Severance Pay for Consultants

Consultants are experts who help businesses across a variety of industries solve problems and achieve specific goals. These individuals are responsible for collecting and assessing data to provide informed insights to clients.

A consultant typically falls under one of two main employment types:

• Employee: A consultant works full or part-time for a consulting firm, and provides their services to clients on behalf of their employer.
• Independent Contractor: The consultant chooses their clients, hours of work, level of pay or compensation, and uses their own materials. Consultants are sometimes misclassified as contractors when they are in fact employees of a company.

To date, the business management consulting services market in North America is valued at more than $824 billion. Growing use of artificial intelligence (AI) and automation technologies are helping consultants analyze data faster and more efficiently.

According to Glassdoor, the average salary of a consultant in Canada is more than $79,000. These employees have the opportunity to earn more through bonuses, commissions, and profit-sharing.

Fired or lost your job as a consultant?

If you are fired or lose your job as a consultant in Canada, you have employment rights, which includes the right to severance. This applies to non-unionized workers in either a provincially or federally regulated workplace.

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

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

READ MORE
• Layoffs in Canada
• Severance for federally regulated workers
• Provincially regulated employees and severance

Severance for consultants

In Canada, consultants may be owed 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.

• LEARN MORE: Severance pay by job

Your employer has the option of setting your termination date in the future and having you work until that time (working notice) or providing you with compensation instead (severance).

These concepts apply during challenging economic conditions, downsizing, the closure of a business, or major public health events such as the COVID-19 pandemic.

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

The employment lawyers at Samfiru Tumarkin LLP have represented tens of thousands of employees 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.

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.

If you work as a consultant, you are either a provincially or federally regulated employee. That means your severance package must consider:

• Your minimum severance pay as a provincially regulated employee, which is determined by each individual province, or your minimum severance as a federally regulated employee, as set out by the Canada Labour Code.
• Your full severance pay according to our legal system (common law) which can be as much as 24 months’ pay.

To figure out how much compensation you may be entitled to, use our firm’s Severance Pay Calculator.

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

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?

If you lose your job as a consultant, there is a chance that you have been wrongfully dismissed.

A wrongful dismissal in Canada happens when a non-unionized employee is fired or permanently laid off by their 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

If you are a non-unionized consultant in Canada, you don’t have to accept a major change to your job.

Large modifications such as a demotion, cut in pay, reduction in hours, or 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.

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’s important for non-unionized consultants in Canada to understand that temporary layoffs are considered illegal, unless you agree to the layoff or it’s 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

Non-unionized consultants in Canada 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 are a consultant who was hired as an independent contractor, there is a significant chance that you should actually be considered an employee.

Employers in Canada 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.

A company can’t avoid the issue by having an individual 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 can’t let you go due to medical issues or a disability.

If a non-unionized 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 are a consultant in Canada, and your long-term disability claim is 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 consultants

The experienced employment law team at Samfiru Tumarkin LLP has helped tens of thousands of individuals across Ontario, Alberta, and B.C. enforce their rights.

Our lawyers in Toronto, Ottawa, Calgary, and Vancouver stand ready to help you solve your workplace issues.

If you are a non-unionized consultant 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.