Reference no: EM133098862

Red Tape Ltd. is a large privately held company (non-unionized) that conducts business in multiple locations throughout Winnipeg, Manitoba. The owner Sarah Sharpe, recently took over the business over from her mother. Its annual payroll is approximately $20M.

Red Tape Ltd. recently lost a significant customer and has taken a number of cost-saving measures: 

• eliminated a senior management position, held by Trevor Snow, MBA
• decrease pay and benefits by 30% to the 10 employees employed in the Paperwork department, located in the company's Winnipeg Square location.

Trevor was asked to leave immediately and was assured that Red Tape Ltd. would meet all requirements of the Manitoba Employment Standards Code. He did not receive a letter of termination at the time of the meeting. His most recent employment agreement does not have a contractual notice provision.   

Trevor had been employed continuously by Red Tape Ltd. for 15 years. He currently earns $100,000 annually and has 4-weeks of vacation. He also participated in a comprehensive benefits plan, all premiums paid for by Red Tape Ltd. that included short- & long-term disability benefits, extended health and dental coverage, and life insurance. 

The decrease to pay and benefits for the 10 employees employed in the Paperwork department will be a 15% pay cut, effective immediately and the premiums for health and dental coverage will no longer be paid for by Red Tape Ltd. All 10 employees will begin paying the premiums immediately.

Your Advice:  You are the HR Manager reporting directly to the new owner Sarah Sharpe.  You are asked to advise her on the steps she has outlined to save the company.  What advice would you give her and why?  Back up your advice with case law and rationale.