Termination or Severance

Did your employer provide you with a fair termination package or severance offer? The best way to find out is by having one of our employment lawyers review the severance package for free to see if anything further can be done to get the compensation you deserve.

As we offer a free consultation, you can only benefit by speaking to one of our Canadian employment law lawyers to get advice on whether or not the severance offer is fair to you. If we determine the severance offer is too low, we can fight on your behalf to get a better outcome. Our legal fees are results-driven and are based on a percentage of the difference between what you have already been offered and what increased severance amount we get for you.

In employment law, lawyers are negotiators first, and litigators second. This is because the vast majority of employment cases taken on by employment law firms are settled long before trial. In many ways, everything that happens before a trial is part of the negotiation process for your workplace rights. Below are some helpful things to keep in mind about employment settlements and how they take shape.

In large part, this question will depend on you. We can advise you on what is reasonable, but this will fall within a range. Things that commonly affect your entitlement can include:

• Your age, length of service, and character of employment;
• The wording of your employment contract or agreement;
• The amount of “working notice” or notice period you received;
• The jurisdiction of your employment;
• You chances of re-employment to a comparable role; and
• The circumstances of your termination.

Every case involves an element of risk. Don't ignore your workplace rights. There are also personal circumstances that you need to consider which may have little or nothing to do with legal considerations.

A court’s discretion to award you severance pay depends, in part, on you proving that you have made “reasonable efforts” to obtain re-employment to a comparable role. However, if you are successful in that regard, money you earn from the replacement job during the “notice period” (i.e., your “mitigation earnings”) will typically be deducted from your damages for wrongful dismissal. For instance, if we claim a 12-month period of reasonable notice on your behalf, and you start a replacement job earning the same pay 8 months after your termination, your entitlement or workplace rights will be limited to 8 months’ pay in lieu of notice.

This interaction provides an incentive for you to try to settle your case early, and can have a significant impact on what you might wish to settle for.

There are many important pieces to a settlement other than amount. Here are some of the most common things we will look for:

1. Types and structure of payments

Depending on how payments are structured, your tax and other liabilities flowing from this settlement may be reduced. For instance, no tax is withheld from human rights damages or (typically) from contributions towards your legal fees. We may also be able to formulate strategies to limit offsets to other sources of income, including your LTD insurer (if you are receiving LTD) or employment insurance (if you are receiving EI). The goal is to increase the total amount of money that ends up in your pocket.

2. Release terms

Your employer will want you to sign a release, which will prevent you from suing them in the future. The release may contain expansive terms that may inadvertently release other legal rights (such as your right to sue your employer for LTD payments); or seek to impose other unreasonable requirements on you, which may be hidden under a volume of legalese.

3. Other terms we might look for

Other non-monetary or quasi-monetary terms we might ask for include the following:

• Extension of benefit coverage;
• Letters of reference and/or confirmation of employment;
• Confidentiality and non-disparagement provisions.

It is important to remember that settlement discussions can, theoretically, include almost any term you could ask for. Money tends to be the most important term for both parties, but it is not the only way to resolve a dispute.

In most cases, we will attempt to settle your case with a demand letter. Sometimes, for whatever reason, your employer may not be willing to make an offer that we consider to be satisfactory. In this case, you have two options: let the issue drop, or press the issue by initiating (or further pursuing) legal action.

Our goal is almost never to go to trial – it is to get you the best possible settlement in the circumstances. People often mistakenly assume that filing a statement of claim means putting the case before a judge, but this is a long way off. Only a very small fraction of claims filed in court end up going to trial. There are many steps to complete between filing a claim and going to trial - the process can take years. Settlement is always a possibility at every stage of a legal proceeding, and each step that we take in the legal proceeding will typically increase the pressure on your employer to settle.

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:

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.

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.

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.

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.

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.

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.