Can Severance Pay Be Included in Employment Contracts

Losing your job is an upsetting experience, regardless of whether you saw it coming or were fired unexpectedly. The rush of emotions can leave you feeling overwhelmed and anxious, especially when you’re trying to figure out how to pay your bills in the meantime. Fortunately, severance pay ontario can help ease some of the financial stress that comes along with losing your job, but it’s important to understand how much you may be entitled to and how it is calculated.

If you are a non-unionized employee (or a unionized one for that matter) in the province of Ontario, and your employer terminates your employment, they have to give you severance pay if it is at least equal to the minimum notice required by the Employment Standards Act. This minimum is three weeks of regular wages, plus 4% vacation pay. However, your employer can also include a clause in your contract that stipulates a higher amount of severance pay than what is mandated by law.

For example, if you are a long-term worker for ZYX Kitchens Inc, who has an Ontario payroll of over $2.5 million, you can expect to receive a severance package of 26 weeks of your regular wages. Your employer is also required to provide you with severance pay if they fire you because of serious misconduct or for a reason that violates the Human Rights Code.

Severance Pay in Ontario – Can Severance Pay Be Included in Employment Contracts?

Sometimes, companies try to circumvent the laws that mandate everance pay Ontario and other employment entitlements by including termination clauses in their contracts. The problem with this is that it can restrict or limit your legal rights in a variety of ways, which can significantly reduce the size of your severance package.

An experienced employment lawyer like Samfiru Tumarkin LLP can review your contract and determine if it includes termination clauses that limit or reduce your rights to minimum legislated severance pay or greater common law amounts when you lose your job. If it does, an employment lawyer can use various laws and factors to argue that your employer owes you a much larger severance package, which could amount to thousands of dollars or more.

In the dynamic landscape of employment law in Ontario, the concept of severance pay holds significant importance for both employers and employees alike. As a vital component of the employment relationship, severance pay serves to safeguard the interests of workers while also outlining the responsibilities of employers in the event of termination.

As an aside, it’s worth noting that you must be paid your severance package within seven days of your termination date or on what would have been your next regular payday, whichever is later. If your employer does not pay you your severance payment in time, you can make a claim to the Ministry of Labour. You also have to pay income tax on your severance pay, so it is important that you set aside enough money to cover these expenses in the event of your departure from a company. If you’re worried about your ability to meet these requirements, speak with an employment lawyer right away.