Negotiating a Severance Package for a Federally Regulated Employee
Indotribun.id – Negotiating a Severance Package for a Federally Regulated Employee. Losing your job is a challenging and stressful experience. For federally regulated employees in Canada, the termination process involves a unique set of rules governed by the Canada Labour Code (CLC). While your employer may present you with an initial severance offer, it’s crucial to understand that this is often just a starting point. Negotiating your severance package is not only possible but essential to ensure you receive a fair financial bridge to your next opportunity.
This guide will walk you through the key considerations, your legal entitlements, and the strategic steps to take when negotiating a severance package as a federally regulated employee.
First, Confirm Your Jurisdiction: Are You Federally Regulated?
Before diving into the details of the Canada Labour Code, you must confirm that you are, in fact, a federally regulated employee. This distinction is critical because your rights are different from those of provincially regulated workers. Approximately 10% of the Canadian workforce falls under federal jurisdiction.
You are likely a federally regulated employee if you work in one of the following sectors:
- Banking (e.g., RBC, TD, Scotiabank)
- Airlines and Airports
- Telecommunications (e.g., Bell, Rogers, Telus)
- Interprovincial and international transportation (railways, trucking, shipping)
- Radio and television broadcasting
- Federal Crown corporations (e.g., Canada Post, Via Rail)
- Uranium mining and atomic energy
If your industry isn’t on this list, you are most likely covered by provincial employment standards. If you are federally regulated, the Canada Labour Code and Canadian common law will govern your severance entitlements.
The Two Pillars of Severance: CLC Minimums vs. Common Law Rights
A common mistake is believing that the Canada Labour Code dictates your full severance entitlement. In reality, the CLC only provides the minimum statutory requirements. Your true and much larger entitlement is typically found under Canadian common law.
1. Canada Labour Code (The Floor):
The CLC sets the absolute minimum notice or pay in lieu of notice that an employer must provide. For a without-cause termination, this includes:
- Termination Pay: At least two weeks of notice or pay in lieu of notice if you have completed three consecutive months of service.
- Severance Pay: An additional payment if you have completed 12 consecutive months of service. This is calculated as the greater of two days’ wages for each completed year of service or five days’ wages.
Many initial severance offers are based only on these minimums. Accepting such an offer means leaving a significant amount of money on the table.
2. Common Law (The Ceiling):
Common law provides for “reasonable notice” or pay in lieu of notice. This is a much more generous standard intended to provide you with financial support while you search for comparable employment. The amount of common law notice is determined by the Bardal Factors, named after a landmark 1960 court case.
These factors include:
- Age: Older employees are generally awarded longer notice periods, as they may face more difficulty finding new employment.
- Length of Service: The longer you have worked for the company, the greater your entitlement.
- Character of Employment: Your role, seniority, level of specialization, and salary are considered. Senior or highly specialized roles often command longer notice periods.
- Availability of Similar Employment: The court considers the current job market and how long it would realistically take someone with your skills and experience to find a comparable position.
A common law severance package can range from 3 to 24 months’ salary, far exceeding the weeks or days offered under the CLC.
What Should Be Included in a Comprehensive Severance Package?
A fair severance package is more than just base salary. When negotiating, you should ensure the offer accounts for your total compensation. Key elements to review and negotiate include:
- Salary and Notice Period: This is the core of the package, calculated based on the common law notice period. It can be paid as a lump sum or through salary continuance.
- Benefits Continuation: Health, dental, life, and disability insurance should continue throughout the entire common law notice period. Losing these benefits can be a significant financial burden.
- Bonuses and Commissions: You are entitled to any bonuses, commissions, or other incentive payments you would have earned during the notice period.
- Pension and RRSP Contributions: Your employer should continue making contributions to your pension or RRSP matching program throughout the notice period.
- Stock Options: The vesting of stock options during the notice period should be addressed.
- Outplacement Services: Career counselling and resume assistance can be a valuable, non-monetary part of the package.
- Letter of Reference: Securing a positive letter of reference can be negotiated as part of the settlement.
- Legal Fees: It is common to negotiate a contribution from the employer towards the legal fees you incurred to review the severance offer.
Your Negotiation Strategy: A Step-by-Step Approach
- Do Not Sign Immediately: Employers often impose a tight deadline to pressure you into signing. Do not give in. You have the right to take time to review the offer and seek professional advice.
- Get Everything in Writing: Request the full severance offer in writing, including all terms and the “Full and Final Release” document you will be asked to sign.
- Seek Legal Counsel: This is the most critical step. An experienced employment lawyer can accurately assess your common law entitlements, identify weaknesses in the initial offer, and formulate a negotiation strategy. The difference between the initial offer and what a lawyer can secure is often substantial.
- Formulate a Counter-Offer: Your lawyer will draft a demand letter outlining your entitlements under common law and presenting a counter-offer. This letter signals to your former employer that you understand your rights and are serious about receiving fair compensation.
- Understand the Release: The “Full and Final Release” is a legal document where you agree to give up your right to sue the employer in exchange for the severance package. Never sign this document until you are completely satisfied with the final offer.
By being informed and strategic, you can turn a difficult situation into a secure financial transition. Remember that your employer expects you to negotiate, and doing so is a standard part of the termination process.
Frequently Asked Questions (FAQ)
1. How long do I have to accept a severance offer from a federally regulated employer?
Employers often attach a deadline to a severance offer, sometimes as short as a few days, to create a sense of urgency. However, these deadlines are often arbitrary. While you shouldn’t delay indefinitely, you are entitled to a reasonable amount of time to seek legal advice and consider the offer. An employment lawyer can often get this deadline extended for you while they conduct their review.
2. Can I collect Employment Insurance (EI) if I receive a severance package?
Yes, but not immediately. Your severance pay is considered earnings by Service Canada. Your EI benefits will only begin after the period covered by your severance has passed. For example, if you receive a lump-sum payment equivalent to 6 months’ salary, your EI benefits will be deferred until that 6-month period is over. It is still crucial to apply for EI as soon as your employment ends to start the process.
3. What if my employer only offers the minimum required by the Canada Labour Code?
An offer that only includes the CLC minimums is a strong indication that you should not accept it. This is a tactic used by employers hoping the employee is unaware of their much larger common law rights. It should be viewed as an initial proposal, not a final offer. This is the exact scenario where consulting an employment lawyer is most valuable, as they can explain your true entitlements and negotiate on your behalf for a package that reflects your age, service, and position.
As an experienced entrepreneur with a solid foundation in banking and finance, I am currently leading innovative strategies as President Director at my company. Passionate about driving growth and fostering teamwork, I’m dedicated to shaping the future of business.
Komentar