If you live in Alberta and are not a member of a union, your employer must generally provide adequate notice or payment in lieu of notice (severance) to terminate you without cause.
If you have breached the terms of your employment contract, your situation may be different. If, however, there is no cause for ending your employment, you are likely entitled to termination payment in the form of a “severance package”.
Before you accept the severance pay offered, it is important to assess whether it is acceptable.
In many cases, employers pay only the bare minimum or, due to a misunderstanding or on purpose, less than you are entitled to.
At Taylor Janis Employment Lawyers Red Deer we can assist in negotiating the maximum severance package possible if you’ve been terminated.
WHAT IS THE BIGGEST MYTH ABOUT SEVERANCE PAY?
Some employers and employees assume that there is a simple way to calculate severance pay.
Yes, there are minimum requirements for severance packages as laid out in the Employment Standards Act.
However, the “one week per year” rule is a myth that could end up costing you a significant amount.
Simply punching your numbers into a formula will not magically show you what your severance package should amount to. It is more complex than this and depends on your personal circumstances.
The number of years you’ve worked and your usual salary are both important factors but they are not the only ones considered when calculating severance pay.
Below we look at the other main factors that help determine severance pay in Alberta.
WHAT FACTORS AFFECT YOUR SEVERANCE PAY IN ALBERTA?
There are four main factors that will affect your severance pay:
Length of employment
Just because you have not served ten years with a company does not mean that you cannot claim severance pay.
In fact, comparatively large severance packages can be awarded to employees with short terms of service with an employer, especially if other factors apply, such as advanced age and/or lack of alternative employment.
Your age at termination
As a general rule, the older you are, the more severance pays you are entitled to as your future employment prospects are usually more limited.
However, young employees should not be discouraged from claiming a fair severance package. You are entitled to adequate compensation and, if your employer does not recognize this, you can take steps to redress the situation.
Your position during employment
Employees in more senior positions with specialist skills have traditionally been entitled to larger severance packages than those in more junior roles, all else being equal.
However, as the employment landscape changes, other factors like demand for skills (see below) play an increasingly important role.
Demand for your skills
For some individuals, termination greatly impacts the rest of their lives and they find it difficult to find alternative employment. This could be due to an economic downturn or because the advance of technology renders certain skills redundant.
This factor is a key consideration that cannot be punched into a severance pay calculator. It applies whatever age you are and however long you have served.
ARE THERE OTHER CONSIDERATIONS REGARDING SEVERANCE PAY?
Remember, severance pay is intended to compensate you for the time you are out of employment.
Therefore, there may be other factors that we may need to consider when assessing your severance package:
- Are you pregnant or suffering from an illness that affects your employment prospects?
- Were you recruited under false pretense?
- Are you subject to employment contract clauses that limit your ability to find timely alternative employment (e.g., a non-competition clause)?
- Does your employment contract contain a termination clause that impacts your severance pay?
- Are you owed overtime pay?
These are just a few possible factors. With severance pay, your personal circumstances are paramount in any calculation.
That’s why it’s important to seek advice from an experienced employment lawyer before accepting what you are offered.
WHAT ELSE SHOULD I KNOW ABOUT SEVERANCE PAY IN ALBERTA?
There are a few other important considerations to note with severance pay:
Don’t be pressured by employer-imposed deadlines
Your employer may attempt to pressure you into accepting a severance package by imposing a deadline on it. Be wary if this is the case as this is not standard practice and it could be a sign that you are being shortchanged.
You have two years to claim full severance
In Alberta, you have two years from termination to pursue full severance pay from your employer. That is the only deadline that you should be concerned with.
Employment Standards can only provide limited assistance
If you call the Ministry of Labour or Employment Standards in Alberta, you will be advised only of the minimum payment you are due under the Employment Standards Act. You may be entitled to considerably more.
Note that if you file a claim with the Ministry of Labour, you may not be able to call on the services of an employment lawyer.
Is your termination for cause legal?
Some employers use termination for cause to avoid having to pay severance. If this has happened to you, our lawyers can help you assess if your termination was legal and, if not, what you can do about it.
OUR LAWYERS ARE EXPERIENCED IN ASSESSING SEVERANCE PACKAGES
Has your employer recently asked you to sign a severance package agreement that you’re not sure about?
You may be entitled to more severance than the minimums quoted above in the state guidelines.
It’s best not to sign anything that you’re unsure about without talking to a lawyer.
At Taylor Janis, an experienced employment lawyer can advise you during a confidential 30-minute consultation about your severance pay rights.
Call us now to book an initial consultation: 604-423-2646.