Executive and C-suite severance pay

Severance pay is meant to assist employees in bridging the gap in employment from one job to the next. For C-suite employees, such as executive-level managers within a company like a CEO or CFO, their severance package should include all forms of compensation and further benefits of employment they had been receiving at the time their employment was terminated.

Severance packages for executives and senior-level employees can be complex given all of the factors that must be considered for compensation.

What is included in a severance package for an executive?

For example, a typical severance package for a director-level employee can include but is not limited to, basic components such as:

• Salary
• Bonuses or incentive payments
• Stock options
• Profit-sharing
• Employee discounts
• Benefits, including but not limited to: extended health benefits; short term and long term disability insurance
• RRSP and/or pension contributions
• Car allowance (including car insurance allowance and gas allowance)
• Membership dues
• Professional development expenses
• Restricted share units (“RSUs”)
• Long-term incentive plans (“LTIPs”)
• Retraining costs
• Outplacement counseling
• Legal fees
• Accounting fees

Are there limits to a severance package for a C-suite employee?

A C-suite employee’s severance package can be limited in scope and entitlements by what has been agreed upon in an employment agreement or employment offer. The employment agreement may use a termination clause to restrict the C-suite employee’s entitlements to less than the reasonable notice period (aka severance package) the courts would award to the employee.

That notice period would have been based on their individual circumstances, based upon factors such as the employee’s:

• Length of service
• Position
• Age
• Ability to secure re-employment

If no written employment agreement limits the employee’s severance to provincially legislated minimum amounts (at most a handful of weeks’ pay), their severance entitlement would be their reasonable notice period under the common law – as much as 24 months’ pay and, in rare cases, slightly more.

The courts agree that pay in lieu of notice must include all the compensation and benefits the terminated employee would have earned during the notice period had they worked it, including their bonus. This can be the case even where a bonus is described as “discretionary”.

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• Bonuses and severance packages
• Do I still get my bonus after I’ve been fired?
• Long-term disability claims for executives and professionals

Employment contract review for executives and C-suite employees

C-suite employees should have all agreements their employer or potential employer are asking them to enter into reviewed by legal counsel at Samfiru Tumarkin LLP, prior to execution. This is to ensure that they fully understand any implications on their future entitlements when they are fired or lose their job.

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• Negotiating employment contracts for executives

Lost your job as a senior executive?

If you have lost your job as a senior executive, you should have your severance package offer reviewed immediately by experienced legal counsel at Samfiru Tumarkin LLP prior to accepting it. The majority of employees who are dismissed without cause, including C-suite employees, are owed more severance than the statutory minimums identified by each province or on the federal level.

Initial severance offers are often inadequate, meaning that you are owed more than the original severance package provides. When an employee does not receive the correct amount of severance pay as outlined by the courts, they have been wrongfully dismissed.

Employment lawyers for executives

The employment lawyers at Samfiru Tumarkin LLP in Ontario, Alberta and British Columbia have decades of experience providing sound advice and representation to executive employees in Canada. In addition to reviewing, drafting and negotiating high-level employment contracts, our executive employment lawyers can expertly navigate negotiating executive severance packages to maximize compensation for C-level individuals.

We are the largest employee-side law firm in the country; our employment lawyers have helped countless executive-level clients secure proper payment after the loss of their job.

You can also try our free and anonymous tool, the Severance Pay Calculator, developed to help you understand more about how much compensation you may be owed.

Contact Canada’s most positively reviewed employment law firm today. Get the advice you need, the compensation you deserve.