What Is Last Chance Agreement?

Every organization or company is started to make profits for the owner. It is mandatory, for the organization to become a success, a smart and hard-working team is essential. Hiring an employee is the most challenging task for a company. To make a worthwhile contribution, a new employee can take three months to six months depending on the experience and job profile. An employee is hired with the basic notion that he/she will grasp the new skills and working patterns quickly. He/she cannot be subjected to spoon-feeding by the supervisor each and every minute. Agreed, coaching, training and counseling are an integral part of the process, but when managing an employee becomes cumbersome and affecting the productivity of the team, the management will decide to take strict action. That is when they decide to draw the line with what is called the Last Chance Agreement (LCA).

last chance agreement

The agreement is specifically designed to address the present challenges of the employee, to give the clarification regarding employment, make firm decisions on rules and regulations (in many cases, this is will be the last chance of the employee before termination). However, LCA is not a document that can safeguard an employer against claims or suits from employees. But if the document has been drafted properly and used at the opportune time, it can best serve as evidence for terminating the specific employee.

What Is Last Chance Agreement?

In other words, the LCA can be best defined as the agreement between the employer and the employee or the employee union that gives one last chance to the employee to prevent getting terminated for severe misconduct or failure in performance. In the agreement meeting, the employer or the management can set his/her/their expectation of the future performance they expect from the employee. Failure to meet the expectation can result in termination of employment.

It is not that LCS are used only with employees; sometimes it can also be used with a non-union employee when he/she suffers from substance abuse and undergoes treatment.

The landmark judgment by the United States Court of Appeals (for the Sixth Circuit) received as a result of the case between United Steel Workers of America vs Century Aluminum of Kentucky changed the perception of LCA. As per this judgment, an employer should arbitrate the accurate guilt of an employee who has been subjected to the Last Chance Agreement. The LCA used to be previously stated as “neither the termination nor any issue of termination will be subject to the grievance and arbitration provisions of the collective bargaining agreement.”

In the organization (Century Aluminum), the union and the employee signed the LCA on the terms that the employee will be continuing the employment as subjected to all the conditions. This LCS had in its draft, failure to adhere to the conditions can make the employer terminate the employee based on the management decision. After seven months, the same employee was fired because he created an uncomfortable work environment as per the certain alleged statements.

The union took this issue to task and questioned the management. The employer refused to budge and the union filed a case. The verdict was given by the district court as the employer should have arbitrated with the employee.

After the judgment, it has to be noted that any Last Chance Agreement has to be carefully drafted if the employer decides to avoid the arbitration part over any decision for the specific employee. It is the duty of the drafter and he/she should explain in detail the policy and arbitration clause of the employer. Mandatory factors to be excluded are the manner of punishment, factual guilt and any other facts as well as arbitration provisions of the bargaining agreement.

Another factor to be taken in account while drafting the LCA is the substance abuse problem. The Americans with Disabilities Act forbids prejudice against employees with disabilities. However, use of illegal drugs is not a disability, but drug addiction and alcoholism come under the ADA jurisdiction.

Under any circumstances, the organization’s LDA should not violate the ADA. In one case, violation of ADA was proved when the court held that the employer forced the employee to sign the document (LCA) because he was under rehab for addition problems. The employee neither had discipline or performance issues. The court gave the verdict that the signing of the document by the employee was termed as a disciplinary action because he was undergoing rehab and he was a recovering addict. To avoid a similar outcome, employers should keep in mind – any employee was a recovering addict if he should be given a Last Chance Agreement.

How A LCA Should be Drafted?

The drafter of the document should always note that the LCA should not be limited to a mere set of simple platitudes or guidelines. It should, rather, serve as a warning sign or neon light to the eyes of the particular employee that he/she can be fired any time if they fail to comply with the instructions given in the document. Let us see how a perfect LCA can be:

Kindly make the words clear in the agreement – the employer have every moral right to terminate the employee at present, but has agreed to forego the right for exchange of the employee’s commitment to abide by the rules of the LCA

If the employee suffers from substance abuse, the points of the LCA should focus in the performance irregularities and the methods that can be used to correct the symptoms. The LCA has to keep in record, the particular performance deficiency. The performance should improve and consistency is the key. Any violation of the agreement or severe drop in performance can lead to termination.

In case of substance abuse, the instructions should be provided and records should be maintained regarding the type and frequency of testing for abuse. If the employee applies for leave, he/she has to undergo a drug test for continuing employment when he/she decides to join the workforce.

If the union is also party to the LCA or in management of employee, the union should be told “not to pursue the grievance” in case the employee tries to move away (violate) from the condition of LCA. In case of a contract or non-unionized employee, the agreement should make it clear that the specific employee remains “one at will at all times.”

Maintain a file of any previous communication with the employee regarding performance problems.

The description of the expected performance improvement should be clear and told in points.

He/she has to abide by all the workplace rules and regulations.

Leave a Reply

Your email address will not be published.