Executive Severance

Upon dismissal/termination, lay-offs or a mutual agreement to part ways, many individuals, especially senior executives, are entitled to severance pay.

Severance pay serves as compensation paid to a qualified employee who has his or her employment severed. You are not entitled to severance pay if you resign from your job. Those entitled to severance pay are compensated for losses that occurred when an employee was severed from his or her job.

For example, executives who may have served a company for a long period of time should be compensated for their loss of seniority. A severance package should not just include lost wages. Severance packages can be determined based on a pre-existing employment contract or by legislative minimums. Under various legislation, severance pay is calculated based on your years of employment and regular wages and benefits. That being said, the majority of employees who are dismissed are entitled to more severance than the statutory minimums. In assessing how much severance an individual is entitled to, courts consider the employee’s age, seniority, tenure, the availability of comparable work, and the employee’s training, qualifications and experience.

Once you reach the position of an executive, negotiating your compensation package is extremely important.

What Should Be in My Severance Package?

Reasonable severance packages can include:

  • Overall salary
  • Bonuses
  • Benefits (including extended health benefits, short term and long term disability insurance)
  • RRSP and pension contributions
  • Car or mileage allowance
  • Retraining
  • Accounting fees

In addition, employees can negotiate receiving the following upon severance of employment:

  • Gym memberships
  • Personal cell phone costs
  • Professional memberships
  • Employee discounts
  • Car payments

Why Choose an Employment Lawyer at Levitt LLP?

If you are being asked to sign an employment contract outlining your severance entitlements, come speak to one of our employment lawyers before signing anything.

Moreover, if you are an executive who is being asked to leave the company, don’t sign a severance agreement until one of our employment lawyers has an opportunity to review the severance package. As a senior executive you may be entitled to more than you think, and as noted above, your severance entitlements can include benefits beyond lump sum payments. An employment lawyer in Toronto will evaluate the severance arrangements that have been presented to you, determine whether you have a potential legal claim for severance pay, and then work vigorously to make sure that you receive the severance package that you deserve. If negotiations fail, our employment lawyers can zealously represent you to ensure that you receive the severance compensation that you are rightfully entitled to.

Each situation is unique, so schedule a consultation today with one of our employment lawyers in Toronto, the GTA or across Canada to learn about your options.


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