Navigating a severance package, can be an overwhelming and emotional process for any employee in Ontario. Whether you are facing a temporary layoff, termination of employment, or some other form of employment separation, it is essential to understand what you should be looking for in a severance package. This package is often the final financial and legal settlement between you and your former employer, and it can significantly impact your future legal rights and financial stability.
If you are unsure about what’s fair or what your rights are under Ontario’s employment law, it is always advisable to seek professional guidance from an employment lawyer in Toronto. This article will guide you through the key elements to look for in a severance package and how you can ensure you’re treated fairly.
1. Understand What a Severance Package Includes
In Ontario, a severance package typically includes a combination of financial compensation and other terms that seek to finalize your relationship with the former employer due to the end of your employment. However, the specifics can vary greatly depending on the circumstances surrounding your departure and your employment contract.
When offering a severance package, most employers will call state in the termination letter that it is made to the employee “without prejudice.” In this context, the term “without prejudice” means that, in doing so, your employer is not waiving (or giving up) any legal rights that we may have at law or under the terms of your employment contract.
Generally, the following components may be included in a severance package:
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Financial Compensation: This is colloquially referred to as “termination pay” or “severance pay,” and it refers to the compensation the employer is required to pay you for the loss of employment. There are many ways this can be paid, including in the form of prior working notice (where you work until your last day of employment and are earning regular income and benefits), or a payment in lieu of working notice. In terms of the appropriate amount, this can vary depending on whether there is an employment contract that sets out or limits the amounts to only the statutory minimum entitlements, or whether the employee is entitled to full compensation under common law severance.
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Bonus or Commission: If your compensation package includes performance bonuses or commissions, make sure the severance package outlines how these will be handled upon termination. Often, these are sticky issues to employers but may be negotiable depending on your past performance as well as the timing and circumstances of your termination (i.e., termination for cause or termination without cause).
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Other Benefits: Health benefits, pension plan contributions, stock options, and other perks should be explicitly outlined. The severance package should also clarify whether your employer will continue providing health and dental benefits for a certain period after your termination.
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Non-Compete or Non-Solicitation Agreements: In some situations, employers may require departing employees to sign agreements that restrict them from working for competitors or contacting former clients. If your employment contract includes such clauses, ensure that they are reasonable and legally enforceable by reviewing them with an experienced employment lawyer.
2. Review the Employment Contract to Understand Your Employee Rights
Your employment contract plays a crucial role in determining the severance you are entitled to. Many employment contracts contain clauses that seek to limit the value of your severance package (i.e., the amount of financial compensation) your employer is required to provide you when terminating your employment. Therefore, when reviewing your severance package, it is important to carefully examine your contract to find out if it contains a termination clauses that limits your severance package to only the statutory minimums. If your contract includes such a clause, it may reduce the amount of severance you are entitled to by law. A skilled employment lawyer in Toronto can assess whether such a termination clause is enforceable and whether they are in line with Ontario’s employment law.
3. Understand Your Rights Regarding Wrongful Dismissal
It is vital to understand that not all terminations are legal. In Ontario, an employee may have grounds to challenge an unjust termination if they are terminated without cause and are not provided with an adequate severance package.
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Wrongful Dismissal: If your employer has no valid reason for termination (i.e., you weren’t fired for misconduct or other just causes), you could be entitled to a fair severance package, including damages for lost income and benefits.
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Constructive Dismissal: A constructive dismissal claim arises when an employer makes significant changes to your job duties, work environment, or compensation that forces you to resign. If you feel you have been constructively dismissed, it is essential to consult with an employment lawyer to assess whether your situation qualifies.
If you feel that your termination was wrongful, negotiating the severance package could help you recover the damages you’re entitled to. A Toronto employment lawyer can guide you through the process, ensuring your rights are protected.
4. Negotiate Your Severance Package
The initial severance offer you receive is often negotiable, especially if you have been employed with the company for several years or occupy a senior position. Here are some key strategies to consider when negotiating:
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Seek Legal Counsel: Before accepting a severance package, always consult with an experienced employment lawyer in Toronto. They can review the package, assess your legal rights, and help you understand what a fair package should include.
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Assess Your Needs: Consider your immediate financial needs, your ability to secure new employment, and your long-term career prospects. This will help you determine how much severance compensation is reasonable to expect.
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Leverage Your Employment Contract: If your employment contract provides additional entitlements beyond the statutory minimums, be sure to raise this during negotiations.
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Consider Future Employment: If you have a solid future with your employer or you believe the termination was unjustified, you may want to negotiate for more financial compensation or a continuation of benefits for a more extended period, particularly if you are subjected to a valid and enforceable non-competition clause.
5. Consulting an Employment Lawyer: Key Takeaways
An employment lawyer can offer invaluable assistance when it comes to reviewing or negotiating a severance package. Here’s why:
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Comprehensive Review: They can examine your severance package to ensure you are receiving everything you are entitled to under Ontario employment law and your employment contract.
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Negotiation: Lawyers can help you negotiate a better deal, especially if you believe the initial offer is too low or it is not a fair severance package.
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Legal Guidance: They will help you understand your rights and, if necessary, assist you in filing a wrongful dismissal claim or constructive dismissal claim if your termination was unfair.
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Peace of Mind: With expert advice, you can feel confident that your severance package is fair and that you have taken the necessary steps to secure your future.
Conclusion
A severance package is often one of the most critical components of your financial future following the end of your employment. By understanding what is included in a severance package, reviewing your employment contract, and negotiating effectively, you can ensure that you receive the compensation and benefits you deserve.
If you are facing a termination or severance package offer, it’s essential to consult with an experienced employment lawyer in Toronto. They can provide expert guidance and help you navigate the complexities of Ontario’s employment laws, ensuring your rights are protected.
A termination of employment is a difficult and confusing time, especially when it comes to reviewing a severance package, or negotiating a severance package, as a wrongful dismissal impact an employee’s base salary, bonus, health benefits and pension plans. Therefore, in a wrongful termination of employment, it is important for employees to consult with an employment lawyer for a severance package review to understand the impact of wrongful dismissal on pension plans. If you are an employer or employee needing to speak with an experienced Ontario wrongful dismissal lawyer to discuss your options and next steps on how to deal with workplace issues, call Bune Law, employment law firm in Toronto. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.