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Draft ‘Last-Chance’ agreements with care

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Q. We have a poor-performing employee who is up for discharge. The union has requested that we give him one “last chance,” and has said that it will agree to a last-chance agreement if we don’t terminate his employment now. What is the impact of a last-chance agreement? — J.R.

A. Last-chance agreements generally provide that the union and the employee will agree today that the employee may be terminated the next time he engages in prohibited conduct, and that the union will not take his case to arbitration if he should be terminated for breaching the agreement. In exchange for that agreement, the company will not terminate the employee for his most recent conduct. The advantage for all concerned is that the parties do not have to arbitrate the discipline that would otherwise be imposed for the most recent misconduct.

Sometimes an employer just wants to terminate the employee immediately, and a last-chance agreement doesn’t make sense. If a last-chance agreement makes sense, have your labor counsel carefully review any such agreement.

What conduct will violate the agreement? Any work rule violation, or a specific act of misconduct? Most employers prefer an agreement that is broad in scope.

When we help our clients create last-chance agreements, they spell out that the act of misconduct is subject to the grievance procedure (Did the employee do what he was accused of doing?), but the penalty of discharge is not. We also provide that the last-chance agreement modifies the labor agreement, thus precluding an arbitrator from deciding that the “just cause” provision of the labor agreement trumps the last-chance agreement.

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