Category: Employment Law

No job lasts forever. In today’s employment landscape, it is rare for someone to start at a company and remain until retirement. Some research suggests that Canadians may hold about 15 different jobs in their lifetime, with the average employee staying at one company for about four years before moving on.

There are multiple reasons for job turnover. People may want more of a challenge, a higher salary, the need to feel valued or they are searching for growth and career advancement.

It is not always the employee’s choice, of course. Companies have their reasons for moving on from employees. They include a shortage of work, cost-cutting, restructuring or poor job performance. Employers are not obligated to share the reason for a termination. However, unless you have been terminated for cause, they must provide notice and, in many cases, severance.

Severance pay, not to be confused with termination pay, is compensation paid to a qualified worker and is designed to assist employees in bridging the gap in employment from one job to the next.

While severance pay generally works the same for executives and regular employees, there are distinct differences. That is why it is essential to seek advice from an experienced employment lawyer to ensure you are receiving the maximum severance package. Walter Law Group has been successfully negotiating on behalf of our clients for more than 30 years, winning better severance packages than they were first offered by their employers. Severance Package Reviews help ensure you get the very best.

Calculating executive compensation

Before discussing severance, it can be helpful to examine how executives are paid. These employees are entitled to more financial remuneration and benefits than regular workers because they are responsible for overseeing major organizational decisions, operations and the overall direction of the company. Due to their experience and expertise, compensation packages are designed to attract and retain valued executives.

In addition to a base salary, executives may also receive short-term incentives such as annual bonuses and profit-sharing plans. They could qualify for long-term incentives such as stock options, which allow executives the right to purchase company shares at a pre-determined price. As well, they may be entitled to performance shares, which are awarded for meeting specific performance targets over a pre-set period.

There could be other perks, such as a company car, country club membership and enhanced retirement benefits. All forms of compensation must be considered when negotiating a severance package.

No easy answers when it comes to severance

Among the first questions a typical employee will ask after they have been dismissed from their job is, “Am I entitled to severance and how much will I receive?” While these are fair questions, employment law is complex and there are no simple answers or one-size-fits-all solutions. Under Ontario’s Employment Standards Act, minimum severance pay is one week of pay for every year employed up to 26 weeks. If you are working in a federally regulated industry, such as banking, you are only entitled to two days’ pay for every year of service under the Canada Labour Code.

Many factors can come into the equation when determining severance. In Bardal v. Globe & Mail Ltd. the Ontario Supreme Court sets out what is commonly known as the Bardal factors in determining the applicable notice period:

• The character of the employment.
• Length of service.
• Age.
• Availability of similar employment.

These factors can be especially significant in determining the appropriate executive severance package. Executive positions pay more, require a particular set of skills and these jobs can be difficult to find so it only makes sense that severance should be higher.

It is important to remember that you are not entitled to severance pay or even notice of termination if you have been fired for cause. This would be behaviour such as assault, theft or insubordination.

What is a typical executive severance package?

The industry you work in, the size of your company and your job title will have a bearing on your compensation package. Also,th keep in mind that what is included in a severance package will rely heavily on your compensation at the time of dismissal. Generally, you could be compensated for lost salary, bonuses and/or incentive payments, allowances, stock options, profit sharing, restricted share units and long-term incentive plans.  As well, there could be a continuation of RRSP and pension contributions. An executive severance package may also include continuation of health and dental benefits, along with short-term disability and long-term disability insurance coverage.You may also receive payment for unused sick days and vacation days.

In return, you could be expected to return any company property and sign a non-solicitation clause, a confidentiality agreement and release of claims and covenant not to sue the company.

While monetary considerations are always at the forefront of any severance package, you may also want to negotiate for other elements that could assist as you transition to a new job. This can include fees for retraining and outplacement counselling, professional development expenses as well as legal and accounting fees.

Key elements to consider

Your severance package may have been already established in your employment contract when you started with the company. However, many of these contracts fail to meet the rigours of a legal challenge and are unenforceable, which is why it is in your best interest to seek advice from an employment lawyer. Even if you believe that the package you are receiving is fair, you may be entitled to additional compensation under common law.

A lawyer with expertise in executive severance packages can help you find the answers to such questions as:

• Is your compensation package in line with what other employees received in similar circumstances?
• Should you accept a lump-sum amount or spread out the payments?
• If severance is paid in instalments will there be offsets, mitigation or clawbacks?
• Does severance pay include partially or fully accrued but unpaid bonus?
• If the settlement is paid over time, will payments continue upon death or disability?
• If you get a new job does pay continuation end?

Remember, any compensation you receive, even small payments such as cellphone plans or mileage allowance, must be assigned a dollar value to determine the appropriate severance pay. Leave nothing unaccounted for.

We are in your corner

Employment law in Ontario has many intricacies and negotiating a severance agreement can be challenging and onerous. Your employer may attempt to bully you into accepting a subpar offer. Unfortunately, it is not uncommon for people to accept less than what they deserve just to put an unpleasant period of their lives behind them. Don’t fall into that trap.

Being dismissed is stressful but it is important to remain calm so you can help yourself. Take notes during the termination meeting and never sign a severance agreement until you understand the terms. Your employer might try to pressure you to sign a severance offer immediately but you are not legally required to do so.

Take the time to study the exit agreement, research and understand your complete compensation package and get an opinion from a lawyer who understands executive severance and can protect your rights. Accepting an agreement without legal advice can be costly and once you sign, it is too late.

At Walter Law Group, we examine every nuance of your offer. We will evaluate what you have been paid and what you are owed, making sure you get the package you deserve. We negotiate, advocate and litigate expertly in all levels of court. Contact us today to see how we can help you.

As an employment law expert, Michael Walter of Walter Law Group spoke to the Canadian Press about Power Dynamics in the Workplace. Walter spoke about the importance of being careful when discussing personal lives in the workplace. Even if you have a good intention of cultivating a positive work environment, you must exercise caution.

Soon after Mike Babcock joined the Columbus Blue Jackets as their new head coach, he was in the spotlight for allegedly asking some players to show their family photos off their mobile phones. Experts stated that Babcock may have crossed the line with this seemingly harmless request, even if he only wanted to know the players better. His request raised many privacy issues, with some people claiming that the head coach was misusing his position of power.

On the “Spittin’ Chiclets” podcast, Ex-NHL player Paul Bissonnette outlined that an anonymous player informed him that Babcock told the players to share their family photos. The head coach would then stream them on his television. The NHL Players’ Association allocated some executive directors to gather information on the Columbus Blue Jackets’ incidence of invading players’ privacy.

As Walter outlines, a delicate balance exists in conversations between managers and employees. When interacting with employees, employers must ensure that they don’t dig too deep into employees’ personal lives or relationships. Employees should not feel obliged to share personal details if they aren’t comfortable doing so.

In the ever-changing workplace landscape, employers must be careful and sensitive when navigating power dynamics. They must foster a positive work environment and respect employees’ boundaries. Employers must balance their curiosity to understand their employees with respect for employees’ privacy to have a cohesive workplace.

Being terminated from your job can be a traumatic and confusing experience. Technically, your employer can dismiss you at any time and for any reason. Or for no reason. However, just because an employer has the right to make hiring and firing decisions to suit its organizational needs does not mean it can simply ignore the law.

Yes, you can be fired without a reason but you must be given proper notice or pay in lieu of notice. This is known as termination without cause and it can be for cost-cutting measures or for poor work performance. The reason can be random and seem unfair but the employer is within its rights to end your employment as long as the dismissal is not discriminatory.

You can also be terminated for cause, but it must be for serious misconduct, such as theft. Even then, your employer must be able to demonstrate a progression in disciplinary action and prove dismissal was the only option available.

In law, there is also something known as constructive dismissal. This is an attempt to force an employee out of their job by imposing significant changes to the terms or conditions of their employment without their consent.

The law is constantly evolving with new legislation and court rulings that can change the employment landscape. Most people are unlikely to have a clear understanding of the many aspects of employment law.  What constitutes cause, wrongful termination or constructive dismissal can be easily misinterpreted. That is why it is essential to seek expert advice if you have a workplace issue.

Termination with cause vs. termination without cause

In Ontario, employees’ rights are protected by the Employment Standards Act, 2000 (ESA). The Act lays out rules about such issues as minimum wage, hours of work limits, termination of employment, public holidays, pregnancy and parental leave, severance pay and vacation.

The ESA provides that in most cases when an employer ends the employment of an employee who has been continuously employed for three months, the employer must provide the employee with either written notice of termination, termination pay or a combination (as long as the notice and the number of weeks of termination pay together equal the length of notice the employee is entitled to receive). If you have been employed for more than five years and work for an employer with an annual payroll higher than $2.5 million, you are also entitled to severance pay.

If you are a federally regulated worker, such as a bank or airport employee, the Canada Labour Code requires employers to provide a minimum of two weeks’ notice (or more depending on the years of service), in writing, when terminating an employee, plus severance pay.

When you are terminated without cause, you may also be entitled to additional severance for the duration of the common law reasonable notice period.

The difference between being terminated for cause and being terminated without cause comes down to your entitlement to notice or pay in lieu of notice. Essentially, if you have been successfully fired for wilful misconduct, your employer does not have to pay you notice or severance.  Being terminated for cause is serious and applies in cases of intolerable workplace misconduct that can include such misbehaviour as sexual harassment, breach of trust, insubordination, assault or theft.  Your employer has to prove it has grounds for a termination for cause.

Notice is required

Many factors can come into play when someone is dismissed without cause. A company may want to restructure or is dealing with a downturn in business. Unless you are a unionized worker, you can be fired at any time and for any reason in Ontario. Your employer does not have to justify their reason. However that doesn’t mean they are free from certain obligations.

You must be given reasonable notice of the termination that states when your employment will end. This allows you to seek out other opportunities to find alternative employment while still being paid. You could be entitled to pay in lieu of notice, which compensates you if a notice period is not provided by your employers. There can also be a combination of termination notice and termination pay.  If your employer does not provide reasonable notice or pay in lieu of notice, you can file a wrongful dismissal claim.

Notice periods vary depending on your age and years of service. There are basic entitlements laid out in the ESA but many employees will be entitled to more compensation under common law.  Under the ESA,  if you have been working for your employer for less than a year, you are entitled to receive one week termination notice. If you have been working for more than a year but less than three years, the notice period is two weeks.  Thereafter it is one week per year of service to a maximum of eight-weeks’ termination notice.  If you have been employed more than five years and work for an employer with an annual payroll higher than $2.5 million, you are also entitled to severance pay of one week per year of service.  Beyond the basic ESA entitlements, you can also be entitled to additional severance under the common law for a failure to provide reasonable notice of termination.

Know your rights

While the law uses precedent to determine a just outcome, every case is based on its own merits. What, if anything, you are entitled to in terms of notice and severance and can vary depending on the circumstances, which is why it is in your best interests to speak with an experienced employment lawyer who can explain your rights.

There are no absolutes, even if you have been terminated for cause. The first thing you should know is that you do not have to immediately accept the severance package your employer offers in a termination meeting. It may be in the company’s best interest to get your signature quickly but it makes sense to have any offer vetted by a lawyer to ensure it is fair. It is too late to change your mind once you have signed the agreement.

If the package you were offered is not acceptable you have two years from the date of termination to file a wrongful dismissal claim.

It is especially important to contact a lawyer if you have been fired for cause. First of all, being terminated for cause means you may not be eligible for Employment Insurance. It may also limit your job prospects.

Many employers mistakenly believe that firing someone for cause means they are not obligated to pay severance. But the fact is, the bar for establishing a termination for cause is extremely high and the onus to prove it is on the employer.

Termination for cause is typically reserved for serious issues. To justify a termination for cause, the employer must show the employee engaged in wilful misconduct and that the conduct was both serious and wilful.

If the employer fails to make its case the employee is entitled to damages

We have the advice you need

For 30 years, the Walter Law Group has been helping clients successfully negotiate better severance packages than they were first offered by their employers. We carefully examine every detail and watch for such things as a non-competition clause, compensation clawbacks, how the money is structured to be paid, tax implications and more.

We work to ensure your future, helping you to keep the most money in your pocket. Contact us today and let’s get started.