Jill and Dana talk cold hard cash (among other things!) in Part 1 of Severance Entitlements. They break down minimum severance entitlements from the ESA and Canada Labour Code for employees let go without cause. The chat notice periods, benefits, vacation pay, and considerations for private sector employees, unionized workers, or federally regulated employees.
Full episode transcript below:
Recording: This podcast is produced by Nelligan Law.
Dana: Welcome to All Worked Up. The podcast where two employment lawyers break down real life workplace issues that affect real people. I’m Dana DuPerron.
Jill: I’m Jill Lewis. And we’re senior associates at Nelligan law. And we’re super excited to bring you this podcast aimed at making employment issues interesting, accessible for employees and employers.
Dana: Hi, I’m Dana.
Jill: I’m Jill.
Dana: And this is All Worked Up.
Jill: And we’re starting a new series this week.
Dana: Yeah, a two-part series, severance entitlements. It’s got us all worked up. Oh. All worked up.
Jill: We’re talking money.
Dana: Yeah. What do you get at the end of the contract?
Dana: The end of the employment relationship. So today, we’re talking about your statutory minimum entitlements.
Jill: Statutory minimum entitlements.
Dana: Exactly. So the very base that you get when your employment is terminated without cause.
Jill: Yeah, this is the ground floor. This is your – don’t negotiate this stuff. Right?
Dana: You can’t sign a release for it.
Jill: You shouldn’t have to negotiate.
Dana: Yeah, you get this. You get this no matter what, in any circumstance where your employments not terminated for cause. And if you want to listen to one of our past episodes where we talked about cause a bit. We’ll talk about it more later. But there’s probably not cause.
Jill: Probably not. If you’ve been fired for cause, absolutely see a lawyer immediately. Because yeah, I mean, I don’t know what you have to do to get fired for cause these days, but…
Dana: Got to be pretty bad.
Jill: It’s got to be pretty bad. And there’s always an argument. There is always an argument to be made.
Dana: We’re talking without cause.
Jill: Yeah, you’re fired without cause. First place we go is you look at the legislation.
Dana: Yeah. Remember, we talked about this before, the Employment Standards Act.
Dana: ESA in Ontario. That’s what covers your employment.
Jill: Unless you’re unionized or a federal employee.
Dana: Right. OK. So in Ontario, federal employees, Canada Labour Code, we’ll park that for a second. We can talk about those entitlements also, because that’s a whole other kettle of fish. But under the ESA, how many weeks’ notice do you get?
Jill: Putting me on the spot. Alright, how many weeks notice? One week per year of service up to eight weeks’ notice.
Dana: Right. And it has to be – so that more or less, right? Because you get nothing for the first three months.
Dana: After the first three months to one year, you get one week.
Dana: And then one year to three years, you get – no, at one, wait. No. Yeah. OK. Wait, one –
Jill: Cut this.
Dana: Yes. No, that’s right. One year to three, you get two weeks.
Jill: No, one year to three, you get two weeks.
Dana: Yeah. And then it goes, so at three years, completed three weeks, four years, completed for weeks. All the way up to eight.
Dana: So you’ve worked 10 years.
Jill: You get eight weeks.
Jill: And we want to talk about like the idea around notice? Like the theory between notice and severance? Maybe not. I don’t know. That’s pretty boring stuff.
Dana: Well, I mean, notice is like the time that it should kind of take you to find another job. But I mean, these are – this is not –
Jill: This is the min. OK.
Dana: Yeah, nobody, you know, you might not, you’re probably not going to find another job in that time. You might not, you might. But anyway, it’s not a very long time. But, OK, so during that eight week notice period, or up to eight week notice period, I should say, all benefits continue.
Jill: Everything runs.
Dana: And your vacation continues to accrue, vacation pay. It’s as if you were still employed.
Jill: That’s the idea is that, what would you be entitled to if you were still working? Had you been given working notice during that eight weeks, OK, so my benefits are going to continue, I have vacation coming in, maybe I have like a car allowance. Something’s getting paid out during that time. If something of a bonus was going to be paid, maybe two weeks later, if that bonus was going to be paid –
Dana: During that period.
Jill: That’s got to get paid.
Dana: Sometimes stocks like, this is just such like an important area that any kind of element of your compensation, you’re going to want to talk to someone about. Make sure it continues. If there’s a stock plan or something, there might be a way around it. Like there’s just, you know –
Jill: Because eight weeks is sort of like a magic period of time where it’s as if you like, you’ve never been terminated. So yeah, and there’s like other things that your compensation does not just include your salary. It includes everything.
Dana: Yeah. So that’s noticed under the ESA. Then we’ve got severance.
Dana: Severance. So two prerequisites, you have to be somewhere for five years. And it has to have a $2.5 million payroll.
Jill: What does that mean, Dana?
Dana: That means that that company – so actually, Ministry of Labour looks globally now. They look at their whole entire payroll. They’ve changed that.
Jill: They do.
Dana: They used to only look at Ontario. Now they look at the companies.
Jill: Is that because of that small claims court decision that came out? Who was that lawyer that won that decision?
Dana: Oh, I don’t recall. I don’t know. But no, there was a case before that.
Dana: The other [Paquette?]. That that’s what they’re following. So anyway.
Jill: OK, I love that.
Dana: So they look at global payroll now.
Jill: Yeah. Because you can have like, yeah, your company can be in Ontario or maybe your branch is on Ontario, but there’s, you know.
Dana: They’ve got tons of employees in like Vancouver –
Jill: Or something like that.
Dana: – Even in the US. So anyway, we look at the full payroll, there are various specific ways of calculating what that payroll is under the ESA. Not going to bore you with that. But those are those two prerequisites, five years’ service, $2.5 million payroll, then you get, essentially, a week of pay per year of service up to a maximum of 26 weeks. The weeks, unlike with notice, it’s prorated. So if you’ve worked 15 and a half years, you get 15 and a half weeks, and there is a very specific way of calculating that payment. It’s usually based on like the last 12 weeks. Like your compensation the last 12 weeks right before termination.
Dana: So, those are your minimum entitlements.
Jill: Those are your bare –
Dana: Bare minimum.
Jill: Bare minimums.
Dana: Under the ESA.
Jill: Bare minimums, that means you could be entitled to more and we are going to talk about that next week.
Dana: Yeah, when we talk about common law.
Jill: And you can’t be limited to these. Yes, yes, of course. You can’t contract out of these. We can contract out of common law. Next week. That’s next week’s episode.
Dana: Yeah. This you get no matter if you walk into a new job right away. So your employment is terminated? You walk into a new job; you have to get these amounts.
Dana: They can’t say OK, well, you’re already getting paid. So you don’t get the – no, you get them if your employment is terminated.
Dana: There are all kinds of little rules about when, like if you can resign during the notice period and still get your statutory severance. So if you have any of those little sort of finicky questions that’s something, you know, worth speaking to someone about, but that’s like, big picture, what you get. So that’s the ESA, Canada Labour Code.
Jill: Canada Labour Code.
Dana: Applies to federally regulated workers.
Jill: And those can include banks, people who are with banks.
Jill: Truck drivers.
Dana: Yeah, like, yeah, interprovincial travel, that kind of thing. We don’t work with the Canada Labour Code generally as often, just because most employees in Ontario are covered by the ESA. One of the huge protections in the Canada Labour Code is that if you are a non-managerial employee, who has been somewhere for a year or more, you could have a claim for unjust dismissal if your employment is terminated without cause. So under Ontario law, I could be like, I don’t like your shirt, which I love your shirt, so I would –
Jill: Oh geez. Oh, my god, I got offended.
Dana: How dare you. What a great colour. You know, if that’s the reason, as long as not discriminatory, whatever, you can terminate someone’s employment.
Dana: Federally, you can’t do that.
Jill: Yeah. It’s much more similar to a union, right? Where you have more entitlement over your job. You don’t have, under Ontario legislation, you’re not entitled to that job. You can be fired, without cause, as long as you’re provided with everything. Federally, it’s different. You got some more rights there, you know, you’ve got some more negotiating power for sure.
Dana: Yeah. There has to be like either cause or a legitimate restructuring, that sort of gets rid of your role. Talk to someone about that if your employment is terminated without cause. You can bring an unjust dismissal complaint; you have to do so within 90 days.
Jill: Yeah, exactly. So you should speak to somebody quickly if you think you’re in that position because, yeah, we have to get the ball rolling pretty quickly.
Dana: Yeah. And you can seek reinstatement. Being put back in your job with back pay.
Jill: That’s a big one.
Dana: It’s an extraordinary remedy, which means not something that they grant very easily, but it’s possible.
Jill: But if they do, and if they do, cha-ching. Because you could be, I mean, that could take two years, right, to get to the end of an arbitration and you are reinstated. And then, what? The arbitrator says you get back pay for those last two years and you get your new job. And maybe you don’t go back to your new job. So then you also get a – it could mean a lot and it is extraordinary, but it means you’ve got some negotiating power there, so.
Dana: And it’s worth it. Because you know, you can use that sort of as leverage sometimes for a different package, or an improved package. Because what you get under the Canada Labour Code is, yeah, two weeks’ notice.
Jill: Two weeks.
Dana: Notice. That’s it.
Jill: And then –
Dana: And then –
Jill: Five days?
Dana: Five days of severance, or two days per year of service, whichever is greater.
Dana: So, kind of stingy.
Jill: I know, you got to get your calculator out. OK. Yeah, it’s not a lot.
Dana: Not a lot.
Jill: Not a lot.
Dana: But you’ve got those big protections if you’re a non-managerial employee.
Dana: So you know, it kind of cuts both ways. So those are the minimums that generally apply in Ontario. ESA applies if you’re a provincially regulated worker. So most people. Canada Labour Code applies for federally regulated workers.
Dana: Those are those minimums. Can’t contract out of them.
Dana: Cannot be required to sign a release for them.
Jill: No, absolutely not.
Dana: And that’s what’s got me all worked up about those things. I wish people knew that.
Jill: I wish more people knew. I wish more people knew that those are your bare minimums so that we can talk more about the common law. And that’ll be next weeks’ episode. We’re talking common law entitlements when you’re fired.
Dana: In the final installment of our two-part series on severance entitlements.