Workers employed in the technology industry in a role requiring skills in technology are generally entitled to proportionally more severance than peers in a more traditional industry.
Calculating Severance For Tech Workers
In common law, the calculation of severance is based on several factors, including the “character of one’s employment”. The character of one’s employment factor tends to justify a longer notice period for highly skilled employees, like modern technology employees (see Celestini v. Shoplogix Inc., 2021 ONSC 3539 (CanLII)).
For example, in the case of Paquette v TeraGo Networks Inc., 2015 ONSC 4189 (which our law firm argued and won), the employee was hired as a Lead Systems Architect before he was promoted to (a) a Senior Unix Analyst where he was responsible for 30-40 Unix systems that were being used by Alberta Energy Corporation; (b) a Systems Programmer for Alberta Energy Corporation; and (c) a Senior Systems Software Analyst, which involved overseeing the computer systems for Alberta Energy Corporation; then (d) Director of Information Technology; and finally, Director, Billing and Operations Support, reporting to the CEO before he was terminated after fourteen years of combined service.
At trial, the employee argued that his position at TeraGo was very specialized, requiring unique skills in niche technology, and that he should be awarded a significant severance award accordingly.
The court generally agreed, finding that in all the circumstances including the employee’s skills and various technology roles at TeraGo, and the availability of comparably niche employment, the appropriate severance award should be 17 months. The court stated: “The character of employment factor tends to justify a longer notice period for senior management employees or highly skilled and specialized employees and a shorter period for lower rank or unspecialized employees”.
In another case, Jonasson v Nexen, 2018 ABQB 598 (CanLII), the employee was working on “cutting edge” technology not ready for sale yet. After twenty-two years of employment with the company, the court awarded the employee twenty-three months severance, noting that “[t]he knowledge he gained in [his] role [developing a new technology] would be of limited transferability.”
At the same time, technology workers who work on outdated technologies, for example, a person employed as a central server tech instead of a cloud server tech, could be awarded even more severance because when they are dismissed, they lack the skills required to secure the same position in the modern world. After all, most businesses have moved on from central servers to cloud servers (see Klimczewski v. Nytric Ltd., 2019 ONSC 1322 (CanLII)).
Summary: More Severance For Workers In Tech
In conclusion, the courts in Canada calculate severance using several factors, including the character of one’s employment. Working in tech is a “character” of one’s employment. Technology, generally, is highly sophisticated, and, classically, employees employed in sophisticated positions tend to be awarded more severance on average.
Jeff is a lawyer in Toronto who works for a technology startup. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles. Jeff is interested in Canadian business, technology and law, and this blog is his platform to share his views and tips in those areas.