Were you dismissed from your job in Ontario? Do you want to know what your legal rights are to severance pay?
When the employment relationship between employer and employee is at an end, there are a lot of questions that can arise as to what entitlements should be owed to the employee at the time of dismissal. People use terms such as “termination pay,” “severance pay,” “statutory entitlements,” and “notice or pay in lieu of notice,” when discussing these issues and we find that often people do not understand what the differences between these terms are. One of the most confusing terms is “severance pay.” A lot of people do not know what it is, if they are entitled to it and how much they seek to get if they are entitled to severance pay.
What is severance pay?
Simply put, severance pay is an amount that an employer pays to an employee when that employee loses their job. Severance pay is not termination pay or pay in lieu of notice (although these terms are often used interchangeably). Termination pay can be owed to an employee who was dismissed when an employer fails to give an employee proper notice of termination. While severance pay is an entitlement that exists with qualified employers when the employee’s employment has been “severed” and it exist to helps employees recover from the loss of employment following many years of service.
Do I get severance pay?
To get severance pay, an employee who was dismissed from their job will need to meet certain requirements. Those requirements are set out in Ontario’ legislation that deals with employment standards called the Employment Standards Act, 2000 (“ESA”).
There are two main criteria that must be met in order for an employee to receive severance under the ESA. Those criteria are:
- The employee must have worked for the employer for five or more years.
- The employer must have a global payroll of at least $2.5 million, or they severed 50 or more employees within a six-month period because all or part of the employer’s business is permanently closed.
How much severance pay would I get?
The amount of statutory severance pay is calculated based on the minimum entitlements under the ESA.
Severance pay is calculated under the ESA by multiplying the employee’s regular wages for a normal work week by the total of the number of completed years of employment with the employer and the number of completed months of employment with the employer divided by 12 for a year that is not completed. The maximum number of weeks that an employee may be entitled to receive as severance pay would be 26 as set out in the ESA.
Under the common law the employee may be entitled to “severance” as well, however, this word is used interchangeably with “pay in lieu of notice” or “severance package.” Since the calculations of these amounts are not subject to the ESA minimums, employees have more flexibility in eligibility to severance pay and the amount of severance pay that the employee may be entitled may be greater than what is set out in the ESA.
Are there any exemptions from severance pay?
Yes. There are several exemptions that would disallow a severance payment to a seeming qualified employee. For example, the employee may not be entitled to severance if that employee refused a reasonable offer of alternative employment by the employer or was involved in conduct that amounts to being dismissed for cause. Often these possible exemptions are complex and if you think that you may qualify for severance but may be also subject to an exemption of severance pay it would be best to contact Zeilikman Law for a confidential consultation so that we can review your matter and determine what the best course of action to take in your case.
Is there anything else that could complicate my ability to claim severance pay under the common law?
Yes. The main complicating factor is an employee’s ability to a claim a severance package under the common law would be the employment agreement that the employee is a party to. Many employment contracts seek to limit an employee’s claims to severance pay to that which is set out as statutory minimums under the ESA. If you have been dismissed and you believe that your employment contract seeks to limit your severance to statutory minimum entitlements, then you should seek out an experienced employment lawyer like those at Zeilikman law to review the employment contract with you to determine whether that contract is enforceable. Employment contract reviews can be complex, and it is best that you do not attempt to decipher any ambiguity in your employment contract on your own. We have written about this topic before, and we suggest you read our blog, “You received a termination letter from your employer stating that you are dismissed. So, what do you do now?”
Do you need more information about severance pay?
We have written about severance pay extensively as it is a very important part of employment law and a topic that is often confusing for the public. You can review our blogs “What You Need to Know About Severance Pay,” “Termination vs. Severance Pay?,” and “Some Information about Severance Pay” for more information about severance pay in Ontario.
The bottom line is that if you have experienced dismissal from your job then you should approach an employment lawyer to review your own individual case. Failing to do so could result in you not getting the full severance pay that you are owed and potentially losing out on other forms of compensation as well. Zeilikman Law can be contacted by calling (905) 417-2227 or online to schedule your own confidential consultation with one of our employment lawyers.
