Severance Pay & Pack

What is severance pay?

Severance pay, or Severance Package, 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. A severance package should be about obtaining what you deserve.

Your Labour and Employment Lawyers for Severance Pay 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. 

At OLS Quebec, we understand that the end of employment can be a difficult and stressful time. That’s why we specialize in labor law and are committed to helping you understand your rights when it comes to severance pay.

Different Types of Severance Pay

There are several types of severance pay, each with its own characteristics and conditions. Among the most common are bonuses related to severance pay, notice of departure and associated compensation, and compensation for unused paid leave.

Bonuses Related to Severance Pay

Severance pay bonuses can take different forms, depending on the nature of your job and the conditions of your contract. They may include performance bonuses, year-end bonuses, or loyalty bonuses, among others.

Notice of Departure and Associated Compensation

The notice of departure is a period during which the employer informs the employee of the end of their contract. The rules for calculating the notice of departure vary depending on the length of employment and the type of contract. Compensation associated with the notice of departure is generally equivalent to the salary the employee would have received during this period.

Unused Paid Leave and Severance Pay

If you have unused paid leave at the end of your contract, you are entitled to compensation equivalent to the remuneration you would have received if you had taken these leaves.

How to Calculate the Amount of Your Severance Pay

The calculation of severance pay depends on several criteria, including the length of your employment, your salary, your age, and the conditions of your contract. At OLS Quebec, we can help you understand these criteria and calculate the amount you are entitled to.

Conditions to Benefit from Severance Pay

There are several cases where severance pay can be refused. For example, in the case of resignation, the conditions to benefit from severance pay are generally stricter. It is important to consult a labor law attorney to understand your rights and obligations.

Tax and Social Impacts of Severance Pay

Severance pay is generally subject to tax. However, there are exceptions and strategies to minimize the tax impact of these payments. In addition, severance pay can have impacts on your social rights, such as your right to unemployment insurance or retirement.

Severance Pay in Case of Dismissal for Personal Reasons

In case of dismissal for personal reasons, you are generally entitled to severance pay. However, the amount of this compensation can vary depending on the circumstances of your dismissal.

Severance Pay in Case of Collective Dismissal

In the case of collective dismissal, employees are generally entitled to a larger severance pay. However, the conditions and the amount of this compensation can vary depending on several factors, including the size of the company and the number of employees dismissed.

At OLS Quebec, we are here to help you navigate these complex situations and defend your rights. Don’t hesitate to contact us for personalized advice and quality legal assistance.