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Termination and Severance Pay in Canada: A Guide for Employees

June 28, 2023

In today’s rapidly changing world of work, we must have a solid understanding of the laws and regulations surrounding termination and severance pay. This guide aims to provide comprehensive and informative insights into our rights and entitlements in case of job loss or eligibility for severance pay in Canada. This knowledge, will assist individuals in understanding the complexities of employment termination and garner a better understanding of their best interests.

Termination of Employment

Termination of employment in Canada refers to the end of an employment relationship between an employer and an employee. It can occur for various reasons, including voluntary resignation by the employee or termination by the employer. There are two primary types of termination: termination with cause and termination without cause.

Termination WITH Cause

When employees face a termination with cause, it is important to take certain steps to protect their rights and navigate the situation effectively. Here are some key actions employees should consider.

  • Review the Termination Justification: Carefully review the reasons provided by the employer for the termination with cause. Assess whether the employer’s allegations align with the terms of your employment contract, company policies, or applicable employment laws. Seek clarification from your employer, if necessary, to fully understand the basis for the termination
  • Seek Legal Advice: Consult with an employment lawyer who specializes in wrongful dismissal and employment law. They can assess the circumstances of your termination, evaluate the strength of your case, and advise on your Legal Rights and potential courses of action. A legal professional can help you understand if the termination was indeed valid or if you have grounds to challenge it.
  • Review Employment Contract and Company Policies: Examine your Employment Contract and any relevant company policies to ensure that the employer followed the agreed-upon procedures for termination with cause. If the termination violates the terms of your contract or policies, it may be grounds for challenging the termination or seeking additional compensation.
  • Consider Negotiations: Discuss the situation with your legal professional and consider negotiating with the employer. Depending on the circumstances, you may be able to reach a mutually acceptable resolution, such as a revised termination agreement, severance package, or reference letter. Legal professionals can provide guidance and represent your interests during negotiations.

Termination WITHOUT Cause

When employees face a termination without cause, meaning their employment is ended for reasons unrelated to their performance or conduct, here are several important steps to consider:

  • Understand Your Rights and Entitlements: Educate yourself about your rights and entitlements in the event of a termination without cause. Review your employment contract, collective agreement (if applicable), and the Employment Standards Legislation in your jurisdiction. This will help you understand the minimum notice or severance pay requirements that employers must provide.
  • Request a Written Explanation: If your employer has not already provided a written explanation for the termination, consider requesting one. Having a clear understanding of the reasons behind the decision can help you assess whether the termination was genuinely without cause and provide a basis for future discussions.
  • Consult with an Employment Legal Professional: Seek advice from an Employment legal professional specializing in Wrongful Dismissal and Employment Law. They can review the circumstances of your termination, evaluate the terms of your Employment Contract, and help you understand your Legal Rights and Entitlements. An Employment Legal Professional will guide the appropriate steps and potential avenues for pursuing compensation.
  • Review Severance Offer: If your employer offers a severance package, review the terms and conditions carefully. Assess whether the offer meets or exceeds the minimum requirements under Employment Standards Legislation and consider whether it adequately compensates you for losing your job. Your Legal Professional can assist in negotiating better terms, including enhanced severance pay, extended benefits, or other considerations.

What is Severance Pay?

Severance pay is a form of compensation for employees who experience job loss due to circumstances beyond their control, such as termination without cause, layoffs, or company closures. It provides a financial cushion to help employees during the transitional period between jobs.

  • Eligibility for Severance Pay: The eligibility for Severance pay can vary based on several factors, including Employment Laws, collective agreements, and individual Employment Contracts. Employees terminated without cause or experience a significant change in their employment conditions may be eligible for severance pay. The length of service with the employer often plays a role in determining eligibility.
  • Calculation of Severance Pay: The calculation of Severance pay can be complex and depends on various factors. Common considerations include the length of the employee’s service, age, position and salary, and any contractual agreements or legal requirements in place. Legal Professionals can assist in ensuring that the calculation of Severance pay aligns with the applicable laws and agreements.
  • Legal Considerations for Severance Pay: Employment contracts play a crucial role in determining severance pay entitlements. Each Province and Territory in Canada has its own Legislation that sets out the minimum requirements for Severance pay. It is important to consult these Laws and any applicable agreements to understand employers’ Legal obligations and employees’ rights regarding Severance pay.

Being aware of the Employment Standards Legislation, collective agreements, and individual Employment Contracts that apply to our situation enables us to understand employers’ and employees’ minimum requirements and obligations. Seeking Legal advice and representation when necessary can provide valuable support, ensuring our interests are protected and helping us pursue appropriate legal remedies if required.


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