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How much is a Good Severance Package?
Employment Law

How much is a Good Severance Package?

TLDR: It’s complicated.

Long answer: It is a commonly held belief that you calculate an employee’s Common Law Notice (commonly referred to as severance, though that has a separate legal meaning) as one month’s salary for each completed year of service. This belief is incorrect. Common-Law Notice is far more complex than that, and the answer to what a person is entitled to can be a shock. What is considered appropriate changes not only due to the person’s age, job, experience, length at that job, previous jobs, education, health, but also the state of the world.

It is important to remember what Common Law Notice is and what it is for. Common-Law Notice is supposed to compensate an employee for the reasonable amount of time it will take them to find new employment. Most people get pay in lieu of Notice, which is the money you would have made over that Common Law Notice period. This is different from Employment Standards Act Notice, which is the legal minimum, and severance paid to long-term employees as compensation.

This raises the question of what happens when it becomes harder to find a job.

COVID-19 Notice Period Cases

The case mentioned above is Butkovic v Hudson’s Bay Company, 2021 ONSC 2610. Plaintiff, Ms. Butkovic, argued she was constructively dismissed when HBC unilaterally reduced her salary by 25% due to pandemic losses and then terminated her a few weeks later. HBC initially argued it was allowed to do so by the COVID regulations, and Ms. Butkovic was entitled to nothing, but before the Court only put forth arguments based on the appropriate notice period.

At the time of dismissal, Ms. Butkovic was 39 years of age and had worked for the Hudson’ Bay Company (HBC) for almost ten years. The chief dispute was over what the appropriate comparator group was. When determining Common Law Notice, the Courts will look at similar cases. This is what the Common Law is, all the decisions from centuries of cases.

HBC argued that Ms. Butkovic was a low-level data entry clerk, that her only post-secondary education was a fashion certificate, and that she should be awarded a maximum of six months. HBC also argued the pandemic was an unknown factor.

Ms. Butkovic, represented by De Bousquet PC, argued that her hard-earned promotions up the corporate ladder at HBC from a floor merchandiser to a data analyst meant she should be granted a longer notice period. Ms. Butkovic also argued that due to COVID-19, it would be much harder for her to find a job.

The Court agreed with Ms. Butkovic and De Bousquet PC. Accordingly, it awarded her 11 months of pay in lieu of Notice, including benefits and pension contributions. In doing so, the Court affirmed that while economic conditions affect both the employer and the employee, it is only relevant if the employee is entitled to a longer notice period.

How much money should I get, though?

Ask us. Just remember that, like Ms. Butkovic’s case, every case is unique. We need to review all the relevant factors before giving you an answer. This is our area of law. There may be factors you do not even know are relevant.

We can also offer three services a severance calculator cannot.

  1. We are lawyers; we give you the advice you can legally rely on.
  2. We can explain why you are entitled to specific amounts.
  3. We can help you get the money.

When Ms. Butkovic came to De Bousquet PC, she did not know what she was entitled to, only that it did not feel fair. However, based on the legal advice she received, she signed a retainer, commenced an action, and won.

Even if you were sure how much you are, how do you get it? It is doubtful your former employer will give it to you because you asked nicely, especially when you cannot show why you are entitled to that much.

Everyone at De Bousquet PC takes the time to learn about and understand your situation and answer any questions you may have. We strive to find a resolution that offers the best possible outcome for our clients with the least amount of stress.

We know this is a hard time. Please take care of yourselves and let us take care of you. Contact us today if you have been terminated or have another type of legal issue relating to work.

Past results are not necessarily indicative of future results, and that the amount recovered and other litigation outcomes will vary according to the facts in individual cases. This is not legal advice. Please speak to a lawyer to obtain legal advice, including possible results.

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