Severance Pay
Even in a healthy economy, business turnover is inevitable. When the time comes to let an employee go, it’s important to ensure that a final paycheck is delivered properly and promptly. If a company fails to comply with wage and hour laws, it can face costly legal disputes and reputational damage.
A bank employee’s Federally Regulated Employee severance pay, for example, will likely include not only the salary and benefits accrued during the employment relationship, but also unused vacation, sick days and other pay leave. The amount of severance pay is usually specified in the bank’s termination policy. It may be delivered as a lump sum or a series of payments over a period. Some companies offer severance packages to help ease the transition out of a job, while others do so to mitigate the impact of layoffs on their balance sheets.
The Canadian Labour Code requires federally regulated employers to give up to eight weeks of notice or pay in lieu of notice to individual employees when they dismiss 49 or fewer workers without cause. This change to the Code’s minimum standards took effect Feb. 1. Employment contracts that were drafted before this date will need to be reviewed and revised to align with the new minimum requirements.
Job Security and Severance Pay
For non-unionized employees of federally regulated enterprises such as banks, airlines and railways, and telecommunication providers, the change in the Code will likely mean higher bank employee severance package than was previously the case. This is because they have greater job security protections than workers whose employers are governed by provincial legislation, including the right to be fired only for serious misconduct or when their job no longer exists.
Federally Regulated Employees who are unsure about their severance entitlements should contact an employment lawyer. The lawyers at Samfiru Tumarkin LLP have represented tens of thousands of clients in severance package negotiations and can explain the entitlements that apply to them.
Severance packages serve a dual purpose: they provide financial assistance to the departing employees, helping them transition to new employment, while also protecting the company from potential legal action by ensuring fair treatment for the affected workers.
The components of a severance package can vary based on the employee’s position, tenure, and the specific policies of the bank. A common feature in these packages is a continuation of salary payments, often calculated based on the employee’s length of service. For example, a long-tenured bank employee may receive severance pay equivalent to several months or even a year’s salary. This income stream helps the employee manage their expenses while they search for new employment opportunities.
While the minimum severance payments are relatively standard, they can vary greatly depending on a number of factors such as an employee’s age, the duration of their service and whether or not they are eligible for an immediate annuity (either under CSRS or FERS) upon leaving their federal job. The lawyers at Samfiru Tumarkin have a deep understanding of these issues and have successfully obtained much larger amounts for their clients. Watch as they explain everything you need to know about severance pay in this episode of the Employment Law Show.