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Can You Get Severance Pay in Ontario?

Get Severance Pay in Ontario

Severance pay is the compensation an employer offers to an employee whose employment terminates due to layoff or being fired. The payment can include a lump sum or a series of payments over time. The amount of the package is typically based on the length of time the employee worked at the company, and the circumstances under which the company ended its relationship with the worker. The purpose of severance pay is to soften the blow of losing a job, while also providing financial support during the transition to a new position.

Neither federal nor state laws require companies to provide severance packages, but it is a common practice. Companies may be able to mitigate legal risks by clearly defining and communicating their policies on termination and severance pay. Moreover, offering such packages can attract talent and boost morale during challenging workforce transitions.

For non-unionized employees in Ontario, full-time and part-time (and even contract workers), severance pay is usually mandatory if the company decides to fire an employee without cause. This could be related to a business reorganization, a decision to close a facility, or for any reason that isn’t connected to the worker’s conduct or discriminatory reasons. It’s important to remember that severance pay doesn’t protect an employee from other legal claims against the company, such as those relating to harassment or discrimination.

Can You Get Severance Pay in Ontario?

The amount of severance pay Toronto varies by employer, and the exact terms are often subject to negotiation. However, it is typically more generous than the salary an employee was earning during their tenure at a company. For example, a bonus that is not a component of the worker’s base salary isn’t always included in a severance package because it isn’t considered wages. However, some states treat performance-based bonuses like wages and therefore may require the company to give them to departing employees in their entirety.

It is also possible for a severance package to include the employee’s right to sue the company for certain wrongful acts. In such cases, the waiver must be drafted carefully to comply with all applicable laws. For example, if a severance package is for an older worker, the terms must comply with federal law pertaining to the Older Worker Benefit Protection Act. This includes specific language, waiting periods, revocation periods and waivers that must be strictly followed for a valid release to be in effect.

In addition, if a severance agreement is governed by state contract law, any ambiguities will be resolved against the drafter, which is typically the company. For these reasons, it’s important to seek legal counsel when drafting a severance package. By working with an attorney, you can ensure that the document complies with all applicable laws and reflects the terms you want to offer to your employees. This will help to reduce the likelihood of any disputes in the future. For more information on how to prepare a severance package, contact an employment law firm in your area.


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