How do I calculate severance pay owing?
Q: How do I calculate severance pay owing?
A: Calculating how much notice or severance pay a worker is entitled to can be straightforward, particularly if the facts relating to the termination or dismissal are simple.
Let’s assume it’s a lawful termination and not the result of serious misconduct on the part of the worker or bad faith action on the part of the employer. In other words, it’s a “without cause” termination.
Second, let’s assume it’s a non-union job since, without cause; terminations are unfortunately more common outside of the union context.
To calculate severance in a simple example like this, the first task is usually to consider the validity of termination provisions in an employment contract, if applicable.
(Note: there many ways in which termination provisions may be invalid — you should get an employment lawyer to check.)
In most cases, the Employment Standards Act amounts are minimum entitlements only. Judge-made common law termination entitlements are often far more generous. Under court law, several standard factors will greatly influence the calculation of severance including but not limited to:
- the amount of working notice given, if any
- the length of service
- the nature of the position and compensation
- the level of responsibility
- the age of the worker
- the availability of similar work in the marketplace
Having said that, other factors that significantly affect a worker’s likelihood of finding a similar job elsewhere will be quite influential as well (for instance: a disability, pregnancy, education barriers, or caregiver responsibilities — or something else that makes it harder to find similar work elsewhere).
In essence, the longer a worker’s length of service, the more unique their job is, and the harder it is for them to find a similar job elsewhere in their own circumstance, the more notice or pay in lieu of notice (i.e. severance) they will be entitled to.
If you are dealing with a termination, please consider getting advice from a lawyer who specializes in employment before you sign any severance offer.
This article was originally published by The Hamilton Spectator.
