Understanding Severance Pay | Employment Law Show TV – S5 E7

Episode Summary

UNDERSTANDING SEVERANCE PAY, layoff clauses in employment contracts, reduced pay after maternity leave, and more on Season 5 Episode 7 of the Employment Law Show with employment lawyer Lior Samfiru, Partner at Samfiru Tumarkin LLP.

Watch above to discover your workplace rights and learn everything you need to know about employment law in Ontario and British Columbia, on the only employment law show on both TV and radio in Canada.

Episode Notes

Non-compete clause in contract

I was let go after 7 years in a senior executive position and offered 6 months’ pay. I also signed a non-compete clause in my employment agreement. Does this matter?

For most people, a non-competition obligation may actually not be enforceable, but for senior employees they are enforceable. However, because you now can’t find a job in that industry for a year, that will have an impact on your severance pay. You could easily be owed a years’ pay since you can’t work for a year. There are other factors that can impact your severance, too, so it’s important to speak to an employment lawyer when you’re let go.

READ MORE
Exit packages for C-level employees

Segment starts at 2:17

Severance Pay Calculations

My brother was just let go with 3 weeks’ pay. He worked at the company for 9 years, with a brief three-week gap in employment a few years ago. What should his severance be based on?

If a gap in employment is very small it usually does not factor into a severance calculation and employment will be considered continuous.

Segment starts at 6:30

Layoff clause in employment contract

I was laid off six months ago. When I asked my employer about a return date, she said she may not bring me back, and that a clause in my employment contract gives her the right to lay me off for as long as she needs. I’m 100% confident I never signed a contract when I started. Can she do this?

A temporary layoff in most cases is not legal. If an employee does not consent to a temporary layoff, it can be considered a termination.

Learn More
• What are Employment Contracts?
• Employment Agreements for Employers

Segment starts at 10:25

Understanding Severance Pay

1️⃣ Many terms are used in termination letters or contracts: termination pay, pay in lieu of notice, reasonable notice, common law.

Most terms are not as significant as the most important factor is the compensation employees are given after they are terminated.

Segment starts at 14:05

2️⃣ How is severance pay truly calculated?

Compensation is typically more than employees realize; age, position, and length of employment all factor into severance pay.

Segment starts at 15:45

3️⃣ How might an employment contract impact severance pay?

An employer can have an employee sign an agreement that can limit future severance.

Segment starts at 17:30

4️⃣ What is “working notice?”

An employer can provide advanced notice equivalent to an employee’s severance entitlements i.e. instead of ten months severance pay, ten months notice.

Segment starts at 18:50

5️⃣ Are construction workers, contractors, part-time, and hourly employees owed severance pay?

There are many misconceptions that contract workers and hourly employees are not entitled to severance and many employees are misclassified. Construction workers are owed severance packages in Canada.

Segment starts at 20:05.

6️⃣ How can an employment lawyer help with severance pay?

Employers may not want to pay employees more or believe an employee won’t pursue any further action. Employment lawyers can begin by offering a proper severance pay calculation.

Segment starts at 21:15

Non-constructive dismissal

I was let go before the COVID-19 pandemic after 5 years with my employer. They said it was a “non-constructive dismissal.” They deposited a months’ pay into my bank account, even though we never discussed severance and I never signed anything.

The term non-constructive dismissal does not exist. An employee in this position will be entitled to severance pay.

Segment starts at 22:38

Reduced pay after maternity leave

When I asked my employer to extend my maternity leave, they agreed but said that I would likely return to a different job at a lower rate of pay, thanks to COVID-19. Can they do that?

An employer has to protect an employee’s position for 18months and not technically beyond. An employee can not be terminated for taking maternity or parental leave.

Segment starts at 25:45

Pay reduction due to COVID-19

I have worked with a large company for 8 years under consecutive 2-year contracts. The new contract they want me to sign states that I will be paid 20% less due to COVID-19. If I refuse, they will not renew, and I will not receive a dime. Is that right?

If an individual signs more than three consecutive contracts, they are considered meaningless and they are considered a regular employee.

LEARN MORE
• Constructive Dismissal
• Reduction in Pay

Segment starts at 27:16

NEXT EPISODE: Employment Law Show S5 E8 – Lost your job due to COVID-19?

PREVIOUS EPISODE: Employment Law Show S5 E6 – Working from home: What you need to know