Author: Daniel A. Lublin
The great enemy of the truth is very often not the lie, deliberate, contrived and dishonest, but the myth, persistent, persuasive and unrealistic. — John F. Kennedy
One of the most frustrating aspects of my practice is that when advising employees about how much their termination package will be worth, everyone thinks they are an expert. Many times, my clients have been given poor advice from friends, neighbours, their real estate lawyers or anyone else purporting to know the law in this area. Fortunately, however, not all “experts” are created equal.
Frequently, I’m asked about a supposed “rule of thumb” approach where employees are entitled to one month of pay for each year they have worked. The reality is, however, that no such “rule of thumb” approach exists.
So where does this myth come from? As recently as the mid-1990s the “rule of thumb” approach was broadly used by lawyers and even affirmed by a few of our courts. However, in 1999, the Ontario Court of Appeal concluded that this approach had very little statistical value when predicting the amount of reasonable notice that courts actually award. Therefore, there are two reasons not to use the “rule of thumb” approach. It is not accurate statistically and the Court of Appeal rejected it.
So how does a court decide how much you will get, or in other words, your entitlement to reasonable notice of your termination?
A court will apply what I consider the “contextual approach” because it takes into consideration all of the unique circumstances of the situation. Under this approach, the four most important factors that a court will look at are:
The character or the type of your employment. Those employees who perform more managerial or supervisory duties are entitled to more severance pay. Employees whose jobs are highly specialized and difficult to replace receive more severance as well.
The length of your employment. If you have been with the company for a longer period, you are entitled to more severance. However, the length itself is not always definitive. Some short service employees can be entitled to substantial severance depending on the other factors.
Your age at the time of termination: It is generally viewed that older employees will have a more difficult time finding a similar job to the one they were just terminated from. As a result, courts usually award older employees greater severance.
The availability of similar employment in light of your experience, training and qualifications. Here, a court will consider all of the circumstances either preventing you or helping you to find another similar job.
This is just one more example of a legal myth with no merit. When it comes to assessing your how much money you are going to get, the best advice remains to consult with an employment law expert before agreeing to anything that may affect your legal entitlements.