limits exist for Federally Regulated Employee severance pay claims
Whether you’re in business for yourself or working for an employer, you may need to let employees go. When this happens, there are certain limits you must respect in terms of the final paychecks you issue and what you’re required to pay for severance packages. Otherwise, you risk running into legal trouble and putting yourself at financial risk.
A “Federally Regulated Employee” is a worker who has a labour and workplace rights that are protected by the Canada Labour Code (CLC). The CLC covers workers who work in industries that are subject to federal oversight, including government jobs; privately owned companies that operate across provincial or international borders such as airlines and airports; banks; transportation services like bus and rail companies; broadcasters; and telecommunication providers.
These types of companies have an obligation to provide their employees with a Federally Regulated Employee severance pay, which can be paid in a lump sum or over a period of time. When deciding on how to deliver a severance package, employers must consider the tax implications and an employee’s preference. Lump sums typically result in lower tax rates, while payments over a specified timeframe can push an employee into a higher tax bracket.
What limits exist for Federally Regulated Employee severance pay claims?
While many people assume a simple formula such as one month’s notice or pay per year of service is the appropriate amount to be offered on a severance package, this is not necessarily true. A severance package must also take into account common law compensation, which consists of an employee’s age, position or job title, level of wages, length of employment and availability of other employment.
In addition, a Federally Regulated Employee’s entitlement to telecommunication employee severance pay can increase if they have been employed with the company for more than 12 months. This is because the CLC sets out a graduated system of notice and pay in lieu of notice for employees, similar to what is found in many provinces’ Employment Standards Acts.
If you’re a federally regulated employee who believes you’ve been unfairly dismissed, contact an experienced employment lawyer at Samfiru Tumarkin LLP for assistance. We can help you make a complaint for unjust dismissal and potentially win reinstatement and substantial severance pay.
For instance, an employee with 10 years of service may receive two weeks of pay for each year worked, while someone with fewer years may receive a prorated amount. This financial support provides a critical buffer, helping employees manage living expenses, mortgages, or other financial obligations during their period of unemployment.
When it comes to the termination of a non-unionized worker, employers can only use valid reasons for dismissal such as health and safety violations, misconduct, or breach of contract. However, this is not always the case and sometimes an employer’s decision to terminate an employee can be illegitimate. In such cases, a fired employee may be entitled to severance pay in addition to any other remedies they may be awarded by the courts or arbitrators. A severance package can be worth millions of dollars in such a situation.
