Economic Recession Layoff
After every boom comes a bust
Economic recessions are an inevitable part of life. As businesses try to keep their heads above water during challenging times, payroll is often the first target for cost-cutting measures. Learn what you need to know about your rights during an economic recession layoff.
In Canada, downsizing and job layoffs due to an economic recession is not an excuse to terminate you without a proper severance package. In fact, a depressed economy may entitle you to more severance.
Your severance package can vary depending on the circumstances of your dismissal, including if you are terminated during a recession.
Scenario 1
Terminated for just cause due to a recession
You have been wrongfully dismissed if your employer has terminated your employment without notice, based on their economic difficulties. Your employer’s economic hardship cannot be used as a reason to withhold paying you a severance package. Rather, your termination is considered without cause, thereby entitling you to a severance package. Factors like age, position, length of service, salary, and even recessionary circumstances are considered in determining the appropriate amount of your severance package. An unfounded attempt to dismiss an employee without notice may justify a longer severance package.
Scenario 2
Terminated without cause, but for a discriminatory reason
If you have been terminated without cause during a recession, it is important to consider whether there are any discriminatory reasons behind your dismissal. The Ontario Human Rights Code prohibit the dismissal of an employee based on factors like age, gender, race, religion, disability, family status or orientation. Even if it is just one factor in a larger decision to dismiss you during a recession, it is still enough to taint your termination and entitle you to moral damages. A recession cannot be a smokescreen for an otherwise illegal termination. “Cost-cutting” during an economic recession is not an excuse to get rid of the older employees or disproportionately fire female employees.
Scenario 3
Terminated without cause, without a discriminatory reason
You have been terminated without cause and your employer has asked you to sign a release to receive your severance package. It is vital that you do not sign anything before receiving independent legal advice. Your entitlement will depend on factors such as age, position, tenure, and salary. In fact, being terminated during a recession entitles you to more severance pay, because on average, it will take you longer to re-employ. Recessions typically mean a lower supply of comparable jobs and higher competition in a reduced job market. The higher severance package gives you a longer “financial bridge” to get to your next job.
You should seek advice when faced with any of the above scenarios. You should make sure that your employer is not shortchanging you with a subpar severance package, or worse, wrongfully dismissing you.
Our lawyers will help you to get clarity and control of your employment matter by explaining the options you should consider, ensuring that your legal rights are protected.
If you find yourself facing a layoff, you can count on the employment lawyers at Whitten & Lublin to be in your corner.
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