A woman recently called me after losing her job.
She was upset because her former employer was refusing to pay her for several days of unused vacation that she had accumulated from the previous year.
The company’s position was simple: you didn’t use the vacation, so you lost it.
That caught my attention because vacation time and vacation pay are not necessarily the same thing. An employee may lose the ability to carry unused vacation time forward in certain circumstances but earned vacation pay does not simply disappear because the employment relationship ends.
So yes, the vacation pay was something worth addressing.
But then I asked her another question.
“How long did you work there, how old are you and what severance did they offer you?”
That changed the entire conversation.
She thought six weeks of severance was reasonable
She was 52 years old, had worked for the company for about four-and-a-half years and held a technical position.
Her employer had offered her six weeks’ pay when it let her go.
She thought that sounded fair.
After all, it was more than one week per year of service.
In fact, she was preparing to sign the severance offer that very day.
Not so fast.
READ MORE: Do you lose severance if you don’t sign by your company’s deadline? Lawyer explains why not
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Based on the circumstances she described to me, she could be entitled to around six months of severance — not six weeks.
Suddenly, the few days of unpaid vacation were no longer the biggest financial issue.
The vacation pay might have been worth a few hundred dollars.
The difference between six weeks and potentially six months of severance pay could be worth tens of thousands of dollars.
Employees often focus on the wrong problem after losing a job
I see this all the time.
Someone loses their job and calls me because:
- Their employer did not pay out a few vacation days
- Their Record of Employment was late
- An expense was not reimbursed
- Their final paycheque appears to be missing something
Those issues may absolutely need to be addressed.
But sometimes they distract employees from a much bigger question: Did your employer actually offer you the severance you are legally owed?
Many people assume that severance is calculated using a simple formula such as one week per year of service.
That is one of the most common misconceptions in employment law.
READ MORE: The most common myths about severance pay, according to an employment lawyer
Minimum employment standards may provide one level of entitlement, but many non-unionized employees can be owed significantly more under common law after a termination without cause.
Factors such as your age, length of service, position and the availability of similar employment can all affect how much severance you are entitled to receive.
Depending on those circumstances, severance can reach as much as 24 months’ pay.
Never assume the severance offer is correct
The woman who called me was doing exactly what many employees do.
She had looked at the severance offer, decided it seemed reasonable and moved on to the issue that appeared obviously wrong: her vacation pay.
Had she signed the offer, she could have given up a claim worth many thousands of dollars.
READ MORE: Fired after returning from a vacation? 4 things employees in Ontario need to do.
That is why I tell employees the same thing whenever they lose their job: Do not sign a severance offer until you know what you are actually owed.
Your employer prepared the package. That does not mean the amount in it represents your full legal entitlement.
And a deadline written into the severance letter does not mean you should rush into signing away your rights.
Focus on the biggest financial issue first
If you have recently been let go, by all means check your vacation pay, expenses and other amounts on your final paycheque.
But do not miss the forest for the trees.
For many terminated employees, severance is by far the largest amount of money at stake.
A few unpaid vacation days matter.
Being shortchanged by several months of severance matters a lot more.
Before you sign anything after losing your job, have your severance reviewed by an employment lawyer at Samfiru Tumarkin LLP.
You may discover, just as this woman did, that the problem you called about is not actually the biggest problem at all.
