Severance Pay in Nova Scotia: What am I owed if I’m let go from my job?
Even hard-working, long-term employees can often find themselves let go from work unexpectedly. This happens often in today’s world of restructuring and downsizing. One day, you are suddenly presented with a termination letter and a request to sign a “Release” in exchange for a severance package. If this happens to you, it’s a good idea to consult with an experienced employment lawyer before signing anything to make sure you are receiving appropriate severance pay in Nova Scotia.
In Canada most non-union employees can be dismissed at any time for almost any reason. Assuming there is no discrimination on a protected human rights ground, or other special circumstances, the only real legal question is whether the employee has received the “notice of termination” to which he or she is entitled.
Often, employers will provide a dismissed employee with “pay in lieu of notice” instead of actual working notice. This payment is often referred to as “severance pay”.
How much severance pay am I owed in Nova Scotia?
When the employer terminates an employee, it will frequently make an offer of severance pay that falls short of what the employee is truly owed at law. Often, the offer is open to negotiation, even if the employer doesn’t say so. Below are some of the initial questions and legal issues that a lawyer will help you work through, as you decide whether to try and negotiate a better severance package.
Statutory minimum termination pay
Employers and employees in Nova Scotia are usually at least familiar with the minimum standards for severance pay set out in the Labour Standards Code. Section 72 of the Code states the minimum amount of pay that an employee is entitled to, so long as the termination was not for some kind of alleged misconduct (that is, if the termination was “without cause”). Keep in mind there are many exceptions to the general rules in the Code, and a lawyer can help you figure out if they apply to you.
See this official Guide to the Labour Standards Code, which will begin to answer some of your questions about minimum standards. In most cases, the minimum payout owed upon termination without cause is as follows:
Length of Employment
Weeks of termination pay owed
3 months – 2 years
2 years – 5 years
5 years – 10 years
Also note that, under section 71 of the Labour Standards Code, an employee with more than 10 years’ continuous service is entitled not to be terminated without just cause. Speak to a lawyer about how this protection may apply to you and what to do about it.
Termination pay agreed to in an employment contract
When the employee was hired, he or she often signed an employment contract that stated what they will be paid if terminated without cause. If so, that employment contract is the first place to look to determine whether your severance offer is fair and whether there are grounds to try and negotiate more. Assuming the termination clause in your contract is legal and enforceable, that is what a Court would use to determine what you are owed upon termination.
However, many employment contracts do not contain any termination clause. In many other cases, the termination clause is poorly or ambiguously drafted, and may be illegal. For example, if your contract states that you will receive an amount lower than the minimum standards provided in the Code (see above), that clause in the contract is null and void. An experienced employment lawyer can help you determine the enforceability of a termination clause in your contract.
Where the contract does not contain a termination clause, or where such a clause is indeed illegal or unenforceable, a Court will find the employee is owed “reasonable notice of termination”, or pay in lieu of such reasonable notice.
Reasonable notice of termination
Often, both employers and employees are unaware that – unless your contract says explicitly that you will only receive the minimum statutory severance pay – the Code is just a starting point to determine what a “reasonable” amount of severance pay would be.
The purpose of providing notice, or pay in lieu of notice, is to provide an employee with enough time to find comparable new work. In many cases, the minimum standards in the Code are simply not enough for that. The Courts will look at a range of factors in each case to determine what severance pay is reasonably owed, and this could range from the Code’s minimum standards to up to two years worth of your pay. The factors most often considered by the Court to assess what is reasonable include: your length of service, your age, your degree of specialization, and availability of similar work in your geographic area.
Moreover, debates often arise about what exactly should be included in the severance pay for any given period of notice. For example, should the employee’s annual bonus, or the value of health benefit premiums, be paid along with the regular salary the employee would have received in the notice period? Also note that any damages awarded by a Court for reasonable severance pay are subject to the employee’s duty to make reasonable efforts to mitigate their loss. A lawyer can help you sort all of these details out.
The bottom line
When an employee is let go from their job, the severance offer is most often not a “take it or leave it” deal, but is rather open to negotiation. Be sure to consult with an employment lawyer about your situation before signing any termination offer and release. Seek legal advice to help you determine whether it’s worth it to seek something more.
Contact us today to book a consultation with our employment lawyer, Daniel Wilband.
The above is provided for informational purposes only and does not constitute legal advice — contact a lawyer to discuss your personal circumstances and learn your options.