Severance Pay in Ontario
Employment lawyers are often tasked by employee clients to negotiate a severance package or obtain their fair share of Severance Pay from their employer.
What is it?
In Ontario, it refers to compensation that is paid to an employee as a result of losing their job. It compensates an employee by providing them with a financial “cushion” allowing them to support themselves while they search for a new job. In other words, severance pay serves the same purpose as Employment Insurance (EI) benefits – with the only difference being it is paid by the employer, instead of the government.
How to Get Severance Pay
Under Ontario employment law, this form of compensation is provided to non-unionized employees only when they lose their job (it is terminated) “without cause”. In such cases, an employer must provide either: (a) working notice, (b) pay in lieu of notice (which is commonly referred to as severance pay and termination pay), or (c) a combination of both. This is often paid to the employee in a severance package.
The amount of an employee’s severance package varies case-by-case basis, and will depend on assessing many different factors.
How Much am I Entitled to in Ontario?
The short answer is: “It depends.” That is, if your employment is terminated without cause, the amount of severance compensation your employer should pay you can be as little as the minimum requirements in the Employment Standards Act, 2000 (ESA), or common law reasonable notice.
Employment Standards Minimum vs. Common Law
The general rule is that an employer must provide “reasonable notice” under common law to the employee when terminating their employment or, alternatively, severance payment in lieu of notice. In other words, your employer can either provide you with sufficient prior “working notice” before your last day of work (termination date), or pay you the equivalent value of your severance package.
If you are an employee who received a severance package from your employer, contact Bune Law to have an employment lawyer to review it to determine if it is fair and appropriate for you, and see how we can help.
The amount of common law notice (or severance pay) is determined based on traditional “Bardal” factors about the employee that employment lawyers (and the courts) rely on:
- age
- length of employment (years of service)
- position
- salary
- education, skills, training and work experience
- availability of similar employment
- other relevant factors (disability, pregnancy etc.)
The Exception to Common Law Severance Pay
An employee’s right to receive their full severance pay can be significantly limited by an employment contract.
Generally, if you have signed an employment contract that speaks about your termination rights, it may limit your severance entitlements to the very low-end of the spectrum. Generally, an employment contract with a valid termination clause that legally minimizes the size of your severance amounts to only the minimums required under the ESA will take away a large chunk of an employee’s common law severance rights. This is why it is very important for employees to fully review their employment agreement with an experienced employment lawyer before signing it when starting a new job, especially to understand what impact it will have on their future rights.
Contact Employment Lawyer
If you are an employee or an employer looking for an employment lawyer to help with a termination of employment and severance package, please contact Bune Law today.
Understanding a termination letter or severance package often requires understanding the impact on your employee pension plan. If you think that your employer is not compensating you fairly for your pension in your termination package, please call Bune Law to discuss your rights and options. To speak with an experienced employment lawyer, please contact 647-822-5492.
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