Work is one of the most fundamental aspects in a person’s life,
providing the individual with a means of financial support and,
as importantly, a contributory role in society. A person’s employment is
an essential component of his or her sense of identity, self-worth and
emotional well-being. Accordingly, the conditions in which a person
works are highly significant in shaping the whole compendium of
psychological, emotional and physical elements of a person’s dignity
[Former Chief Justice of the Supreme Court of Canada, Brian Dickson]
You have just been terminated from your job and suddenly left without an income. Your former employer has given you a termination letter that includes an offer of severance. The offer is conditional on you signing a release. You are in need of money and your employer has only given you two days to accept the offer. What do you do? You must call a competent employment lawyer, because you need to find out if the severance being offered is adequate.
In Canada, severance entitlements upon termination, or wrongful dismissal, can be significant and most initial offers by employers are inadequate. The assessment of your severance entitlements is a specialized area of the law, and every case has to be assessed on its own particular set of circumstances.
There are several factors that the courts will consider when determining the length notice of termination to which the employee is entitled to. The factors considered include, but are not limited to, your position, salary, age and the current economic climate. Sometimes, a contract of employment will determine the amount of severance. But often times, even when a written contract includes a termination clause that restricts the amount of severance, the termination clause in a contract is unenforceable by the courts.
With respect to the amount of notice, the first thing you must understand is that under the Employment Standards Act (“ESA”), the employer has a statutory obligation to provide you with at least one week’s notice for each year of service up to a maximum of eight (8) weeks. This is the mandatory minimum the employer must pay upon termination and the employer and the employee cannot contract out of this minimum statutory obligation. This is referred to as the “statutory notice period”.
During the statutory notice period, the employer must also maintain all of the employees’ benefits for the entire statutory notice period. These usually include health and dental benefits, and life and disability coverage. For example, if you are terminated after having worked for the same employer for four years, the ESA entitles you to at least four weeks’ notice, or pay in lieu, and your benefits must be maintained during the entire four-week period.
Upon termination you may also be entitled to “statutory severance” pursuant to the ESA. Statutory severance will apply when the employee has been employed for at least five (5) years and the employer’s payroll is at least $2.5 million. If those conditions are met, you are entitled to severance pay equal to one week’s pay for each year of service to a maximum of twenty-six (26) weeks. This is a significant benefit to employees, but employers do not always pay it out automatically despite their obligation to do so. Again, a skilled lawyer can make sure you are receiving all of your statutory entitlements.
Common Law Notice of Termination
In most cases, and even where there is a written contract of employment, the employee will have a right to receive notice of termination pursuant to the common law. This is a very significant right for employees and it is very important to understand that you are most likely entitled to notice under the common law. It is also important to know that the amount of notice (severance) under the common law is almost invariably and significantly more generous than the minimum statutory entitlements under the ESA.
The difference between statutory notice and common law notice can be significant. For example, an employee who has worked for the same employer for 25 consecutive years could be, under the common law, entitled to 24 months’ notice (or pay in lieu). Whereas, under the ESA, that same employee would only be entitled to less than 2 months’ notice (8 weeks).
Below is table to assist in understanding the difference between statutory entitlements and common law notice of termination (or pay in lieu).
Statutory Entitlement upon Termination
Common law notice of termination
Your employer must fulfill their obligations under the ESA.
There is a presumption that all employees are entitled to notice under the common law in the event of a wrongful dismissal. However, that presumption can be rebutted but only in a written contract that is clear, concise, and unambiguous. It is surprisingly difficult for employers to enforce written termination clauses that purport to eliminate the employee’s right to common law notice. This is where having a good lawyer becomes very important. This firm has many years of experience and success in challenging termination clauses in court.
Section 57 of the ESA provides for a maximum of eight (8) weeks’ notice.
Section 65 of the ESA provides for a maximum of 26 weeks’ notice in addition to those under section 57 if the employee qualifies. To qualify, (more than 5 years of service and the employer has a payroll of more than $2,500,000.00.
The common law does not provide for any maximum notice. The period of notice the employee is entitled to under common law takes into account the following factors
1. Character if the employment;
2. Length of service;
3. The age of the employee;
4. Availability of similar employment;
5. Current economic conditions;
6. Experience of the individual;
7. Education/training of the individual; and
8. Qualifications of the individual.
If you have been terminated, fired, dismissed, or laid-off, you should contact J.F. Lalonde, a highly qualified wrongful dismissal lawyer with over 15 years’ experience representing employees that have lost their jobs.
– J.F. Lalonde and Victoria Lamontagne