Toronto Severance Pay Lawyer

Toronto Employment Lawyers Advising on Severance Pay Matters

Losing your job is a challenging and stressful situation. Having the support of an experienced employment lawyer can make a significant difference, ensuring you receive the compensation you are legally entitled to. Whether you are an employee facing termination or an employer drafting severance terms, engaging an experienced employment lawyer can make a significant difference in mitigating potential legal challenges and ensuring fair outcomes.

What is Severance Pay?

Severance pay is a financial compensation package offered to employees upon severance of employment. It is designed to provide individuals with support during the transitional period between jobs and to ease the financial impact of the loss of a job.

Who is Eligible for Severance Pay?

The Ontario Employment Standards Act (ESA) dictates that to qualify for severance pay the following criteria has to be met:

  • an employee must have worked for their employer for five or more years
  • their employer either has a global payroll of at least $2.5 million or they have severed the employment of 50 or more employees in a six-month period due to downsizing or closing

Severance Pay vs. Termination Pay

Severance pay is not the same as termination pay. Termination pay is the financial compensation given to employees instead of giving the employee working notice. This form of payment is given if an employee is terminated without cause, as they are entitled to either a working notice period or payment that would reflect the amount of money they would have earned during their notice period.

How Severance Pay is Calculated

If an employee meets the eligibility criteria listed above, their severance pay can be calculated by multiplying the employee’s wages for a standard work week by the sum of:

  • The number of completed years they have been employed
  • Plus the number of completed months of employment divided by 12 for an incomplete year

For example, for an employee that has been working for 7 years and 4 months and earns $25 an hour, their severance pay would be calculated as follows:

  1. Weekly wage: 40 hours/week x $25 = $1000
  2. Time employed: Completed years + completed months of incomplete year = 7.33
    1. Number of completed years: 7
    2. Completed months in incomplete year: 4/12 = 0.33
  3. Total severance pay: Weekly wage ($1000) x time employed (7.33) = $7330

The Importance of Seeking Legal Counsel

Understanding the complexities of severance pay is crucial for both employers and employees. At DSF, our team of skilled Toronto employment lawyers take the time to understand each client’s unique situation to tailor strategies to each client’s needs. For employees, we provide expert advice on severance matters to help you understand your rights and negotiate a fair compensation package. For employers, we help to develop compliant and comprehensive severance packages to minimize risks and create a positive relationship between employer and employee.

We offer multiple convenient locations in TorontoWhitbyBarrie and more to better serve our clients. To begin your initial consultation and find the right employment lawyer, please contact us at (416) 449-1400.

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