In my experience as an employment lawyer, the biggest misconception in Canadian employment law is how much severance pay someone should get when they are fired.
This misconception is writ large in cases where the employee who has been let go has only been with the employer for a short period of time.
Both employers and employees alike tend to assume that a short period of employment means a commensurately small severance. This assumption makes sense when you consider the other big misconception in employment law: that severance is only given to employees as a reward for their service.
Severance is not a reward. Rather, the purpose of severance is to financially support a terminated employee while they search for replacement employment. That is why the period of unemployment that is anticipated after an employee loses their job is a key factor when calculating the severance that employee is entitled to.
Here’s what to know about how severance works for short-service employees — and how much they may be owed.
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How does severance work for a short-service worker?
In many cases, an employee’s length of service is the initial yardstick by which courts will (and employers should) measure severance entitlements. Someone who was employed for six years may presume to be entitled to severance in the six months’ salary range, and potentially more or less based on other factors such as any enforceable contractual entitlements, their age and the job market.
With short-service employees — or employees who have been employed for less than three years — this metric does not apply. Courts across the country have acknowledged the reality that employees with short periods of service on their resumes often have more difficulty finding another job.
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Prospective employers may see short periods of employment as an indication that someone is either difficult to work with or a flight risk. That’s why our courts start with the assumption that short-service employees will have a more difficult time securing alternate employment and, as a result, are entitled to more severance.
How much compensation should someone get after a few years of service?
The floor of an individual’s severance entitlements is generally within the one to three months’ salary range.
This amount of compensation increases if the employee was in a senior management position, and if they can show that the job market is particularly difficult or that they were induced from a previous position. For older people with substantial years of service under their belt, their full severance package can be as much as 24 months’ pay.
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As an employment lawyer at Samfiru Tumarkin LLP, I recently represented a 40-year-old sales representative who was only employed for six months — and was awarded six months of severance.
Other legal decisions that demonstrate increased compensation for short-service employees include a senior manager being awarded eight months of severance after two years of employment and a worker who received three months of severance after only three weeks of employment.
Courts usually rely on underlying assumptions, such as the fact that older employees face age discrimination in hiring practices, senior managerial positions are fewer and further between and that short-service employees fight against the perception that they are not long-term investments.
While these are examples of severance packages obtained through court decisions over the past few years, though, the majority of negotiations between employees and their former employers happen outside of a courtroom and can typically be resolved before legal action is necessary.
Have you been let go from your job after only a few months? Not sure if you’re owed severance pay?
Contact the firm or call 1-855-821-5900 to secure assistance from an employment lawyer in Ontario, British Columbia or Alberta. Get the advice you need — and the compensation you deserve.
Lia Moody is an employment lawyer and partner at Samfiru Tumarkin LLP, Canada’s most positively reviewed law firm specializing in employment law and long-term disability claims. The firm provides free advice through Canada’s only Employment Law Show on TV and radio.