Severance Package Lawyer 

Dealing with the loss of a job can be overwhelming for employees. When this occurs, employees are forced to navigate complex legal and financial affairs that are likely unfamiliar to them.  This article provides a comprehensive analysis of severance packages in Ontario. We will explore severance agreements, the differences between severance pay and statutory notice of termination, how to calculate severance package entitlements, and the benefits of seeking severance package lawyers at Roberts & Obradovic. 

Severence Pay versus Statutory Notice of Termination

Severance pay is a payment that an employer is required to give to an employee when their employment is ended, on top of any required individual or group termination notice (or payment in lieu of notice). While the notice of termination helps employees get ready to depart from their current job and gives them time to start looking for new work, severance pay is intended to compensate employees for their long-term, dedicated service to the employer. In Canada, only Ontario and the federal jurisdiction make it mandatory for employers to provide severance pay when an employee’s job ends.   

When is an Employer Severed?

According to the ESA, a person’s employment is “severed” when the employer: . 

  • Dismisses or stops employing the employee. 
  • The employee is no longer employed due to the bankruptcy or insolvency of their employer
  • Constructively” dismisses the employee and the employee resign in response within a reasonable time. 
  • Lays the employee off for 35 or more weeks in a period of 52 consecutive weeks. There are specific rules for determining the effective lay-off period. 
  • Lays the employee off because all of the business at an establishment closes permanently (an “establishment” can, in some circumstances, include more than one location); or 
  • Gives the employee written notice of termination and the employee resigns after giving two weeks’ written notice, and the resignation takes effect during the statutory notice period. 

Qualifying for Severance Pay

An employee becomes eligible for severance pay if their employment is “severed” and

  • They have worked for the employer for a period of five years or more (which includes all the time spent working for the employer, regardless of whether it was continuous or active) and 
  • Their employer has a total global payroll of at least $2.5 million OR has terminated the employment of 50 or more employees within a span of 6 months due to a permanent closure of all or part of the business. 

Exploring Severance Pay Rules and Regulations

Navigating the rules and regulations concerning severance pay in Ontario can be quite complex. Severance pays goes beyond any other compensation the employee might be entitled to per the Employment Standards Act, 2000, or their employment contract.  

It is essential to differentiate between statutory termination notice (or payment instead of notice) and statutory severance pay. 

When it comes to termination notice, it can be given as actual working notice or as payment in place of notice. On the other hand, severance pay must always be given as a direct payment; it cannot be substituted with a work notice. Even if an employer provides more than the minimum required working notice period, they still need to pay the full amount of severance pay owed to the employee. 

Interestingly, a scenario can arise where an employee is eligible for severance pay but not termination pay. This depends on whether the employee falls under a specific exception outlined in the regulations. 

It is important to also that the rules outlined in the ESA regarding termination and severance are considered the “bare minimum”. Certain employees might have additional rights granted by common law or other laws, which could provide them with more extensive rights compared to the notice of termination (or termination pay) and severance pay defined in the ESA. As these broader rights typically can’t be enforced through the ESA, some employees might decide to take legal action against their employer for what’s known as “wrongful dismissal,” or explore alternative options. 

Important Note

An employee can’t pursue both a wrongful dismissal lawsuit and a claim for termination pay, or severance pay through the Ministry of Ontario for the same employment termination or severance. A choice needs to be made between the two options. If you find yourself in this situation, seeking legal advice about your rights is recommended. An employment lawyer can also help you comprehend the intricate landscape of severance pay in Ontario and ensure you are well-informed about your rights and responsibilities. 

Read This Before You Sign any Severance or Termination Agreement

A severance or termination agreement is a legally binding document that outlines the details of the termination package. The termination package is the initial offer by the employer. While it might represent a reasonable estimate of what the employee is entitled to, it could also fall short. Keep in mind that the value of a termination package can vary, and it’s important to fully understand the terms and implications before making any decisions. An employer will also typically seek the employee’s agreement to release any future legal claims related to the termination of their employment. So, thread carefully before accepting the first offer.  

It is essential to carefully review this agreement, as signing it could limit your rights and options. It’s common for employers to include clauses that restrict your ability to pursue legal action in the future or work for competing companies.

To best protect their interests and ensure they receive a fair severance package, we recommend employees obtain legal advice before signing anything or accepting the employer’s initial offer. Your legal counsel can help you negotiate for an enhanced termination package, which is typically better than the employer’s first offer. 

Calculating Your Entitlement

Severance pay is calculated based on the length of employment and employee’s average weekly pay during the 12 weeks before termination. The calculation of a severance pay depends on many factors, such as provincial regulations, union’s collective agreement, employment contract, length of service, and reasons for job termination.

While the ESA sets out minimum standards, many employees are entitled to more than the minimum based on common law principles. Factors such as availability of comparable employment opportunities are considered by common law.  

Can My Employer Force Me to Sign a Severance Agreement?

No, it is against the law to force an employee to sign a severance agreement without providing them with an opportunity to consult with a legal professional. If you are unsure how to proceed if you are faced with a severance challenge, it is wise to seek legal advice to make the decisions that best protect your interests. Severance package lawyers can help you understand the terms and implications of the agreement so you can make an informed choice. 

Severance Package Legal Advice: How Roberts & Obradovic Can Help

Being challenged by the legal issues surrounding severance cases is a very common situation, as not knowing about the details of severance packages can hinder decision-making and negotiation processes.  

Seeking legal support therefore is crucial for workers who have been severed and are negotiating a compensation severance package. If you are in such a delicate situation, our knowledgeable employment lawyers at Roberts & Obradovic would be honored to serve you.  

We specialize in employment law and provide comprehensive legal guidance and representation to employees dealing with severance matters. We are here to give you all the information you require to fully understand your rights and the obligations of your employer. We can negotiate with your former employer to obtain the best possible outcome for you. We can provide our legal services in a broad range of circumstances, including:  

  • Understanding the initial severance package offered by your employer or helping to structure a severance package  
  • Structuring a severance package 
  • Negotiating with your employer and advocating on your behalf to ensure you are treated equitably and fairly  
  • Seeking legal recourse if necessary 

If you’re an employee navigating the complexities of a severance package, our dedicated team is ready to lend a helping hand. Reach out to us now at (647) 724-5179 or complete our convenient online form. 

Experience peace of mind as you navigate the landscape of leaves of absence, backed by the expertise of Roberts & Obradovic Employment Lawyers.