Air Canada recently announced it will cut approximately 400 non-union management positions after an “extensive review.”
While the airline says these reductions won’t affect day-to-day operations, for employees impacted, understanding severance rights is critical.
Losing a job can feel overwhelming. Beyond the emotional impact, there’s the practical question: Am I getting what I’m entitled to? If you’re a non-unionized employee or executive, your severance package could be worth significantly more than what’s initially offered. Here’s what you need to know.
What Is a Severance Package?
A severance package is compensation provided when your employment ends involuntarily, often due to restructuring or downsizing. It’s designed to help bridge the gap while you search for new employment. A typical severance package may include:
- Pay in lieu of notice (salary continuation or lump sum)
- Benefits continuation (health, dental, insurance for a set period)
- Unused vacation pay
- Outplacement services (career counseling or job search support)
- Other negotiated perks (e.g., bonuses, stock options, pension contributions, letters of reference, payment of your legal fees, etc.)
Further, for Air Canada employees, there are additional benefits that you may also receive, including travel benefits.
Employers often present severance as a standard offer, but your legal entitlement may be much higher under common law than under minimum employment standards.
What Determines Severance Pay?
Severance isn’t one-size-fits-all. Courts consider several factors when determining fair severance:
- Your Employment Contract: One of the most important factors that affects your severance entitlement is your employment contract. However, Courts often void employment contracts in Canada that limit your entitlement on termination, entitling you to a higher severance award. You should get advice about your employment contract and whether it is enforceable before accepting a severance package, even if what Air Canada offered seems to match your contract.
- Length of Service: Longer tenure generally means more severance. Someone with 20 years of service will usually receive more than someone with two years.
- Age: Older employees often receive more severance because finding comparable work can take longer.
- Position and Responsibilities: Senior executives and managers typically receive higher severance due to specialized skills and fewer comparable roles in the market.
- Availability of Similar Jobs: If your industry is shrinking or your role is highly specialized, severance may be higher to reflect the difficulty of finding new employment.
Special Considerations for Non-Unionized Executives
Executives often have unique compensation structures—bonuses, stock options, car allowances, and pension contributions. These should be factored into severance calculations.
Why You Shouldn’t Sign Immediately
Employers often frame severance as “take it or leave it.” In reality, you have the right to review and negotiate. Signing too quickly can waive claims for additional compensation or benefits.
How an Employment Lawyer Can Help
This is where professional guidance makes a real difference. An employment lawyer can:
- Review Your Offer: Determine if the severance package meets your legal entitlements under common law.
- Calculate True Value: Factor in bonuses, benefits, stock options, and other perks that should be included.
- Negotiate on Your Behalf: Employers expect negotiation—lawyers know how to maximize your settlement.
- Protect Your Rights: Ensure you don’t sign away important claims or agree to restrictive covenants that harm your future career.
- Provide Peace of Mind: When you’re facing uncertainty, having an advocate ensures you’re treated fairly and can focus on your next steps.
Job loss is financially and emotionally stressful. Understanding your rights and getting advice can turn a difficult situation into a manageable one. If you’ve been affected by Air Canada’s cuts or any corporate restructuring, don’t rush to sign. Get in touch with our team today.
