Hamilton Employment Lawyer: Severance Package Reviews

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It’s important to know that when you lose your job, do not feel pressured to sign severance papers offered to you in your termination meeting. If you do, your poor decisions could cost you thousands of dollars in severance that you may be owed.

Instead, it is crucial to understand that you have rights as an employee. Employers may present their initial severance offer as the best available option, but this is not always the case. Many companies offer lower severance packages initially, with the expectation that the shock of job loss will lead employees to accept less than they are entitled to receive.

If you have recently lost your job, we encourage you to contact our office for a confidential consultation. Allow us to assess your unique circumstances and work towards securing a severance package that is in compliance with the law, and simply not what your employer wants you to accept.

Ontario Employment Law

Employment law is a complex and ever-evolving field that governs the relationships between employers and employees. In Canada, employment law is regulated by both federal and provincial legislation, including the Employment Standards Act. This act outlines the minimum requirements for employment, including notice periods, severance pay, and termination procedures. Understanding employment law is crucial for both employers and employees, as it can help prevent disputes and ensure fair treatment. If you are an employee who has been terminated or an employer looking to navigate the complexities of employment law, it is essential to seek legal advice from an experienced employment lawyer.

Is your Severance Payment Fair and Reasonable?

After being terminated, one of the primary concerns for many individuals is whether the severance package they have been offered is adequate and fair. Determining the appropriateness of a severance package can be challenging, especially for those who are not well-versed in employment law or labor relations. The amount of severance pay should be sufficient to support you financially while you search for new employment opportunities.

In Ontario, severance packages are governed by the Employment Standards Act (ESA) and common law. The ESA sets out the minimum standards for termination pay in Ontario. Common law, on the other hand, is “judge made law” and takes into account various factors when determining a fair severance package. These factors include your age, length of service, position, and the circumstances surrounding your termination. Common law severance packages are often more substantial than those required by the ESA, as they aim to provide you with reasonable notice or pay in lieu of notice. Non-unionized employees who are terminated without cause are generally entitled to either notice of termination or pay in lieu of notice.

To ensure that you are receiving a fair and proper severance package, it is highly recommended that you consult with our Hamilton employment lawyers. We can assess your unique situation, taking into account factors such as your length of service, position, and the circumstances surrounding your termination. They can provide valuable guidance on whether the severance offer is reasonable and in line with legal requirements.

Never Sign Termination Papers Under Pressure.

It is understandable that the prospect of receiving immediate financial support through a severance package may be appealing, especially in the face of unexpected job loss. However, it is crucial to carefully consider the long-term implications of accepting the initial offer without further review or negotiation.

Employers often impose a deadline for employees to sign severance packages, which can create undue pressure. Signing a full and final release in exchange for the severance pay may prevent you from seeking additional compensation or benefits to which you may be entitled under the law. By agreeing to such terms, you effectively waive your right to pursue legal action against your former employer, even if it is later discovered that the severance package was inadequate or that your rights were violated during the termination process.

Before making any decisions regarding your severance, it is strongly advised that you consult with an . Our law firm can provide valuable insight into your specific situation, assess the fairness of the severance offer, and help you understand the potential consequences of signing a release. An attorney can also negotiate on your behalf to ensure that you receive the maximum compensation and benefits you are entitled to under the law.

Remember, while it may be tempting to accept the initial severance offer for immediate financial relief, it is essential to prioritize your long-term interests and protect your legal rights. By speaking to a severance pay lawyer, you can make informed decisions about severance package negotiations and safeguard your future well-being.

Does your Severance Comply with the Employment Standards Act?

By law, if your employer has terminated your non-union employment relationship, you are entitled to notice of your termination or pay in lieu of notice in accordance with .

Your employer CANNOT contract out of inimum standards entitlements – such as notice of termination or pay in lieu, severance pay, continued payment of benefits premiums during the statutory notice period, and payment of vacation pay on termination entitlements.

In Ontario, if you have been terminated without cause, the Employment Standards Act mandates that when an employer decides to end the employment relationship, the employee, if continuously employed for over three months, must be given either written notice of termination, or a combination of both. An employee who does not receive written notice of termination is required under the Employment Standards Act to be given termination pay in lieu of such notice. The Employment Standards Act legislates the amount of termination pay.

Termination pay is calculated as a lump sum payment equal to an employee’s regular wages over a work week, which he or she would otherwise have been entitled to during the written notice.

Understanding Severance Pay

Employees often use the term severance as an all-encompassing term for separation pay, but technically, it is not so. The concept of severance pay is actually made up of three separate payments which can be made on termination, those being termination pay, severance pay, and payment in lieu of notice.

The amount of severance pay is influenced by several factors, including the employee’s length of employment, age, position, and the circumstances of their termination.

Termination Pay

When a non unionized employee is terminated in Ontario, they are entitled to “termination pay”. Under the Ontario Employment Standards Act, termination pay is the minimum amount an employer must pay an employee who has been terminated without cause and has worked for the employer for at least three months. The amount of termination pay is based on the employee’s length of service, with one week’s pay required for each completed year of service, up to a maximum of eight weeks. Termination pay is meant to provide employees with some financial support while they search for new employment, but it does not necessarily represent the full amount of severance an employee may be entitled to under common law.

Severance Pay

In Ontario, under the Employment Standards Act, severance pay is a separate and additional payment that certain employees are entitled to receive upon termination of their employment, distinct from termination pay. While termination pay is based on the length of service and is meant to provide employees with some financial support during their job search, severance pay is only available to employees who meet specific eligibility criteria. The company must meet specific eligibility criteria to be required to pay severance, such as having a global payroll of at least $2.5 million. To qualify for severance pay, an employee must have worked for the employer for at least five years, and the employer must have a global payroll of at least $2.5 million or must have terminated 50 or more employees within a six-month period due to a permanent discontinuance of all or part of the business. Severance pay is calculated based on the employee’s length of service, with one week’s pay for each completed year of service (and a prorated amount for any partial year), up to a maximum of 26 weeks, and is provided in addition to any termination pay the employee is entitled to receive.

Payment in Lieu of Notice

In Canadian employment law, payment in lieu of notice is a legal obligation that employers have when terminating an employee without cause. This concept, which has been developed through judge-made law, goes beyond the statutory minimums set out in employment standards legislation and includes various legal obligations.

When an employer decides to terminate an employee without cause, they are required to provide the employee with reasonable notice of termination or pay in lieu of that notice. The purpose of this notice period is to give the employee time to search for new employment and adjust to their impending job loss. If an employer chooses not to provide working notice, they must instead provide the employee with pay in lieu of notice, which is essentially a lump sum payment equivalent to the wages the employee would have earned during the notice period.

The length of the notice period or the amount of pay in lieu of notice is not solely determined by statutory minimums. Canadian courts have consistently held that employees are entitled to “reasonable notice” under the common law, which often exceeds the minimum notice periods set out in employment standards legislation. This is where the concept of “payment in lieu of notice” as judge-made law comes into play.

The determination of what constitutes reasonable notice is guided by the “Bardal factors,” named after the landmark case Bardal v. The Globe & Mail Ltd. (1960). The Bardal factors are a set of criteria that courts consider when assessing the appropriate length of reasonable notice. These factors include:

1. The employee’s age;

2. The length of the employee’s service;

3. The character of the employee’s employment; and

4. The availability of similar employment, given the employee’s experience, training, and qualifications.

Courts will weigh these factors to determine the appropriate notice period on a case-by-case basis. Generally, older employees, those with longer service, those in more senior or specialized positions, and those who may have difficulty finding similar employment are entitled to longer notice periods.

It is important to note that while the Bardal factors provide a framework for determining reasonable notice, they are not a rigid formula. Courts have the discretion to consider other relevant factors and adjust the notice period accordingly.

Severance Offer and Acceptance

When an employee is terminated, they may be offered a severance package by their employer. This package typically includes notice pay, severance pay, and other benefits. However, before accepting a severance offer, it is crucial to review the package carefully and understand your legal rights. A severance package review can help you determine if the offer is fair and adequate. It is also essential to consider seeking legal advice from an employment lawyer to ensure you are not signing away any entitlements or rights. Remember, a severance package is a legally binding contract, and once you sign, you may be waiving your right to pursue further claims against your employer.

What happens to my Health and Dental Benefits?

In Ontario, minimum standards legislation requires the employer to continue making whatever benefit plan contributions they are required to make to maintain the employee’s benefit plans during the statutory notice period, regardless of whether the employee is provided with working notice or is terminated immediately and provided with pay in lieu of notice.

Continuing benefit plan contributions can save employees a significant amount of money during the statutory notice period.

How Reasonable Notice Periods are Typically Structured in a Severance Package?

More often than not, employees who are presented with severance packages do not understand the difference in the methods of structuring severance pay.

Understanding the structure of your severance package is crucial for determining your next steps after termination.

Typically, there are three ways to structure an employee’s notice. Your termination letter should set this out quite clearly. Employees may be terminated by being provided working notice, a lump sum payment, or a salary continuance. Employers are not legally required to provide notice in all the same form. There could be a mix of working notice and lump sum payments, working notice in salary continuance, no working notice and a lump sum payment covering part of the notice – followed by salary continuance. The methods of termination could be blended in a variety of different ways.

Working notice – an employer may choose to give an employee working notice of the termination of his or her employment. The termination letter would expressly provide a final termination date which reflects the end of the working notice. Employers could end the working notice at any point by providing additional pay in lieu of notice. With working notice, the employee would remain at his or her place of employment until the active notice is complete. Employers are mandated to provide work to employees who are provided with working notice.

Salary continuance – employers may choose to continue payments in addition and in excess of statutory minimum requirements. Salary continuance is simply what it means – the employment relationship is ended, but notice is provided by continuing the employee’s salary and benefits to the end of a specific notice period. Often, some clawbacks are put into place with salary continuance terminations.

For example, it is not uncommon for an employer to offer salary continuance with a clawback to reduce its liability if the employee becomes re-employed with an alternate employer. In other words, the employer would provide a lump sum payment to the employee of a certain percentage of the remainder of the notice if the employee finds another job. When the employer offers a salary continuance of the clawback, the employee receives his or her regular salary until the end of the notice or the date the clawback is triggered.

Lump sum payments – if the employer’s cash flow permits, it may offer the employee to pay in lieu of notice, a lump sum amount. Typically, lump sum packages are not structured with a reduction for mitigation income earned during the notice period.  Lump-sum packages are typically offered when the employee executes a full and final release for amounts over his minimum standards or contractual entitlements. The employer cannot require the employee to execute a release for or severance pay.

Severance Package Negotiations

Severance package negotiations can be a complex and challenging process. Employers may offer a standard severance package, but this may not always be fair or adequate. As an employee, you have the right to negotiate improvements to your severance package. This can include negotiating a longer notice period, additional severance pay, or other benefits such as car allowance or continuation of benefits. To navigate the negotiation process effectively, it is essential to seek legal advice from an experienced employment lawyer. They can help you understand your legal rights, assess the fairness of the severance package, and develop a strategy to negotiate better terms.

Benefits of Working with an Employment Lawyer

Working with an employment lawyer can provide numerous benefits, especially when dealing with severance packages. An experienced employment lawyer can help you understand your legal rights, review your severance package, and negotiate improvements. They can also provide guidance on the Employment Standards Act, common law, and other relevant legislation. Additionally, an employment lawyer can help you navigate the complexities of employment law, ensure you receive fair compensation, and protect your legal rights. Whether you are an employee or an employer, seeking legal advice from an employment lawyer can help you make informed decisions and achieve a better outcome.

Common Mistakes to Avoid

When dealing with severance packages, there are several common mistakes to avoid. One of the most significant mistakes is signing a severance package without reviewing it carefully and seeking legal advice. This can result in waiving your right to pursue further claims against your employer and accepting a package that is not fair or adequate. Another mistake is not understanding your legal rights and entitlements under employment law. This can lead to accepting a package that does not meet the minimum requirements outlined in the Employment Standards Act. To avoid these mistakes, it is essential to seek legal advice from an experienced employment lawyer who can guide you through the process and ensure you receive fair compensation. Remember, a severance package is a significant decision, and it is crucial to get it right to protect your legal rights and financial well-being.

Severance Package Review Lawyer Hamilton

If you have been terminated, our can help review the structure of your termination package to ensure that it has been thoroughly reviewed and that you are paid what you are owed. It’s important that you do not sign any termination agreement, termination paper, severance package, complete and final release, or any other documentation prior to .

It’s important that you understand and fully appreciate what you have been offered and what you’re entitled to – otherwise, you may be barred from bringing future lawsuits against your former employer for claims of any type, be it termination or human rights.

Call us Today, no matter where you are in Ontario at for your free employment law consultation. Alternatively, you can contact us online, confidentially, by filling out a .