Severance pay relate to employee rights
Severance pay is an amount of money that a company pays an employee upon being fired, laid off or terminated. Severance packages are often offered by companies in order to soften the impact of the termination and make it easier for a fired employee to find new employment. The size and contents of a severance package can vary widely depending on the industry, type of business and company policy. Many employers will also include other benefits in a severance package, such as continued health insurance coverage, outplacement or career consultation services and the option to keep company equipment like a laptop or cell phone.
While there is no law requiring a company to offer a severance package, it is generally considered good practice and in the best interests of the business. In addition, severance packages can be used as leverage during a layoff or firing to get higher termination compensation from an employer. Severance packages can also be negotiated on a case-by-case basis between an employer and employees or as part of an employee contract or collective agreement.
If an employer has a good reason for terminating you, such as the company going bankrupt or a decision to close your department, then it is likely that a reasonable severance package will be offered. However, if your termination appears to be in retaliation for reporting unlawful conduct, or is because of your status within a protected class – such as age, pregnancy or disability – then you may have substantial leverage to negotiate a more generous severance package.
How does severance pay relate to employee rights?
A Superior Court of Ontario ruling (Nahum v. Honeycomb Hospitality Inc., 2021 ONSC 1455) has determined that pregnancy should be considered a factor when determining the amount of notice (severance pay) an employee is entitled to upon termination. The court found that a 28-year old woman who had been working as the Director of People and Culture at a hospitality and entertainment company for 4.5 months was entitled to five months of severance pay calculator because she was pregnant and would likely have difficulty finding new employment.
In addition to severance pay for pregnancy termination in British Columbia, some employers may also provide benefits such as vacation and sick leave credits, stock options or other perks. Severance payments are normally taxed in the year they are received, although some employees choose to have their severance payments deposited into an RRSP or RPP and then have taxes deducted when they withdraw the funds.
As you consider whether to accept a severance package, it’s important that you speak with an attorney before signing. They can help you understand the terms of the severance agreement and ensure that any waiver of rights is fair and reasonable and in compliance with the law. It’s also important that you understand what you are giving up by signing a severance agreement, including any legal claims you may have against the company. If you believe your termination is discriminatory or unfair, and the severance agreement does not adequately reflect this, you can always refuse it and fight for a judgment in court.
