Employment Law

Severance for technology industry employees

August 8, 2022

The technology sector is a multitrillion-dollar industry comprised of skilled workers who provide a variety of products and services, including designing electronic devices and developing comprehensive software systems.

To date, the global technology industry is reportedly worth more than $5 trillion. The majority of the money is divided up between North America (35 per cent), Asia (32 per cent), and Europe (22 per cent).

In Canada, tech companies including Shopify have permanently transitioned staff from in-office work to remote work in response to the COVID-19 pandemic.

Latest technology industry layoffs

Recently, there have been a number of layoffs across the tech sector.

2022

October

Intel: The world’s largest semiconductor chip manufacturer intends to slash its staff by as much as 20% in some divisions by late October, according to sources with knowledge of the situation. This will result in thousands of layoffs.

September

Meta: The tech giant is reportedly planning to trim its headcount as it looks to cut costs by at least 10 per cent over the next few months. While Meta isn’t using the term “layoffs”, executives say departments are being reorganized and affected staff have been given a certain amount of time to apply for other roles. The company didn’t disclose how many Canadian employees are impacted by the cuts.

August

Unbounce: The Vancouver-based landing page platform is laying off 47 employees, or 20 per cent of its workforce, as part of a company-wide restructuring. The company did not disclose how many workers from Unbounce and LeadsRx were affected by the cuts.
Article: The Vancouver-based online furniture company is laying off 216 employees, or 17 per cent of its workforce, as demand for e-commerce continues to cool off. Article said that affected staff will receive severance, have their benefits extended, and will be able to keep their equipment (i.e. laptops).
Hootsuite: The Vancouver-based social media company is laying off 30 per cent of its workforce as part of a global restructuring. Hootsuite did not disclose the specific number of employees affected by the cuts.
Wayfair: The online furniture and home decor retailer is laying off five per cent of its global workforce as demand for e-commerce continues to cool down. The company did not disclose how many employees in North America are affected by the cuts.
Q4: The Toronto-based investor-relations software maker and provider is laying off approximately 48 employees, or eight per cent of its workforce, in a bid to cut costs as Canadian tech companies grapple with a sector-wide downturn. The company said the restructuring is designed to focus the sales, marketing, and product teams on the most important areas of the business.
Clearco: The Toronto-based e-commerce investment company is cutting 60 employees in the U.K. Ireland, Australia, and Germany as it hands off its international business. The reduction comes after Clearco laid off a quarter of its workforce in July.
Snap: The parent company of Snapchat is laying off approximately 1,300 employees, or 20 per cent of its workforce, as part of a company-wide restructuring. The Santa Monica-based social media giant did not disclose if staff members in Canada are affected by the cuts.
Shopify: The Ottawa-based e-commerce company reportedly laid off 70 workers as it continues to grapple with a sector-wide downturn. In July, the company said it was planning to remove “over-specialized and duplicate” roles as well as groups that it believes are convenient to have, but are too far removed from building products.

July

Shopify: The Canadian e-commerce giant is laying off 10% of its global workforce after it said it misjudged the growth of e-commerce during the COVID-19 pandemic. Shopify said in a blog post that most of the staff impacted work in recruiting, support, and sales.
Clearco: The e-commerce investing platform is laying off 25 per cent of its workforce after claiming that it increased its headcount “too quickly in anticipation of continued economic growth.” 125 employees of Clearco’s 500-person team were affected by the cuts.

June

Enjoy Technology: There are reports of an increase in the amount of employees being laid off. The company has not released an official announcement to comment on the layoffs at this time.
Wealthsimple: The Toronto-based financial technology company is cutting 13% of its workforce in response to the downturn in the global technology sector.
Netflix: The streaming giant announced another round of layoffs impacting 300 employees mostly in the U.S.

May

Netflix: The digital streaming service announced it has laid off roughly 150 employees due to a significant 200,000 drop in subscribers and revenue. This accounts for approximately two per cent of Netflix’s workforce in North America.
Bolt: The Silicon Valley start-up company announced it would be laying off roughly a third of its employees. In total, the decision will impact 250 workers, 150 of which are based in the U.S. and Canada.

April

Legible: The Vancouver-based tech firm announces plans to lay off over a third of its employees. This accounts for 23 members of its 60-person staff.

March

Thinkific: The Vancouver-based company announces plans to lay off 100 employees after recording a net loss $26.4 million USD in 2021. The layoffs will impact one-fifth of their 499-person team. According to a letter posted to the Thinkific website, all terminated employees will receive a minimum 12 weeks’ pay.

Fired or lost your job in the technology industry?

In Canada, if you have been fired or lost your job, you have workplace rights, which includes the right to severance.

Many companies, including those in the tech sector, anticipate that their staff is largely unaware of their severance entitlements. In other cases, employers legitimately do not know what their obligations are to workers during the termination process.

LEARN MORE
• Employment lawyer on mass layoffs in the tech industry
• Employee rights when a company downsizes
• Layoffs in Canada (2024)

Regardless of a company’s grasp on employment law, they are legally required to provide proper compensation following a termination.

Severance pay for technology industry employees

In Canada, employees in the tech sector can get up to 24 months of severance pay when they are fired or laid off from their job. This includes individuals working full-time, part-time, and hourly in Ontario, Alberta, or B.C.

Severance is the compensation a non-unionized worker receives from their employer when they are fired without cause. If you are fired for cause, you are likely still entitled to full severance.

WATCH: Employment lawyer Lior Samfiru explains everything you need to know about severance pay on an episode of the Employment Law Show.

In Canada, all non-unionized employees are entitled to severance pay during the COVID-19 pandemic if they are terminated or let go from their job. A company doesn’t have the option of “suspending” their legal obligations due to the coronavirus outbreak.

ADDITIONAL RESOURCES
• Severance Pay in Ontario
• Alberta severance packages
• Understanding severance in B.C.

The employment lawyers at Samfiru Tumarkin LLP have represented numerous employees from the technology sector over the years in severance package negotiations. We have successfully secured much larger amounts for individuals employed across a variety of positions, ranging from entry-level jobs to executives.

How to properly calculate severance pay

Employers often incorrectly calculate severance pay. There is a belief that severance pay is one week’s pay, two weeks’ pay, or a week for every year of service an employee has with the company. While this formula may cover the minimum amount owed by a company as per provincial legislation, our legal system (common law) has determined that a full severance package should be higher (i.e. many months’ pay).

LEARN MORE
• Severance pay during a recession
• Does a deceased employee have a right to severance?

For non-unionized employees, the main factors of termination or severance pay include age, length of service, position, bonuses, benefits and the ability to find new work.

Our Severance Pay Calculator can help you determine your severance entitlements.

Don’t sign on the dotted line!

Do not accept any severance offer, termination papers or exit agreement that your company may provide you with. Once you sign back these documents, you eliminate your ability to negotiate a fair and proper severance package.

Wrongfully dismissed from the tech sector?

If you have lost your job, there is a chance that you have been wrongfully dismissed. A wrongful dismissal in Canada happens when you are fired or permanently laid off by your employer and are not given a proper severance package.

An employment lawyer at Samfiru Tumarkin LLP can analyze your situation and explain how much compensation you may be owed.

Changes to your job

Employees in the tech sector do not have to accept a significant change to their job. Large modifications, such as a demotion, cut in pay, reduction in hours, negative changes to commission, are illegal.

When the terms of your employment are significantly changed, the law allows you to resign from your job and seek full severance pay through a constructive dismissal claim.

LEARN MORE
• Changes to your employment in Ontario
• B.C. employees and changes to your job
• Can your employer change your job in Alberta

Temporary layoffs

Temporary layoffs occur when an employer significantly reduces or completely stops an employee’s employment. There is usually a mutual understanding from both sides that the employee will be called back to work, to the same position, after a reasonable period of time.

It is important for employees in the tech sector to understand that temporary layoffs are considered illegal, unless you agree to the layoff or it is addressed in your employment contract. You have the option to wait to be called back, or can treat this as a termination through a constructive dismissal and pursue severance.

Harassment

If you work in the tech sector, you don’t have to tolerate any form of harassment in the workplace, from either coworkers or managers.

Employers must investigate and respond appropriately to allegations of harassment and abuse.

If your company is creating, or allows for the creation of, a hostile or toxic work environment, this could be grounds for a constructive dismissal.

Contact an employment lawyer at Samfiru Tumarkin to explore your rights.

Independent contractor? Think again

If you were hired as an independent contractor, there is a significant chance that you should actually be considered an employee. Employers may misclassify employees as contractors to avoid acknowledging certain employment rights like minimum wage, vacation and overtime pay, and severance when the individual is fired.

Companies, including those in the tech sector, cannot avoid the issue by having staff sign an employment contract, which indicates that they are a contractor rather than an employee.

Our legal system provides guidelines for determining whether someone is a contractor or employee. Use Samfiru Tumarkin LLP’s Pocket Employment Lawyer to find out what you are right now.

Fired for medical reasons?

If your medical condition was in any way a factor in your employer’s decision to fire you while you are on leave, you may be able to file a human rights claim. Your employer cannot let you go due to medical issues or a disability.

If an employee is terminated without cause for reasons unrelated to their medical leave or disability, this is legally permissible, as long as the company provides proper severance pay.

Your employer may also legally fire you while on medical leave if:

You are dismissed for reasons which sufficiently establish just cause
Your employment contract has been frustrated

Long-term disability denied? Don’t appeal

If you work in the tech sector and your long-term disability claim has been denied by your insurance provider, you will likely receive a letter inviting you to appeal the decision.

While it might seem like a good idea to do so, in almost all cases, the appeals process will be handled by the same insurer that denied your claim.

Insurance companies make money by not paying claims. They often use the appeals process (sometimes leading claimants to request multiple appeals) to run out the clock on your ability to file a claim against them to get the money you are owed.

If your long-term disability claim is denied, cut off, or comes under “investigation”, contact Samfiru Tumarkin LLP immediately.

LEARN MORE
• Appealing a long-term disability claim denial
• Disability in the Workplace: Your Rights

Employment lawyers for technology industry employees

Our employment lawyers have helped tens of thousands of individuals across Ontario, Alberta, and B.C. enforce their rights. With employment lawyers in Toronto, Ottawa, Calgary and Vancouver, we stand ready to help you solve your workplace issues.

If you are an employee in the tech sector who needs help with an employment issue, contact us or call 1-855-821-5900 to get the advice you need, and the compensation you deserve.

Get The Severance Package You Deserve

Contact Samfiru Tumarkin LLP today, and find out why were are the most positively reviewed employment law firm in Canada

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Severance for technology industry employees

Latest technology industry layoffs