A severance package in Ontario is an offer of monies from an employer to an employee upon termination of employment in exchange for the employee signing a release releasing the employer from liability.
An employee in Ontario is generally entitled to a severance and therefore an employer is eager to offer some amount to settle the issue. Employers either want to pay what is reasonable or offer some amount to avoid a fight about what is reasonable. However, not all severance packages in Ontario are reasonable. Some severance packages don’t offer enough notice or lack some key component, for example, payment of a bonus.
What is a severance package in Ontario?
A severance package in Ontario is usually an offer consisting of combination of monies encompassing the following requirements:
- A. Payment of an amount of money in lieu of common law reasonable notice (if applicable), which is different than statutory notice / severance;
- B. Payment of an amount of money in lieu of statutory notice per the Ontario Employment Standards Act;
- D. Payment of vacation pay owing to the date of termination;
- E. Payment of wages owing to the date of termination;
- F. Promise of continuation of benefits for the notice period;
In some cases, employers offer an employee a severance package in Ontario consisting of the above-noted entitlements plus certain other fringe monies which are generally not required by statute, including: career transition services, continued use of company property such as vehicles, banked sick or vacation pay and an offer to pay for a legal consultation to calculate and review the severance package.
Some employers offer to write the employee a positive reference letter to be included in the severance package, but this is not required.
There are countless other things that may or may not be required in a severance package depending on the specific circumstances and contract (written, implied or oral) such as:
- A. Payment of an annual bonus;
- B. Payment of commissions that would normally be earned over the notice period;
- C. Payment of vacation pay and overtime that would normally be earned over the notice period;
- D. Relocation fees;
- E. Unpaid expenses;
- F. Pension or RRSP contributions over the notice period;
- G. Continuation of fringe benefits such as discounts etc.;
- H. Anything really the employee reasonably deserves under his or her written, implied or oral contract.
In summary, there are many variables for a severance package in Ontario depending on the unique circumstances of each employee. Not only are there issues regarding what should be included in a specific severance package in Ontario, but there is also the issue of calculating how much severance is appropriate in each case. Thus, consider calling an employment lawyer to review your severance package to calculate if it is reasonable or click here to learn how to calculate severance. It is a wrongful dismissal if your severance package isn’t reasonable.
Severance package calculation in Ontario
Call Dutton Employment Law, a division of Monkhouse Law, for a free consultation to determine if your severance package in Ontario is reasonable. We have seen thousands of severance packages and we, Dutton Employment Law and Monkhouse Law, have litigated important severance decisions you can see yourself on CanLII.org. Allow us to be your personal severance pay calculator in Ontario. Call now. We will usually speak to you the same day.
Jeff is an employment lawyer in Toronto. He is the Principal of the Dutton Employment Law Group at Monkhouse Law. Jeff is a frequent lecturer on employment law and is the author of an employment law textbook and various trade journal articles.