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Severance Pay: Reasonable Notice and Minimum Statutory Notice

Whitten and Lublin | Feb 27, 2018

Minimum Entitlement Under Law

The amount of severance pay an employee is owed when dismissed without misconduct varies between common law (judge-made law) and employment law. Employment legislation provides about a week of notice or payment in lieu equivalent to earnings for each year of service for a maximum of 8 weeks of notice/pay. These are minimal entitlements under the law. However, employees should not be satisfied with employment law notice as employees are often entitled to more under common law.

Common Law Entitlement

Common law provides above-minimal entitlements, which employees are entitled to receive. The common law considers factors such as age, skill level, job function, labour market conditions, a so forth, with the goal of providing enough notice or pay in lieu for the employee to find comparable employment. Generally, this can amount to 2 weeks per year of employment. Unlike statutory minimum notice, the courts will award much more than 8 weeks if warranted by the circumstances, with over 24 months worth of pay in damages possible. Even if notice is limited to the employment contract, the wording must be precise in complying with employment law or it will be unenforceable.

No “Stacking” of Entitlements

If an employee does challenge an employer that only provided the legal minimum, the courts will deduct that amount from the awarded damages as established in the case Stevens v. Globe and Mail (OCA 1996). In other words, the notice periods under the law and at common law will not be “stacked”. This may not be a factor in the decision making for senior employees with many years of service. However, for employees with only a few years of service and an easy time finding comparable employment, the difference may not be enticing enough to litigate.

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