BC Severance Law

Know Your Rights: An Introduction to BC Severance Law.

BC Severance Law

Do not accept a termination package or severance offer without speaking to a professional first!

The basics of BC severance law should be common knowledge to all employees across the province. We hope that the information provided here will help reduce the number of workers settling for a fraction of what they are properly entitled to upon termination of their employment.

Severance Entitlements

BC employment laws stipulate that employees terminated against their will and through no fault of their own must be provided with adequate notice ahead of their termination (measured in weeks or months) or with a payment equivalent to income they would have earned over that notice period. Such payments are commonly referred to as “severance” or “severance pay.”

An employee’s entitlement to severance exists independently of any severance offer provided by an employer. The BC Employment Standards Act (ESA) outlines the minimum amount of notice or severance non-unionized employees in BC are owed. Employees entitled to notice under the ESA cannot contract out of their minimum entitlement, regardless of what their employment agreement states.

Notice under the ESA is as follows: 1 week is owed after 3 months of service; 2 weeks are owed after 12 months of service; 3 weeks are owed after 3 years of service; and 1 additional week is owed for each additional year of service (maximum 8 weeks).

It is critical that employees understand that their severance entitlement under the ESA is only the minimum amount and does not account for the greater severance sums most employees are entitled to under the common law. Compare, for example, the maximum 8 weeks of notice or equivalent pay outlined in the ESA with the maximum severance entitlement under the common law, which is generally 24 months.

Note that by using a well drafted employment agreement, an employer can reduce an employee’s severance entitlement down to the minimum amount outlined in the ESA, thereby removing the employee’s entitlement to much larger sums owed under common law severance principles (discussed here). It is critical that you understand what you have agreed to in your employment agreement!

The Severance Package / Offer

Employers will often provide a severance package that outlines the minimum sum owed under the ESA and then offers severance pay representing a nominal improvement over this minimum amount. Many employees are entitled to a far greater sum under the common law! Severance packages are also often accompanied by a tight timeline for acceptance, which is nothing more than a pressure tactic. Unfortunately, if an employee accepts their employer’s severance package – even a low-ball offer signed under a tight deadline – it can severely limit or entirely remove their ability to seek any further sums.

It is for the above reason that we recommend speaking with an employment lawyer while reviewing – and certainly before signing – a severance offer.

How Much Severance am I Owed?

In Canada, Courts assess common law severance by determining a “reasonable notice” period and then looking at wages and benefits an employee would have earned working over the course of that notice period. The assessment process is an art more than a science, with factors considered by judges summarized in the following passage from the seminal 1960 Bardal v. Globe & Mail Ltd. decision:

The reasonableness of the notice must be decided with reference to each particular case, having regard to the:
– character of the employment,
– the length of service of the servant,
– the age of the servant,
– and the availability of similar employment, having regard to the experience, training and qualifications of the servant.

To learn more about how to calculate severance, click here.

Resources:
(A Helpful Introduction to Your Rights, Click on Links Below)

BC Employment Standards Act Guide (Government of British Columbia)

Basic Severance Calculator (vLex Canada Open)

What if I have already signed an employment agreement that severely restricts my severance entitlement?

To limit an employee’s severance to the minimum amount stipulated in the Employment Standards Act and displace their entitlement to common law severance, employers must:

Use a well-crafted employment agreement with precise language in the termination clause;
Execute the employment agreement in accordance with fundamental contract law principles.

These requirements, which can be difficult for even the most experienced employers to comply with, allow keen employment lawyers to challenge what at first glance may appear to be rock-solid employment agreements. Book a consultation today to have an employment lawyer assess your severance entitlement.