Lior Samfiru with the HR Reporter on Shopify lawsuit and severance

Shopify faces legal action after their latest round of layoffs due to reducing severance packages after many had already been accepted. The lawsuit filed on behalf of its former employee’s breaks has been a reaction to a breach of contract, said employment lawyer and national co-founding Partner Lior Samfiru.

“From our perspective, that is a simple breach of contract. Once a severance offer is accepted, it’s binding on both sides. Just like the employee could not then say, ‘I changed my mind, I want more,’ the employer can’t say, ‘Well, no, we’re not going to pay it.” Samfiru explained to Sarah Dobson at the Canadian HR Reporter.

SEVERANCE FOR SHOPIFY EMPLOYEES
• Shopify’s legal obligations to severance

Samfiru went on to caution against accepting the minimum severance entitlements outlined in legislation like the Employment Standards Act in Ontario.

“Every employee gets their severance under common law, sometimes referred to as notice under common law, based on their age, their position and the length of their employment… under common law, you could easily be owed six months’ severance even though you only worked for two years,” Samfiru said.

While employers can protect their own interests by including terms in an employment contract, Samfiru explained, the terms in most agreements are rarely enforceable.

“They would have to say certain things in a certain sequence, and if they don’t do it that way, then they don’t effectively limit severance. So in many cases, even if an employee has signed an agreement that tries to limit their entitlements, it does not actually have that effect…” said Samfiru. “That’s why neither employer nor employee should assume that they have an enforceable termination term in their agreement. They have to get some legal advice.”

Samfiru also cautioned against an immediate acceptance of severance offers despite a proposed deadline by employers.

“I think there’s a problem when that deadline is used as a pressure tactic,” Samfiru stated. “That is a problem, especially recognizing a couple of things: Number one is that an employee, in fact, does not lose rights for two years, so imposing a deadline of ‘Friday by five’ is arbitrary and it’s unfair, especially to someone that just lost your job.”

Samfiru explained that a deadline should only be used if there is a secondary offer of severance pay. “Secondly, I would suggest to you that a deadline should only be put in place if an employer offers an employee better severance than what the employer is required to offer them.”