By Sheryl Smolkin
Read this article and comments at Moneyville.ca
Huge severance packages often make the news, but for most of us a six-figure golden parachute is about as likely as winning the lottery.
Even so, if you and your employer do part ways, there are ways to ensure that you can get as good a deal as possible. If you signed an employment contract when hired, it will typically set out how much you will receive if fired and how the money will be paid out , whether a lump sum or monthly payments. A collective agreement may do the same for union members.
Otherwise, you can expect an Ontario court to award you roughly one month of pay per year of service to a maximum of between 24 and 30 months. But depending on the specific facts, the remedy in each case can vary significantly.
For example, in Sanders v Chateau de Charmes Wines Lawrence Saunders, a 39 year old marketing director, was fired after 10 years and got 15 months of pay. The size of the award was due in part to a finding by the court that his manager was “hostile, aggressive, profane, rude, demeaning and intimidating.”
Employment law mediator Barry Fisher created another way for you to find out what you might be entitled to. His Wrongful Dismissal Database lets you enter your age years of service and occupation and get severance details based on court decisions of the cases most relevant to your situation. The $49.95 charge for a single report may be useful if you want to get a general idea whether the termination package offered by your employer is in the ball park.
Fisher says it is most difficult to predict what an employee who has been on the job for one to five years can expect. These situations might include if you were recruited away from a company where you worked for 10 years and are fired after one year. You will be entitled to more than if you were unemployed prior to receiving the current job offer.
He says there are things you can do to ensure you get the best settlement. Here is his list.
1. Consult with an employment lawyer
Negotiating the best settlement is not something you can do on your own. Find a lawyer who has employment law experience. The Law Society of Upper Canada’s Lawyer Referral Service will give you the name of a lawyer within or near your community, who will provide a free consultation of up to 30 minutes to help you determine your rights and options.
2. Get statutory payments up front
In Ontario, you are entitled to minimum termination and severance payments under the Employment Standards Act whether or not you get another job. Other provinces have similar laws. Payments from the ESA can be up to 34 weeks if you are a 26-year employee of a $2.5 million company. Getting this money up front will give you the breathing space to negotiate an appropriate resolution of your wrongful dismissal claim.
The Canada Labour Code covers federally-regulated companies like banks and airlines. You can also sue for wrongful dismissal, but the statutory minimums will be deducted from any award.
3. Keep records
To succeed in a wrongful dismissal case, you must show you have tried to mitigate your damages by searching for another job. You may incur expenses for career counselling, printing resumes and transportation to job interviews. Carefully document all aspects of your search and related costs.
4. Ask for relocation counselling and a reference letter
If your employer complies, this will enhance your job search. If not, you can use this information to help persuade a court to give you a longer paid notice period.
Where the employer is alleging any performance issues, Koskie Minsky partner Arleen Huggins also asks for a “non-derogatory” agreement so the company is prevented from releasing negative information.
5. Track your benefit costs
Coverage for employee benefits (health, dental, life insurance etc.) must continue for the period of statutory notice but not necessarily for the more extended common law notice period. There are two competing theories as to what you are entitled to: the premiums to replace the coverage or the actual costs you incur during the notice period (i.e. for prescription drugs, dental bills). However your benefit losses are calculated, it pays to hold on to all your bills.
6. Exercise any stock options
The law says your stock options must continue to be valid for the notice period. However your employer may take the position that the stock options expire within a short period after termination. If so, exercise the options and then track the progress of the stock throughout the notice period. You may be entitled to any positive difference.
7. Record all sales, commissions owing and what’s in the pipeline
For sales people, outstanding commissions can be very contentious, particularly if they do not have access to records of pending transactions after they leave. Make detailed notes before you forget.
8. Medically document mental distress claims
To successfully claim damages for mental distress in a wrongful dismissal case, you have to prove how the distress affected your personal life. See a doctor or psychiatrist. Ensure your doctor’s notes reflect the reason for your condition. Take any medications prescribed.
9. Take a lesser job, a contract or a temporary position
Your obligation to mitigate requires that you search for alternate comparable employment. However, if you don’t find similar job after a reasonable period (say six months), don’t rule out lower paid work, a contract or a temporary position. It’s always better to be looking when you are back in the labour market. Also, if you have money in your pocket, you are less likely to take a cheap offer.
10. Don’t pani
People often overreact. They don’t understand they are entitled to statutory minimums and they prematurely sell off their assets or grab a terrible offer because they think they are going to go broke next week.
To add to this list, Huggins suggests that you make your lawyer aware of possible statutory violations that could enhance the value of your wrongful dismissal claim. Examples include terminations due to pregnancy, disability, race and other enumerated grounds under human rights legislation.
She also cautions clients not to file a claim with Ontario Ministry of Labour for termination and severance pay. “While this may appear to be a less costly preliminary step, by going this route you forfeit your right to sue for potentially more lucrative common law damages for wrongful dismissal. The better practice is to incorporate both the statutory claim and the common law claim into one lawsuit.”