The involuntary loss of a job is a disruptive life event, which can be personally crushing and often has far-reaching traumatic consequences for employees. Research into the psychology of job loss also suggests that termination and displacement is associated with immediate financial loss, declines in psychological and physical well-being; loss of psychosocial resources; loss of self-esteem, social withdrawal; family disruption; and overall lower levels of well-being. Remember – when an employee loses a job, not only is your income gone, but also your personal work relationships, daily routine, and for many people, an important sense of self-purpose and self-identity.
It’s even more crushing to employees who are terminated and not treated fairly and not paid reasonable enough severance pay – which should be calculated based on a variety of factors. When employees are not fairly treated financially on exit, then that employee is entitled to claim damages for wrongful dismissal.
When an employee is terminated, he or she is entitled to notice of his or her termination. The notice that one is to be terminated, needs to be reasonable. The purpose of providing reasonable notice is to allow an employee of period of time in which to secure alternative employment.
There can be variables affecting the length of an employee’s notice and the amount of severance pay owed – such as:
The employer has an implied common-law obligation to give an employee reasonable notice of its intention to terminate the employment relationship and if reasonable notice is not given, based on objective factors, then the employee is entitled to bring a wrongful dismissal lawsuit for the breach of common-law obligation.
Reasonable notice of termination, or the employer’s obligation to provide the employee with reasonable notice of termination does not apply when:
Typically there are two notice periods to consider. The first is statutory notice. The Canada Labour code and provincial employment standards legislation provides notice periods for the termination of employees based on length of service. In Ontario, the employment standards act provides the minimum notice for termination as follows:
In addition to statutory notice of termination, or statutory termination pay, you are also entitled to what the courts would determine is reasonable notice. In every non-unionized employment relationship, the employer has an implied duty outlaw to provide employees reasonable notice of its intention to terminate the employment relationship. In other words, not only are you entitled to minimum notice under the Canada Labour code or the Employment Standards Act, you are also entitled to an “increased” amount of notice of termination, or pay in lieu of. Again, if the employer fails to provide reasonable notice of termination, the employee can bring a wrongful dismissal lawsuit for breach of that implied term.
Once the period of notice is determined, an employer is obligated to calculate the employee’s damages based upon the reasonable notice period. Reasonable notice damages are usually calculated on the basis of the employee’s compensation per month, multiplied by the number of months of reasonable notice.
Determining the right amount of notice to pay you is an art rather than a science. It is done on a case by case basis.
In addition to the points above, courts typically start the assessment of what is reasonable notice by referring to the seminal case of Bardal vs Globe and Mail. Bardal lists the most important factors to be considered in assessing the common law reasonable notice period. These factors are weighed and balanced by the courts in their analysis. No single Bardal factor is to be given disproportionate weight. In that case, reasonable notice was decided with reference to the following key factors which judges call “the Bardal factors” – which are the following key factors:
The character of your employment – in considering the character of your employment, the courts are more concerned with the responsibilities, skills and character of the work performed rather than the minutia of the employee’s job duties or the employee’s job title. Appeal Courts have considered the character of employment factor as one of “declining” importance or significance in the reasonable notice assessment. The character of employment factor is relevant to the reasonable notice analysis, but it is not to be given disproportionate weight.
Your length of service – long term employees are typically entitled to longer notice periods than short term employees of the same age, with the same skills and responsibilities. Normally, the length of an employee’s service is easy to determine: it is the period between hiring and termination. However, this determination becomes more difficult if there has been a break in the employee’s tenure of service or there has been a sale of the business.
Your age – older employees are generally entitled to longer reasonable notice than younger employees, based on the rationale that it will take an older employee longer to find new employment. The court will take judicial notice that “Barring specific skills, it is generally known that persons over 45 have more difficulty finding work than others. They do not have the flexibility of the young, a disadvantage often accentuated by the fact that the latter are frequently more recently trained in the more modern skills”. (McKinney v. University of Guelph, 1990 CarswellOnt 1019 (S.C.C.) at paragraph 92. See also Ansari v. British Columbia Hydro & Power Authority, 1986 CarswellBC 86 (B.C. S.C.) at paragraph 27, affirmed (1986), 55 B.C.L.R. (2d) xxxiii (note) (B.C. C.A.).
Age should not be given disproportionate weight in the Bardal analysis. For example, it is improper for the court to set reasonable notice as the time-period needed to bridge an older employee to the date he would be entitled to a full pension.
The availability of similar employment, having regard to your experience, training and qualifications – a court may increase the amount of reasonable notice where there is limited similar employment available in the job market, having regard to the experience, training and qualifications of the employee. On the other hand, where similar employment is widely available, less notice may be awarded.
In considering the availability of similar employment, a Court mat determine that finding a job is harder if the employee is older or in poor health, the employment is a very specialized the employment is very unusual, the employer’s actions at the time of termination negatively affected the employee’s chances of finding another job or securing a similar position.
Reasonable notice of termination is usually expressed as a number of months. Typically, an employer will determine how much reasonable notice they believe is owed to the employee. Once the appropriate amount of settlement has been determined, it is important to consider whether it should be provided in the form of working notice, salary continuation or severance pay.
For example if your employer determines that you are owed reasonable notice of termination of eight months, then your employer could:
Provide you with working notice – meaning you will continue to work for the full eight months, and continue to be paid your regular salary. At the end of eight months, your employment relationship ends. The employer will typically encourage the employee to use this time to seek alternative employment. During your working notice period the employee should have reasonable time off for attending employment interviews or for other job search purposes. Also it’s important to note, that during the working notice period, the employer is obligated to provide the employee work.
Provide you with salary continuance – which is where an employer ends an employee’s employment, but continues to pay to the employee that employee’s regular salary and benefits during the notice period. Salary continuances often contain a “balloon” or “clawback” clause, which provides that if an employee finds a new job, salary continuance payments will end, and the employee will receive an incentive bonus payment. The purpose of these clauses is to encourage the employee to find a new job. The benefit to an employer in providing such a clause is that any damages the employee may suffer as a result of the ending of employment are mitigated. If salary continuation is elected as the severance arrangement, deductions for both employment insurance premiums and Canada Pension Plan contributions must be continued. A record of employment is not issued for employment insurance purposes until the cessation of salary payments. However, such salary payments are not eligible for tax sheltering in an RRSP.
Typically, our Courts will look at the conditions attached to the salary continuance, and whether the salary continuance is for a period “reasonably equivalent to a lump sum award in lieu of notice”, in deciding the appropriateness of salary continuance.
Salary continuance is by far the most utilized method of notice of termination.
Provide you with a lump sum payment in lieu of notice – payment of lump sums are less common than salary continuance due to higher expense required at the time of termination by the employer. It’s not uncommon for a lump sum to be offered unconditionally, but at a lower amount then offered by way of salary continuance. When termination pay is provided in a lump sum, it can be difficult for employees to continue to be a part of the benefit package for the entire reasonable notice. The lump sum payment is subject to statutory deductions. After the lump sum is paid, a record of employment is issued for the employment insurance process however the amount of notice paid by the employer must be disclosed to service Canada. Normally the ROE will be sent electronically to service Canada and will be available to the employee via My Service Account within two weeks of the employee’s final pay. Typically, with lump sum payments, and employs less contribution to his or her pension will be made to his or her pension plan on the last pay. Normally when an employee is terminated without cause or proper notice, his or her entitlement to compensation includes loss of any pension rights that would have accrued during the notice period.
Having a job is often an essential part of a person’s development and identity. Being terminated, on the contrary, is one of the most devastating and frustrating experiences of life that often come with negative psychological consequences and physiological disregulation.
What makes job loss worse, is when an employer terminates an employee without providing proper notice and of termination to the employee. If you have been terminated, it’s important that you speak to a Hamilton employment lawyer to determine whether or not you have been paid enough payment in lieu of notice or termination pay
An employee’s claim for damages is not limited to the wages or salary which he or she would have received had proper notice been given. The dismissal, if wrongful, is a breach of contract, and all damages flowing from such breach of contract are recoverable. In addition to the loss of the salary which the employee would have earned during a period of notice, there is a wide range of benefits accompanying employment for whose loss an employee may be compensated by way of damages
If you have been terminated it’s important that you do not sign anything. Call our Hamilton employment lawyers at 905-333-8888 to have your severance package reviewed today. We represent employees all over Southern Ontario. You can also fill in a contact form or chat with our live chat operator who would be happy to help set up an appointment.
We’re here to help. Contact us confidentially at (289) 203-5991 or by filling in a contact form today.
If you've been terminated we can help ensure that you are paid the appropriate amount of severance that is owed to you.
Our Hamilton Employment Lawyers are able to help employers of all sizes - from small businesses to large corporations.
If you feel that you have been unfairly or wrongfully terminated, it’s vital that you act quickly to seek legal advice. Call us today.