Can My Former Employer Refuse to Pay Severance?

SCENARIO

I was laid off after 14 years with the same company. It was a termination without cause, and I was given no advance notice. I was offered a severance package consisting of 16 weeks’ pay. I felt that I was owed more than that, especially since I never signed an employment agreement. Because of this, I wasn’t tied down by a termination clause. When I asked the company to increase the severance offer, they said they would think about it. Ultimately, they refused and then pulled the original offer off the table. Can they do that?

RESPONSE

If you are terminated without cause, under no circumstances can your employer refuse to pay the minimum amount of severance pay you are owed under provincial laws. They are also unable to negotiate those minimum entitlements, or withhold that severance pay until you accept a severance offer. The company may also face a wrongful dismissal claim if they ignore their severance obligations under common law.

When it comes to severance, employers will often offer an employee what they think they will accept, not what they are truly owed by law. Employers may attempt to convince a terminated employee that the offer is fair, and pressure them to accept the offer within a short time frame (often a week), with the threat of revoking the offer completely. You should always request an extension to have the termination offer reviewed by an employment lawyer. Severance offer deadlines are often arbitrary and serve as a pressure tactic.

Employment Lawyer Lior Samfiru discusses key facts about severance pay deadlines on season 3 episode 30 of the Employment Law Show in Ontario, Alberta and BC.

Employers can’t refuse minimum severance

When an employee is terminated without cause (fired for nearly any non-discriminatory reason) in Ontario, Alberta or BC, they are entitled to a minimum amount of severance pay guaranteed by that province’s employment legislation. This statutory severance amount is based on the employee’s time spent working for the company.

For more information on what your provincial rights to severance pay are, read our resources about severance pay in Ontario and severance packages in BC.

Full severance pay under common law

Although provincial employment law provides an employee with statutory minimum severance pay, oftentimes employees are entitled to more generous termination packages under common law. This fact is either intentionally ignored or innocently overlooked by companies of all sizes.

The total amount of severance owed to an employee is based on numerous factors, including:

• Age;
• Length of Service;
• Position or salary; and
• Ability to find a similar job elsewhere.

An employee experiences a wrongful dismissal if an employer refuses to provide the proper amount of severance pay based on the above factors. When this occurs, the individual may be in line to receive additional compensation from their employer, called damages, on top of their severance package.

WATCH MORE
• Employment Law Show: Severance pay rights
• Employment Law Show: Severance pay rules for different jobs

The role of an employment contract

Some employers ask their workers to sign an employment contract when they start their job, or at various points during their working relationship. While these contracts contain basic information about a person’s job, they may also contain a termination clause that seeks to limit the amount of severance owing when that person is laid off, let go or fired.

If an employee did not sign an employment agreement with a termination clause, they can claim full common law severance. This also applies if you signed an employment agreement with an unenforceable termination clause, which is the case with many contracts.

Even if you signed an employment agreement with a termination clause, it is very important to have the employment agreement reviewed as it is likely unenforceable in the eyes of the court. An employment lawyer at Samfiru Tumarkin LLP can help you determine if the contract is valid. Our experienced team is the most positively-reviewed employment law firm in Canada, and has secured proper compensation for countless clients.