Severance Pay

What is severance pay?

Severance pay is financial compensation for termination of employment. If you have been dismissed or forced out of employment, you may be entitled to a severance pay package. A severance package should not be about the executive or manager getting revenge; it should be about obtaining what they deserve.

 Severance pay is often offered by the employer. Before accepting a severance pay package you should always consult an expert labour lawyer to make sure the offer is fair. Sometimes, the best advice an experienced employment lawyer can give is to accept the employer’s offer. If the offer is fair, accepting saves you time and money on a useless endeavour. However, in many cases, the offer is not a fair one.

 A lot of factors affect whether an offer is good. Some of these factors have legal relevance, others mainly practical relevance, but they all add up to determine circumstances. These factors can include (but are not limited to):

  • Age
  • Years of service
  • Salary
  • Benefits
  • Position held
  • Ease of replacing position (for you)
  • Time of year when termination occurred
  • Circumstances of the dismissal
  • Organizational culture of the company
  • Economic circumstances
  • Whether there is reputational damage

 In order to receive fair compensation, you need to give your expert labour lawyer every possible chance to either help you or tell you there is nothing more to be done. To do that there are a few do’s and don’ts.

Your Expert Labour and Employment Lawyers in Montreal, Laval and West Island

To do :

  • Consult legal counsel ASAP (immediately upon termination or before, if possible)
  • Immediately send your lawyer the dismissal letter and the termination agreement your employer is asking you to sign
  • Put together a brief summary of what you were earning and how it is broken down (base, bonuses/STIP, RSUs/PSUs/Stock options/LTIPs, benefits, car allowance, RRSPs, other perks or advantages, etc…)
  • Put together your T4’s and RIs for the last two fiscal years
  • Send your executive dismissal lawyer any employment contracts you have in your possession
  • Send a brief summary of any important events related to your termination of employment

Not to do:

  • Sign anything before consulting legal counsel
  • Delay in consulting a lawyer (especially after you’ve been dismissed)
  • Discuss the situation with anyone currently employed by your employer
  • Discuss your situation with anyone in HR
  • Request any documents from your employer if you are unable to find them yourself
  • Attempt to handle the situation yourself

Negotiating fair severance packages

Severance pay disputes often begin with negotiations but may continue on to litigation. In spite of how negotiations are often portrayed in legal dramas, it is worthwhile to invest substantial efforts in negotiating because, when properly done, it frequently prevents the need to invest substantial time, stress, and expense in litigation for an uncertain result.

 Like most systems, the legal system is not a perfect system. The perfect case is still subject to circumstances and judgements, which can sometimes go against precedence and the spirit of legislation. It is for this reason that litigation is inherently chancy and, where possible, an expert labour lawyer can negotiate a guaranteed satisfactory result. This saves time and money and, more importantly: the amount of severance pay and terms an executive and employer agree to in negotiations can’t be overturned on an appeal. 

Severance package negotiations are highly strategic. Employers frequently have years of experience across several dozens of cases (if not more) where they have negotiated them. Bringing in a respected employment lawyer right from the start will generally force the employer to act more fairly and set the tone for fair and productive negotiations. A trusted and experienced employment lawyer can help ensure that the employer pays what the executive deserves and that the terms and conditions are also fair. 

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