Employment Law

Former hospital CEO receives major severance package

A headshot of Employment Lawyer Lior Samfiru, Partner at Samfiru Tumarkin LLP, to the left of the logos for 640 Toronto and Samfiru Tumarkin LLP.

Many public officials have recently made the news for traveling during the pandemic and the public backlash has led some to resign or be terminated from their positions, including hospital CEO Dr. Tom Stewart. Stewart however, received a major payout after being let go as he was terminated without cause. This has led many Canadians to question severance entitlements, particularly for executives.

Chantel Goldsmith, a Toronto employment lawyer, and partner at Samfiru Tumarkin LLP joined Kelly Cutrara on Global News Radio’s 640 Toronto to discuss severance packages for CEOs and termination for cause.

What They Discussed

In a standard severance package, if an individual finds a new position, do the payments stop?

In a salary continuous package, there is usually claw-back in which an individual has found new employment.

Was Dr. Stewart’s million-dollar severance package normal or above average?

Stewart had only been in this particular role for a few years and negotiated a very good termination clause in his contract. Normally six months severance pay would be standard for an employee in Dr. Stewart’s position however he will receive a 24-months severance.

Is an employer responsible if they approve an employee’s decision that can negatively affect the company?

Ethically, an employer could have a responsibility to report an employee’s actions.

Will COVID-19 result in ethical language being implemented into employment contracts?

Most employers stay away from including ethical language into employment contracts explicitly, however company’s do consult a code of ethics before drafting a contract.

Could the board of directors have terminated Dr. Stewart for cause?

The threshold for for-cause termination is very high in Ontario and the burden of proving the cause for termination usually lies with the employer.

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