Can my ex-employer refuse to pay severance?
The Question: I was laid off this summer. After discussing with several lawyers the severance package offered, I was told I deserved more so I contested the offer.
After negotiating various issues, the last offer made to me was ‘taken off the table’ by the employer and the matter deemed ‘closed’ by its lawyer. Can my employer not pay me anything at all because my lawyer and I did not accept the offers they proposed?
I worked with my employer for close to 25 years and was laid off without cause and with no notice due to a change in the company’s business needs. Am I not entitled to the minimum severance offered under employment standards legislation?
The Answer: Your ex-employer is not playing by the rules and it makes your case against them even stronger.
When you are laid off without cause, employment standards legislation states that you are automatically entitled to a statutory severance payment based on your tenure. This is not something that can be taken away and it is not negotiable either. Even if negotiations are cut off, these payments must still be made and they must be made immediately following your termination.
In a recent Ontario case where a company fired its longest serving employee and forgot (at least according to them) to pay him his statutory severance, the court awarded him more than two years’ pay – a result usually reserved only for exceptional cases and interest on all the amounts that he should have received from the outset. In that case, the judge sent a strong message to employers that paying the statutory amounts should never be overlooked.
Employers are also required to provide a more generous severance package than what is required by employment standards legislation. This “common law” payment is based on your age, position, tenure and re-employability. However, unlike the statutory payment which is unconditional, the common law payments usually fall within a range and can be subject to some dispute.
Since the common law payments are not specifically defined, they are often negotiated and in these negotiations there are a few key rules to remember. First, employers can make time-limited offers that, if not accepted, can be withdrawn. Second, by making a counter offer, the initial offer is deemed to be rejected. This means that if your counter offer is not accepted, you cannot insist that the employer’s first offer be reinstated. For this reason, when you negotiate termination settlements, you need to know what you are doing – or else hire someone that does.
Keep in mind that employees do not lose their entitlement to severance because the negotiations do not result in a deal. If an employer decides to take its offer off the table and consider the matter closed (clearly a pressure tactic to try to force an agreement on its terms), then the overall fairness of its offer will be judged by what you actually received – in this case nothing. Courts frown on this behaviour and will award increased damages against an employer it feels was negotiating in bad faith.
In your case, the only way you will end up with nothing at all is if you let your ex-employer take advantage of you. In my experience, courts have a great deal of sympathy for older and long-term employees when it comes to awarding fair severance. Courts have even more sympathy when an employer, or it’s lawyer, does not play by the rules.
Author: Daniel Lublin
Publication: The Globe & Mail