By severance pay ontario
When a company decides to let go of a valued employee it should provide compensation in the form of a severance package. However, many people have misconceptions about what is considered severance pay in Ontario, and how to negotiate an equitable offer.
The Employment Standards Act (ESA) stipulates a minimum statutory severance pay Ontario of one week of salary for every year of employment, up to 26 weeks. This provides an essential foundation for any severance package. However, a good severance package will also take into account common law considerations such as length of employment, age and job market conditions. These factors can increase an employer’s obligation significantly.
Generally, an employer must pay severance to an employee who is terminated without cause. It is a breach of contract if an employer fails to do so and it can result in a claim for breach of contract or wrongful dismissal. However, the ESA does not protect certain groups of workers such as federal employees, individuals employed through a college-approved work program and people who hold political, judicial or religious positions. An experienced employment lawyer will be able to assess whether the ESA’s provisions apply to an individual.
Should I ask for severance pay ontario
A severance package typically includes all forms of compensation owed to an employee upon termination such as wages, vacation pay and benefits. It may also include a lump sum payment for unused sick days and personal emergency leave. It is important to note that a portion of any severance package is taxed, as is all income from any source. Therefore, an individual should try to set aside some of their severance pay to pay any income taxes they may be required to pay.
In some cases, an employer will attempt to reduce their severance pay obligations through the use of a severance clause in an employment contract. However, a well-drafted clause will not be valid if it violates the Employment Standards Act and severance payments must be made in accordance with minimum statutory requirements.
Many employers do not have the expertise to navigate the complexities of Ontario’s employment laws and negotiate a fair severance package on their own. It is best to engage an experienced employment lawyer such as Samfiru Tumarkin LLP to review your situation and employment agreement, ensure that the law is used to your advantage and handle the intricate details of legal documents including a full release and waiver.
It is estimated that a severance package could be worth as much as $200,000, depending on the circumstances of your employment and your unique circumstances. A severance package can be an extremely valuable financial safety net to help you cover your living expenses as you search for new employment. Contact our Toronto-based firm for a consultation today. We serve clients across Ontario and Quebec. We speak French and English. We look forward to hearing from you. Call us or use our online contact form to get in touch.