Employer Doesn’t Offer Severance Pay
Losing a job can be one of the most devastating things that can happen to a person. Whether it was something that you saw coming or were abruptly fired, losing your employment can leave you feeling completely lost and vulnerable. You must find a new job, figure out how to pay your bills and even deal with the ramifications of your termination. However, in many cases, your employer must also provide you with a severance package. In Ontario, employers must follow the minimum rules set out in the Employment Standards Act (ESA). If your employer does not offer you a fair severance package, there are certain steps you can take to resolve this issue.
The severance package that is provided by an employer to an employee who is terminated from their employment can include wages, bonuses, commissions, car allowances, vacation days and other forms of compensation. Severance packages are typically paid out either seven days following your severance or on what would have been your next regular payday, whichever is later. Severance packages may be provided in a lump sum or in installments, depending on your contract.
When you receive everance pay Ontario, you must pay income tax on it. The amount of income tax that you must pay will depend on the province in which you live and how much your employer pays you in severance. It is also important to remember that your employer will not deduct Canada Pension Plan (CPP) contributions, Quebec Pension Plan (QPP) contributions or Employment Insurance premiums from severance pay.
What Happens If an Employer Doesn’t Offer Severance Pay?
Your employer can attempt to limit the amount of severance pay that they must give you by including a termination clause in your employment contract. While these clauses can be effective, they must be drafted correctly to be enforceable. Many employment lawyers spend a great deal of time reviewing and discussing the wording of termination clauses and their validity.
In some instances, an employer might not be able to use termination clauses to restrict the amount of severance pay they must offer employees in accordance with the ESA. In these cases, the court may award you common law severance pay.
While the ESA sets the minimum requirements that you must receive when your employer lays you off, you can still negotiate with them to exceed these minimums. The criteria for determining an equitable severance pay offer draw from both common law and the ESA.
If your employer fails to meet these standards, they are obligated to pay you termination pay in addition to the severance pay that you are otherwise entitled to under the ESA. Additionally, you can sue them for additional severance pay in the event of a breach of contract. In the case of a breach of contract, you may be able to claim liquidated damages, which are calculated by multiplying your severance pay by the number of weeks that you have worked for the company. This is an important part of your legal protection in the event that you are laid off or fired without cause.
