Losing a job is never something easy. No matter the reason, it always puts you in a precarious position and thus, you might easily get overwhelmed and simply not know what you should do next.
However, although your employer may have justified reasons to terminate your employment contract, there are some cases where he might be taking advantage of a situation to save money.
If your employment contract has recently been terminated, you might be entitled to severance pay. Such payment will allow you to receive financial compensation for your years of experience.
Before starting the procedures, you should take the time to verify if you are eligible. Even if the severance is frequent, some exemptions would prohibit you from receiving such compensation.
With the help of JuriGo, learn how to calculate your severance pay in Ontario easily!
Severance Pay – What Is It?
Before calculating your severance, the first step is to understand what a severance pay is and when it occurs. Simply put, severance is the compensation your employer will pay to a qualified employee whose employment has been severed.
In other words, it will compensate the employee for losses whenever a long-term employee loses his employment. For instance, it can be a loss of seniority. However, it is important to understand the difference between severance pay and termination pay which will normally be given to replace the notice of termination of employment which is mandatory by law.
When does severance occur?
Hence, to receive your severance, you must be able to demonstrate that your employment was severed. Many situations can lead to such a claim. For instance, if your employer dismisses or stops employing you, he will have to pay severance. This is also the case when the employer terminates your employment due to bankruptcy or insolvency.
Severance will also occur in case of constructive dismissal or if the employee resigns within a reasonable time in response to such a dismissal. A case will be considered to have constructive dismissal when the employer tries to terminate his employees when they are not allowed by law.
You could also seek severance when your employer lays you off for at least 35 weeks in a timeframe of 52 consecutive weeks. It is also important to know that, according to the law regarding severance, if you receive less than 25% of your regular wage, you will be considered laid off according to the law.
| Did you know? If you were not available or unable to work, if you were suspended due to disciplinary reasons, or if you simply don’t have work due to a strike (or a lockout), this week will not be included in the calculation for the severance. In other words, you will not be “laid off”. |
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As mentioned, the timeframe of 52 weeks must be consecutive. However, such an obligation does not apply to the 35 weeks. Therefore, those weeks can be separate as long as they are in the same 52 weeks.
You will also be eligible to seek severance if you were laid off because the business at a specific location closed permanently. In some cases, this establishment could include multiple locations.
Lastly, your employment will be considered severed if you received a written notice of termination and you took the decision to resign after giving your 2-week notice. Your resignation must also take effect within the notice period.
What Happens if the Employee Resigns After Receiving Notice of Termination?
Most of the time, before terminating your employment contract, your employer will give a written notice of termination. In that case, you might think you can’t do anything other than wait until the date on the notice.
However, you would be wrong! Indeed, you can always resign and still be entitled to receive your severance pay. If you wish to keep this right, you will need to respect some criteria. Notably, you will have to give him 2 weeks’ notice in writing.
| Good to know! If your employer grants you a longer notice period than the minimum required by law, the statutory part of this notice period will be the period that finishes on the date of termination. |
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Additionally, you will have to resign during the statutory notice period. This is the period of written notice that your employer must provide you when he wants to terminate your employment contract.
How to Qualify for Severance Pay in Ontario?
If you seek severance pay, you will need, as an employee, to qualify. Firstly, you need to have worked for at least 5 years for the employer. This includes the time spent in employment whether or not it was continuous or not. Also, it does not require you to be active.
Lastly, the employer must have a minimum global payroll of 2.5 million dollars. If not, you will also be qualified if your employer severed the employment of 50 employees or more in 6 months. It could also be the case if your employer closes permanently.
Can I Calculate my Severance Pay?
Once you qualify for severance pay, you might want to verify what is the amount you could expect. To do that, it is easier to understand how to calculate your severance pay with an example.
Let's say that you normally work 40 hours a week with a pay of 25$ per hour. If your employer gave you an 8-week notice for the termination of your employment contract and you decided to work during the notice period. At the end of the 8 weeks, your employment will be severed. For example, let’s pretend that you worked there for 6 years and 6 months.
In that case, here is how you can calculate your severance pay entitlement in advance according to Ontario laws:
- Calculate your regular wages for a week: 40 hours x 25$ = 1,000$
- Calculate the number of years worked (including the completed months): 6 years + 6 months / 12 months) = 6.50 years.
- Multiply both numbers: 1,000$ x 6.50 = 6,500$.
Therefore, in such a situation, you would be entitled to a severance pay of 6,500$. Of course, if you are not paid according to a per-hour wage, you will have to use a special method of calculation.
Your employer does not give you your severance? JuriGo can help you find a lawyer for free with his form!
When Is the Severance Paid?
According to Ontario laws, an employee should receive his severance pay in whichever of these two situations occurs the last:
- 7 days after your employment was severed, or
- The day you should have received your next regular payday.
Nonetheless, an employer can pay you in instalments. In that case, you must have a written agreement or the approval of the Ministry of Labour, Immigration, Training and Skills Development.
If your employer decides to pay you in instalments, the agreement must not last more than 3 years. Furthermore, if he fails to respect the schedule you agreed on, you will be able to ask for the complete payment immediately.
Can an Employer be Exempt from Severance Pay?
Yes, in Ontario, there are some exemptions to the severance pay. However some of them are complex and thus, it is recommended to seek legal help from a lawyer specializing in labour law which will provide you with all the assistance you need.
As an employee, you will not be entitled to severance pay if you have previously refused an offer from your employer of reasonable alternative employment. That would also be the case if this position was available through a seniority system within the company.
You will also not be entitled to a severance pay if your employment was severed and you decided to retire on a full pension which recognizes the years of service you have worked in the business. Keep in mind that the Canada Pension Plan does not qualify for this exception.
It is not possible to seek severance pay if your employment was severed due to a permanent (or partial) closure of the business due to the economic consequences of a strike. Obviously, you can’t ask for a severance if you were found guilty of wilful misconduct or neglect of duty that was not condoned by the employer.
As a construction worker, you can’t ask for severance pay if you are associated with work or if you have a collective bargain. That will also be the case if you are employed in the maintenance of one of the infrastructures below:
- Building,
- Sewers,
- Structures,
- Pipelines,
- Roads, and
- Tunnels.
Lastly, you can’t seek severance pay if the reason for your employment termination is due to the impossibility of performing your tasks or if it has been frustrated by an unexpected event. This situation does not include bankruptcy or insolvency.
Additionally, this exception does not include the situation where your employment has been severed because the Director of Employment Standards failed to issue (or renew) a licence allowing you to operate a temporary help agency.
File a claim to receive your severance with the help of a lawyer partnered with JuriGo!
Whenever you have an issue with your employer, it can be difficult for you to resolve it quickly. This is mostly due to the imbalance of power between you and the person who has authority over you.
Hence, whenever he terminates your employment contract, you might think that there is no solution and you simply have to accept your faith and move on. Others might simply think that the recourse will be more expensive than what you are seeking.
However, you should always make sure that your rights are respected by your employer during your employment but also when it is terminated. To do so, it is possible to seek help from a lawyer specializing in labour law.
Because of your past relationship with your employer, the lawyer will be able to help you in the negotiation process by bringing someone else into the debate. He will also be able to represent you if the situation ends up in front of a judge.
Looking for a lawyer specializing in labour law? File JuriGo’s form right away to find a lawyer for free!