What is severance?

When an employer terminates your employment without cause, or incorrectly with cause, they are required to provide you with notice. This means that they have to give you advance notice of when your last day will be. However, employers frequently provide payment in lieu of giving notice and terminate you effective immediately. This payment is known as a severance package.

Being terminated from your job is stressful enough without having to worry about whether the severance package you were offered is a good one. There are a few things you should consider when you have been offered a package and this will help you decide if you should contact a lawyer and when you should reach out.

It is always valuable to have legal advice. It becomes more important to have a lawyer review your severance package if there are a lot of dollars at issue, if there are complicated issues including termination notice provisions that may be unenforceable, if there may have been workplace misconduct such as discrimination or harassment, if your employment terms or severance package includes restrictive covenants, or if you’re uncertain of your entitlements.

Considerations for a severance package

Deadline to Sign

One of the first things that you should know is that the deadline the employer has set for you to sign the severance package is not set in stone. The employer should give you a reasonable amount of time to seek legal advice. You are in an unequal bargaining position with your company and a lawyer can help you negotiate on more equal footing.

We suggest asking for an extension before you need it, and to speak with a lawyer as soon as possible. That gives the lawyer time to properly review your case and give a well-rounded opinion regarding your severance. A lawyer can help you ask for any extension.

Of course, you should also remember some important timelines in case negotiations aren’t successful. In Alberta, you typically have two years to sue, however you may make complaints through certain administrative processes that may be favourable for you, which can have shorter timelines such as six months from the date of loss (i.e. when you were terminated).

Discrimination and Constructive Dismissal

Your employment or termination may have had discriminatory or improper elements. By having your employment background and severance package reviewed by a lawyer, you may find out that you are entitled to more compensation, for example in the following or similar situations:

• Demotion
• Wage reduction
• Harassment
• Violence in the workplace
• Refusal to accommodate family status (e.g., daycare, fertility treatments)
• Discrimination based on age, race, sexual orientation, gender identity, etc.
• Addition or removal of job duties

Additionally, if the employer has dramatically changed or interfered with your job, you may be allowed to seek severance-style compensation, even if the employer has not formally terminated you. This is called “constructive dismissal”. Again, this is an important situation in which to seek the advice of a capable lawyer.

What Should be Included in a Severance Package

Your benefits, stock options, vacation pay, RRSP contributions, commission agreements, and more are all factors in your employment, and should be considered in reviewing your severance package. An experienced employment lawyer can go through your severance package and make sure that these items are addressed, and you are being compensated fairly during the changes in your employment.

Your Employment Contract and Offer Letter

Most lawyers will ask to review your initial employment contract in order to flag anything that could be an issue. There may be severance provisions in the employment contract that are not compliant with legislation and may have a dramatic impact on your eligibility for severance. If you do not have your contract available, the employer can and should provide you with a copy.

Restrictive Covenants

Your severance package or employment agreement may also include non-compete or other clauses which may affect your ability to find a job in your field. Sometimes these restrictive covenants are too broad, and a lawyer can help advise on whether they are likely to be enforceable, negotiate more reasonable clauses, or help you navigate the situation so you can continue working in your field.

What are Your Priorities?

It’s important to note that a lawyer’s job is to help serve your needs. If you know you are happy with your severance, hiring a lawyer may only add cost during your changes in employment. However, a lawyer may also help you get the best, fair, deal possible from the employer. Many people, in favour of moving on, accept the first deal that is offered. This is what the employer may be hoping for. Before signing the severance deal, take some time to consider the package and whether you would benefit from more specialized advice or advocacy.

What can we do for you?

At Nicol Law, our lawyers can guide you through the process of asking for an extension, reviewing your severance package, and negotiating with your employer for an equitable and fair severance package. We understand that incurring extra costs at a time when you have lost your job is a hard pill to swallow, so we offer a competitive severance package review service at a fixed fee and will work with you to achieve the best possible results. We can also help people understand when a severance offer is fair and should be accepted.

If you are starting out at a new job and you are unsure about your proposed employment contract, check out our blog post, on when to ask a lawyer to review a contract.