Legal Resource Guide

2013

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severance pay. However, she points out that the ���conduct has to be fairly egregious for a court to find that someone is entitled to no severance pay.��� ���We call that the capital punishment of employment law,��� says David Whitten, of the employment law firm Whitten & Lublin LLP. ���Our courts don���t like cause terminations, so they���re very rare.��� In most cases, employees are terminated without cause and will be entitled to some termination and severance pay. If they have an employment contract in place, it may contain terms setting out what the severance package is. ���If [the employee has] signed an enforceable agreement with a severance provision, that will dictate their entitlement,��� says Whitten. ���It may say in there that all you���re going to get is the minimum that the employment standards legislation calls for. It may call for something better than that.��� Whitten points out, however, that most employees don���t have an employment agreement with a severance provision. That means most people will be relying on provincial employment laws to determine the minimum amounts they are entitled to. Nancy Shapiro, of Koskie Minsky LLP, says if the employee is non-unionized in Ontario, his or her rights ���are governed, at a minimum, by the Employment Standards Act, [2000], which gives them a right to termination pay and possibly severance pay. ���Termination pay is, in rough terms, one week for every year of service, up to a maximum of eight weeks,��� says Shapiro. ���Severance pay is only applicable to certain employees in certain circumstances. You have to have been at your employer at least for five years and the employer has to have a payroll of more than $2.5 million. There also has to be 50 or more employees.��� Whitten notes that federal employees, such as those working for banks and airlines, fall under different legislation. ���Under the Canada Labour Code, you get two weeks��� termination pay,��� he says. In terms of severance pay, he says federal employees are entitled to ���the greater of five days or two days for every year that you���ve been employed.��� There is no service requirement under the code to get severance pay. While it may be tempting for people to try to figure out their entitlement by searching the internet, Shapiro cautions against ���internet lawyering.��� ���It leads to lots of incorrect conclusions. I hear from clients frequently that they���ve looked things up on the internet or they���ve spoken to friends and they���ve come to conclusions which are completely wrong.��� Wobick points out that ���courts often award much more than the minimum amounts provided for in the [legislation].��� She says courts consider several factors in deciding what constitutes reasonable notice of termination, including ���the type of position that you have, the level of responsibility you���re given, the length of your employment, your age, and the availability of similar kinds of jobs in the job market.��� Other factors can also increase your severance package. ���Vacation pay ought to factor into a severance package in most cases,��� says Wobick, adding the amount depends on how employers pay out vacation, including whether the employee had to accumulate a certain number of days per month. Other considerations Wobick looks at include whether employees received an annual bonus, a car allowance, a pension, stock options, and health benefits. In addition, she says it is important to discuss grounds for discrimination with a lawyer if they exist as this could affect what the employee is entitled to. There may be other terms in releases that companies ask employees to sign when they are fired. Some releases include ���termInatIon pay Is, in RoUGh TeRMs, one weeK foR eveRy yeaR of seRviCe, Up To a MaxiMUM of eiGhT weeKs.��� non-competition or non-solicitation clauses. ���Employers often require employees to sign agreements that restrict their abilities to take another job as a condition of receiving severance pay,��� says Wobick. ���These types of matters actually impact an employee���s ability to secure work for their future and I think it���s important that employees are aware of this and make sure they understand the terms of whatever separation agreement they���re signing up for.��� Ontario���s Employment Standards Act is online at tinyurl.com/OntESAct. Find the Canadian Labour Code at tinyurl.com/LabourCode. 21

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