will monitor the service-wide administration of the EET policy through regular reports from departments.

12. Enquiries

Departmental officials responsible for advising on policy interpretation or the administrative application of the Executive Employment Termination policy should contact Treasury Board Secretariat officers at the following address for advice on any aspect of the policy or the guidelines:

Appendix B – Sample Letter of Agreement

Dear:

This is to advise you that your position (or assignment) as (title, level, position number) is surplus to requirements due to (lack of work) (discontinuance of a function) effective at the close of business on (date).

It is understood that you have opted for (an individual settlement under the Executive Employment Transition Policy) (an alternative cash settlement under the Executive Employment Transition Policy) and that you will resign from the Public Service on (date). Based on this decision, I have approved (details of payment). In addition, you are entitled to (number) weeks of severance pay under the (specify group) Terms and Conditions of Employment as well as the liquidation of earned but unused balance of your annual leave, if any.

It is agreed that you will be required to repay the benefit, or a pro rata portion of it, if you become employed in any organization listed in Schedule I, Part I, of the Public Service Staff Relations Act. This provision applies to appointments on a continuing basis or for a fixed period (term employment)

If you return to work for the federal Public Service on a contract basis, you shall be subject to a cumulative $5,000 ceiling for the period covered by the lump sum payments. (Of particular relevance, as you will be in receipt of a pension under the Public Service Superannuation Act, you shall be subject to the Treasury Board's fee abatement policy on contracts for a further twelve-month period following the expiry of the period covered by the lump sum payment.)

For a period of one year following the termination of your employment, you are subject to the provisions of the Conflict of Interest and Post Employment Code with respect to former public office holders.

The particulars of this settlement shall be held in strictest confidence by all parties and shall not be disclosed to any persons. However, you may make disclosure to your immediate family and your professional and financial advisors. Disclosure may also be made to those employees of the Public Service required to finalize and implement your departure arrangements.

In order to conclude this agreement, I would ask that you advise me in writing of your acceptance of this transition settlement by signing and returning a duplicate copy of this letter and annex(es) to (name, title, address). Upon payment of the benefits outlined above, the department will have no further obligation and this will provide for mutual release.

Yours sincerely,

(Deputy Head)