Termination and Severance Pay: Understanding the Legalities

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An involuntary termination can cause financial hardship when an employer ends a relationship with an employee or terminates the contract without prior notice. In such a scenario, employees are eligible to get severance pay. The severance pay provides financial support to employees during the period of lost wages.

In most cases, employees are not familiar with severance pay and how it works. A skilled Ontario employment law attorney can help them understand the severance pay concept and its significance.

An overview of severance pay

Severance pay is a form of compensation provided to employees who are unexpectedly terminated. The purpose is to provide a financial cushion during employment. Employees who face termination due to restructuring, layoffs, and downsizing can claim severance pay.

The terms and conditions may vary according to employment contract, length of services, labor laws, company policy, and more. Severance pay covers the following components including:

  • Outplacement Services: Some companies may offer outplacement assistance to employees after termination. This may involve job search support, career counseling, access to placement services, resume writing assistance, and more.
  • Lump Sum Payment: Employee receives a one-time payment right after the termination. Lump sum payment will be based on years of service, salary, and company policy.
  • Continuation Of Significances: Some companies may include retirement benefits and health insurance in severance packages for a specific period. Continuation benefits get alternative coverage unless they find new employment.
  • Non-Disclosure Agreement: Employers may sign an agreement during severance pay negotiation. The agreement restricts employees from disclosing sensitive information to other companies after termination.

How can employees request severance pay?

Severance pay laws and entitlements vary from country to country. Both employees and employers must understand their respective state employment law. Moreover, employees can seek assistance from employment attorneys to understand their rights. 

Here are some essential steps an employee can follow to request for severance pay:

  • Review Employment Contract: This helps you know about involuntary termination and severance pay clauses. 
  • Understand Employment Laws: Employees should familiarize themselves with employment rights and state-specific laws. 
  • Communicate With Management: Contact the human resource department of the company. Discuss about termination and possibilities of claiming severance pay. Ask for company policies and clarification to better understand the matter.
  • Prepare a Case: If severance pay is not included in company policy, negotiate with the employer based on your contribution to the company. Prepare your severance pay case highlighting your worth and mention the financial assistance you need during employment

Seek a skilled employment attorney advice

You may seek legal advice if your company does not provide severance pay. Consult with a skilled employment attorney who helps get a legal claim.

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