Everything You Need to Know About Severance

The single most common issue in employment law is not whether employees are entitled to severance pay upon dismissal, but how much. Even seasoned employment lawyers can have vastly differing opinions on the value of the same case, because even little details can make a huge difference.

Here are some basic things that all employees should know about severance entitlements:

1.There are two types of severance pay – and you could be entitled to both

“Severance” is a specific entitlement spelled out in employment standards legislation. For instance, the Ontario Employment Standards Act provides up to 1 week of severance per year. Severance can also refer, however, to “common law” entitlements that can only be awarded by a court. This can be months or even years of pay, depending on your age, length of service, character of employment, chances of re-employment, and many other factors.

Confusingly, your employment termination can give rise to both types of severance. It is important that you understand both entitlements. The interchangeable use of the term “severance” often misleads employees about their entitlements.

2.Your employer is not offering you a severance to be nice

While severance is usually not required for US-based employees, the opposite is typically true in Canada. Make no mistake – when your employer offers you a severance in Canada, they are almost always doing so because they must. Unfortunately, this misconception often leads Canadian employees to gratefully accept the first offer, not realizing that their true severance entitlements could be significantly more.

3.Your employer is trying to buy your signature

When your employer offers you a severance, they will tell you that the offer “gratuitous”, made in “good faith”, or claim that the money is “to assist in your transition”. They may give you a deadline to accept. They may threaten to withhold money if you refuse. These are classic sales tactics designed to pressure you into a deal.

You have more leverage than your employer would lead you to believe. Your employer is trying to buy a very unique and valuable product that only you can provide: your signature. Do not give your employer what they want without knowing what it is worth.

4.Your employer’s first severance offer is usually low

In most cases, determining your total severance entitlements is more of an art than a science, and requires forecasting what a judge might think and say about your specific circumstances, as well as what might happen in the months or years after your dismissal. For this reason, severance entitlements fall within a range of outcomes. Your employer’s first offer is usually not their best offer, and there may be significant room for improvement.

5.Your employment contract may not mean what you think

Your employer may have had you sign an employment contract to attempt to limit severance entitlements upon your termination. In fact, this is a very common requirement from employers. Far less commonly, however, are these agreements enforceable. Seemingly minor technical abnormalities in the language of your employment agreement could have huge impacts on your severance entitlements. Trust only an employment lawyer to properly interpret your employment contract.

6.If your employment is terminated, always contact an employment lawyer

Share Lawyers offers free consultations, meaning that if we think we can help you improve on your employer’s severance offer, we will arrange a call for you to speak with an employment lawyer with no charge and no obligation. Call us today to have your severance offer reviewed for free.

Visit the Severance page on our site to learn how Share Lawyers’ employment lawyers can help if you think you’ve been offered an unfair severance package, or no severance at all.

If you are dealing with an employment issue such as wrongful dismissal, unfair severance, or workplace harassment, contact the employment lawyers at Share Lawyers. Our 35+ years of experience in long term disability (LTD) law and team of experienced employment lawyers can help you win your case against your employer. We offer free consultations and there are no fees unless you win your case. Join us on Facebook and become a Top Fan for a chance to win each month.

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