Unless there is just cause for dismissal, employers in Canada must provide clear and unequivocal written notice of termination to an employee in order to sever the employment relationship. While there is no simple way to calculate an employee’s severance pay or termination package, an employer must meet its obligations pursuant to Employment Standards legislation, and, unless an enforceable contract says otherwise, provide “reasonable notice” pursuant to the common law. Many employers fail to realize that during the notice period, all forms of compensation are to continue; in other words, the severance pay cannot simply continue the employee’s base salary but cut off commissions, bonuses, and disability benefits.
Rudner MacDonald LLP will work with you in order to explain your options when it comes to terminating the employment relationship and selecting the appropriate severance pay and termination package. While employees often expect a termination “package”, it is an employer’s right to provide working notice of dismissal, salary and benefit continuance, a lump sum payment, or a combination thereof. It is also possible to include a “clawback” provision that reduces your obligations if the employee finds a new job.
We can help you to understand the pros and cons of each option so you can determine what will be most beneficial for your organization.