Wrongful Dismissal and Severance Package Reviews

FAQS

• WHAT IS SEVERANCE PAY?
  The term “severance pay” refers to compensation that is paid to a qualified employee who has their employment "severed." It compensates an employee for losses that occur when a long-term employee loses their job. Severance pay is not the same as termination pay, which is given in place of the required notice of termination of employment. If you have questions in relation to a severance package, and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• What is the difference between severance pay and termination pay?
  Termination pay is compensation paid in place of the written notice of termination an employer is required to provide. Under Ontario's Employment Standards Act, termination pay can amount to up to eight weeks. Severance pay is a separate entitlement paid to qualifying long-service employees to compensate for the loss of a long-term job, and can amount to up to 26 weeks. Depending on your circumstances, you may be entitled to both. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• What is a severance package?
  The term “severance package” refers to the severance pay that employers offer employees when their employment is terminated without cause. A severance package is intended to help employees in the period between jobs to ease the transition and alleviate stress. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• Am I eligible for severance pay?
  You are eligible for severance pay if your employment is severed and:

  • you have worked for the employer for five or more years (including all your time spent in employment with the employer, whether continuous or not and whether active or not) and
  • your employer:
    • has a global payroll of at least $2.5 million; or
    • severed the employment of 50 or more employees in a six-month period because all or part of the business permanently closed.

  If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• What amount of severance pay am I eligible for?
  To calculate the amount of severance pay you are eligible for, multiply your regular wages for a regular work week by the sum of:

  • the number of completed years of employment;

  and

  • the number of completed months of employment divided by 12 for a year that is not completed.

  The maximum amount of severance pay required to be paid under legislation is 26 weeks. If you were terminated from your employment and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• What is common law severance (reasonable notice)?
  In addition to the minimum entitlements set out in the Employment Standards Act, employees dismissed without cause may be entitled to common law reasonable notice, or pay in lieu of that notice, which is often significantly greater than the statutory minimum. Courts determine the amount by weighing factors such as your age, your length of service, the nature of your position, and how difficult it may be to find comparable work. A written employment contract may limit this entitlement, so it should be reviewed carefully. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• Am I entitled to severance if I resign or quit?
  Generally, employees who voluntarily resign are not entitled to severance pay. An important exception is constructive dismissal, where an employer makes a significant unilateral change to the fundamental terms of your employment and you are effectively forced to leave. In those circumstances, you may still be entitled to severance, so it is worth having your situation reviewed before treating a departure as a simple resignation. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• Can I still receive severance if I was terminated for cause?
  If an employer establishes just cause for termination, typically serious misconduct, you may not be entitled to termination or severance pay. However, the threshold for proving just cause is high, and terminations labelled "for cause" are frequently found to be unjustified. Before accepting that you are owed nothing, it is worth having the circumstances of your dismissal reviewed. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• What is an employee severance agreement?
  Before your employer gives you your severance package, you typically must sign an agreement that specifies the terms of your termination and how you will receive your severance pay. Generally, you may be able to choose how you receive your severance pay, which can include choosing from a lump-sum payment, a salary continuance, or a deferred payment. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• Can I negotiate my severance package?
  Yes. Initial severance offers are often lower than what an employee may actually be entitled to, particularly once common law reasonable notice is taken into account. The terms, including the amount, the continuation of benefits, and other conditions, can frequently be negotiated. Obtaining legal advice before responding to an offer can help you understand your entitlements and strengthen your position. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• How long do I have to accept a severance offer?
  Employers often set a deadline for accepting a severance offer, but you should not feel pressured to sign before you fully understand what you are agreeing to. Reviewing the offer with an employment lawyer before the deadline can help ensure you are not giving up entitlements you are owed. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• Is severance pay taxable?
  Severance pay is generally treated as taxable income in Canada. The tax treatment can differ depending on how the payment is structured, for example as a lump sum, a salary continuance, or a transfer to a registered retirement savings plan where you are eligible. A lawyer, together with a tax or financial advisor, can help you consider the most tax-efficient way to receive your severance. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.
• Should you speak to a lawyer before signing your employee severance agreement?
  Yes. Reviewing an employee severance agreement is a complex matter. A knowledgeable lawyer who specializes in employment law can help you determine what you are getting and what you are giving up—and, if needed, help you negotiate for better terms in the agreement. If you were terminated and are seeking legal advice with respect to your entitlements, please contact Toronto employment lawyers, Sultan Lawyers at 416-214-5111 or via email to mlahert@sultanlawyers.com.