Severance Pay: a crash course

Posted by on February 24, 2011 in General Information

I have been receiving questions about information on severance pay (I use the term in its generic sense rather than the legal one). Rather than reinventing the wheel, I would reference readers to my previous posts about severance pay. Specifically,

Severance pay: what am I entitled to?

Severance pay in bankruptcy situations.

If you are a contractor for a business which is insolvent or bankrupt, the unfortunate situation is that generally there are no special provisions helping unpaid contractors as opposed to employees in a similar situation; the assumption being, as a private agreement negotiated between sophisticated parties, the business providing the service would have taken sufficient steps to protect themselves from non-payment (deposits, with-holding work, trade-credit insurance coming to mind) or commence legal proceedings to collect.

The situation most likely affecting many employees recently is constructive dismissal. Constructive dismissal occurs when the employer makes a large change to the employee’s job- whether the roles and responsibilities, hours (for employees not working on call or an as needed basis) or salary (a turn for the worse in working conditions can also be a ground for constructive dismissal). Assuming the employee resigns in protest not soon after such a change, the employee may have grounds for severance. Given the law of constructive dismissal is so complex, qualified legal advice should be sought immediately.

As employee rights differ from jurisdiction to jurisdiction, qualified legal advice should be sought regardless. For those in middle management, employers will sometimes compensate (either in whole or in part) reasonable legal fees in connection with reviewing severance packages. For those in unions or a part of a large layoff, pre-paid legal services or a group hiring a lawyer may be cost-effective ways to go. Many law schools will also offer legal advice through legal aid clinics.  Good luck.

4 Comments on Severance Pay: a crash course

By This and That: Parking RRSP contributions, Market Risk and more… | Canadian Capitalist on February 24, 2011 at 11:27 pm

[...] Thicken My Wallet offered a crash course on severance pay. [...]

By This and That: Parking RRSP contributions, Market Risk and more… | MoneySense on February 25, 2011 at 12:14 pm

[...] Thicken My Wallet offered a crash course on severance pay. [...]

By Marc F. Conley on March 26, 2011 at 6:04 pm

The law of Oklahoma recognizes constructive discharge, but the case must be compelling on its facts. The difficulty for the employee is a more general one — Oklahoma is an employment at will jurisdiction in which few jobs are deemed to be continuing. The phrase from the case law that comes to mind is that, absent a written contract for employment for a specified period of time, an employee can be discharged for a good reason, a bad reason, or no reason at all.

By Where can you go if your severance package is unfair? - Thicken My Wallet on June 2, 2011 at 5:01 am

[...] far the largest number of emails I receive has to do with my posts on severance pay. The questions often have to do with whether an employee received a reasonable package when [...]

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