I am frequently retained to review severance packages that have been handed to someone who has just been fired. Typically the package will contain a covering letter with an offer, details about any outstanding entitlement to benefits such as life insurance or pensions, a release, a recommendation to get independent legal advice, and a deadline to respond. The package is given to a bewildered person who probably hasn’t heard much beyond the pat phrases about restructuring or downsizing.
If you are that person, here is what you need to do:
• Take a deep breath – you will survive.
• Don’t sign anything yet.
• Read over the package and make a note of any deadlines.
• Ask for an extension to obtain advice if necessary. I have never seen this request turned down, but you should ask before the deadline passes.
• Collect any information you need from company sources such as benefits, pension and life insurance.
• Get legal advice – invest in an hour of summary advice from a lawyer who specializes in employment law. The package may or may not be fair – find out. Many people who are offered a fair severance package are too angry or upset to look at the offer objectively.
If the package is fair the advice will probably be to accept it and sign the release. Once you have been paid the severance, that will end any further claims against your employer whether in contract, under Human Rights legislation or the Employment Standards Act. If the package is not fair, you can discuss your legal options.
Keep in mind that if you find another job right away you may be considered to have “mitigated” your losses and not entitled to any overlapping compensation.
General information to keep in mind:
• The Employment Standards Act in BC sets out only the minimum notice periods for termination.
• The three main types of termination of employment are as follows:
o The term of the employment contract is over – no severance is payable unless set out in the contract.
o Termination for cause – the employee has breached the employment agreement (e.g. theft; stopped coming to work etc.); no severance is payable.
o Termination without cause – notice is required. Notice might be set out in the contract (e.g. 30 days’ notice) but if not then it has to be “reasonable” and not less than the notice required by the Employment Standards Act, section 63.
o “Working notice” means that you keep working, and get paid, to the end of the notice period.
o “Wages in lieu of notice” means that you stop working and get paid until the end of the notice period.
o “Reasonable notice” is intended to be an estimate of how long it will take to find suitable replacement employment.
Since most people are paid wages in lieu of notice the factors that affect the length of the notice period include the following:
How long you have been employed.
The seniority of your position.
The market for your skills – is similar employment available?
Did you move to take your current position?
Being terminated is an unpleasant experience, but it is not the end of the world. Get some advice and get ready to move on to the next phase of your career.
The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.