By Charles Thompson
A layoff or sudden termination of employment is a reality for many workers at some point in their career. Often this comes with an offer of severance, based on the idea that employees should be given enough time and/or compensation to find another job without being severely impacted financially.
Generally, employment law in Nova Scotia allows employers to terminate an employee’s position with reasonable notice of termination or pay in lieu of notice, unless there is “just cause” for immediate dismissal. If the employer has just cause to terminate an employee, it does not have to provide any advance notice or pay any severance.
Often, if an employer decides to terminate an employee without just cause, they prepare a letter informing the employee that they are being let go. Along with this letter, there may be a request that the employee sign a “release” in return for a severance payment.
To assess what is a fair amount of severance requires consideration of a number of things. As a starting point, the Nova Scotia Labour Standards Code outlines the minimum severance an employee is entitled to if the employer terminates the employment without cause. Often, the minimum amounts laid out aren’t enough to cover the amount of time before the worker is able to find a new job. Courts have taken employee circumstances into consideration and have generally decided employees are entitled to significantly more severance than what is contained in the Labour Standards Code.
The courts have said that several factors are considered in determining what constitutes “reasonable notice”, and therefore what a reasonable severance package should be. One of the most important factors is the length of employment, and others include the age of the worker, type of occupation, and the availability of similar employment (which may include consideration of employment rates, geographical location, training, and experience). The more difficult it is to find a job quickly, based on these factors, the larger the severance may be.
There is a very rough “rule of thumb” that an employee should receive one month’s salary for each year they worked for their employer. However, this rule has generally not been accepted by the courts and is of really limited use.
The above is a simplified description of the law regarding severance, and there are many other factors that can come into play, including:
- If the employer has “just cause” to dismiss the employee for poor performance or disciplinary reasons, generally they do not have to pay any severance.
- If there is a written contract of employment, it might contain terms about the employer’s right to terminate the employment, and the amount of severance that will apply.
- If the employer terminates the employee because of a characteristic protected in the Human Rights Act (such as the employee’s gender, race or disability), the employee could have a human rights complaint.
- Termination rights for employees who are unionized are governed by the terms of their collective agreement.
If you are terminated and offered a severance package, you should have it reviewed by a lawyer, who can tell you whether the offer is fair, and if not, what your options are.
This article is for information only and is not intended to be legal advice. If you have any questions or would like further information, you should consult a lawyer.