What Do I Need to Know About Severance and Termination?


Posted by heritagelaw on Sep 15, 2019 in Blog, Employment Law

With today’s unstable job market, jobs are not as secure as they once were. With so many fluctuations in our economy, many companies are forced to lay off and downsize in order to maintain and continue their business.

This can be devastating to dedicated employees when termination comes swiftly and without notice. Fortunately, there are laws in place to protect those who are released from work without cause and without notice.

If you are suddenly let go from your place of work without cause and without notice, you are entitled to termination pay and, in some cases, severance pay. Knowing the difference is important when facing this particular situation.

What is Termination Pay?

Termination pay is the minimum amount of pay in lieu of notice that an employer must pay an employee when terminating them without cause. By law, this minimum legal amount must be paid.

This means that an employee can terminate an employee without the standard two weeks notice. However, by law, that employer must pay that employee for two weeks because no notice was given.

What is Severance Pay?

Severance pay is an additional amount on top of termination pay that is allowed by law. Severance is usually offered to employees who work under contract or to long-serving employees. Again, it is given in lieu of termination notice.

Whether or not severance pay is offered depends on many factors such as cause (or lack of cause) for termination, length of work term, industry, type of work, work title and job responsibility.

The amount of severance pay depends on many things too. If you are being offered a severance package, we recommend speaking to one of our experienced lawyers to ensure you are being offered a legal and reasonable amount.

Severance Packages and Termination Pay Releases

When a company terminates you without notice and instead offers you termination pay and/or a severance package, you are required to sign an agreement before you receive these amounts.

However, you should always reviews these agreements, whether yourself or by a professional, to ensure fairness and accuracy. Once an agreement or release is signed, no action can be taken in court if you come to realize the terms were unfair or inappropriate.

What does a severance package include?

Severance packages typically include your regular salary, commissions or bonuses as well as your pension and RRSP contributions, medical and dental benefits, vacation pay and other benefits such as a company phone, vehicle, etc.

The severance pay offered is usually one to two weeks for every year worked – but this amount can be more. You may be entitled for up to four weeks of severance pay for each year worked.

When it comes to severance and termination pay, the employee is only bound by law to provide the minimum amount – but you could be entitled to more. Our lawyers at Heritage Law have the knowledge to ensure that you are receiving appropriate compensation.

Make Sure You Get What You Are Entitled To

Most companies will do what they can to save their bottom line and oftentimes will commit only to the minimum amounts of termination and severance pay the law requires.

But employees are people too, with their own financial responsibilities and hardships.

Let us use our knowledge of the law to help you get the most out of any termination or severance pays. Contact Heritage Law today with any questions or concerns you may have.