Myths and misconceptions about how to calculate severance pay in Ontario continue to be pervasive, especially during the COVID-19 pandemic.
As both a leading employment lawyer and host of Canada’s only Employment Law Show on TV and radio, I speak to countless people who hold various incorrect theories about what a fair severance package should look like. Some suggest that two weeks’ pay is an appropriate standard, while others believe that a mere one week’s pay per year of service is the most anyone can receive.
In reality, a true severance package takes into account both provincially mandated minimums and, more importantly, full severance pay as determined by common law standards.
Here are the key common law standards used to calculate severance pay in Ontario.
Length of employment
Many people believe that only those employees who have spent many years with a company are owed a significant severance package. This is not true.
In many cases, an employee with very little service time under their belt can expect to receive comparably higher severance amounts than their long-serving colleagues.
For example, an employee who is 60 years old with 30 years of service would be entitled to as much as 24 months’ severance. That same employee with only two years of service would be entitled to as much as eight months’ severance pay.
Older employees are generally entitled to larger severance packages. This accounts for the increased difficulties that older workers face when looking for a new job.
Some employers may try to avoid making a large severance payout to older employees by forcing them to resign or retire. Attempting to force a resignation, however, can be interpreted as a termination with severance, and the employee could potentially be entitled to human rights damages as well.
Job or position
In the past, senior employees or employees with specialized skills have been given more severance. While that is still true in many cases, standards have begun to change in recent years due to precedent-setting decisions rendered by our courts on various legal cases.
More and more, severance pay is being increased based on the difficulty an individual has in replacing employment, and not only on the position they held with their former employer.
As COVID-19 continues to disrupt lives and livelihoods, it is more important than ever to have our employment law team assess exactly what you are owed when dismissed.
Availability of employment
In today’s competitive employment market, it’s taking longer for people to find new work after being fired. This is one of the most important factors in determining the amount of severance pay owed and applies to individuals of all ages, both short- and long-serving employees.
An employee working in a declining industry, such as manufacturing, will not be able to replace their position as quickly as someone in a different field. Given that severance pay exists to compensate you for the time between jobs, the availability of employment is a crucial factor that an employer must consider when determining what you are owed.
Other factors that determine severance pay
The employment lawyers at Samfiru Tumarkin LLP will comb through additional factors to pinpoint the amount of severance you should receive. These factors include:
- Any termination, non-compete or non-solicitation clause in an employment contract
- Whether you have been fired for cause, which may impact your ability to secure new work
- Whether you were recruited from another job
- Whether you are pregnant, ill or experiencing a medical condition
- Any unpaid overtime you may be owed or bonuses you regularly earn
Before you accept any severance offer from your employer, use the Ontario Severance Pay Calculator or contact an employment lawyer at Samfiru Tumarkin LLP to ensure that the above criteria have been met. My team has successfully fought for and secured full common law compensation for tens of thousands of Ontarians.
Have you been let go from your job? Are you trying to properly calculate the amount of severance pay owed to you?
Contact the firm or call 1-855-821-5900 to secure assistance from an employment lawyer in Ontario or British Columbia. Get the advice you need — and the compensation you deserve.
Lior Samfiru is an employment lawyer and partner at Samfiru Tumarkin LLP, one of Canada’s leading law firms specializing in employment law and disability claims. He provides free advice as the host of Canada’s only Employment Law Show on TV and radio.