What is Severance Pay? Learn About Severance Pay

Make no mistake, in British Columbia (BC) employees have few rights when it comes to dismissal from employment and associated severance pay or packages.  Unless you have negotiated terms of dismissal and severance in a unique employment contract or you are a union member, the terms of your employment are likely outlined in the BC Employment Standards Act.  According to the regulations in this document, employers may dismiss any staff member for any reason at any time; though, there are essentially just two categories of dismissal – just cause or without cause.  If you’re wondering about how much severance you are owed, it is important to understand each of these categories and the provincial laws that govern them.

Just Cause and Severance

There are a few reasons your employer may dismiss you with cause or just cause.  These cases are not common because a serious infraction by the employee must have occurred.  For example, theft, dishonesty, fraud, and assault or harassment of co-workers or clients are examples of reasons and employer may dismiss you for cause.  In the case of just cause, an employee is not eligible for severance pay or notice, though the burden of proof falls on the employer.  If you have been dismissed for so-called “just cause” and you dispute the reasons for your dismissal, you may want to consult with an employment lawyer.

Without Cause and Severance

Unfortunately, employees have few rights when it comes to dismissal; however, when an employee is terminated without cause they are entitled to severance pay or adequate notice.  There are many reasons an employee may be dismissed without cause including downsizing, poor workplace performance of the employee, or company restructuring.  But what are your rights if you are dismissed without cause?

In a nutshell, BC employers must either provide employees notice of termination or severance.  Depending on your term of service, your entitlement varies.  With respect to severance, an employee who has served three consecutive months with a company is entitled to one week paid severance; after 12 consecutive months of service, your entitlement is 2 weeks’ pay; and after three consecutive years, your entitlement is three weeks’ pay plus one week’s pay for every additional year of employment.  Maximum severance in BC is set at 8 weeks’ pay.

In lieu of compensation, an employer may also provide written notice of dismissal which is calculated in the same way.  For example, if you have been employed for 4 years, you are eligible for 4 weeks’ notice.  Moreover, an employer may choose to combine severance and notice; again, if you have been employed for 4 years and an employer provides 3 weeks’ written notice of dismissal, you are still entitled to 1 week of severance pay.

Exceptions

There are exceptions to these laws; for example, collective agreements and unique employment contracts often outline specific guidelines for dismissal and severance.  If you are unsure of your rights, speak to your union official or an employment lawyer.

DISCLAIMER: The content of this article, and this website generally, is not intended as legal advice and cannot be relied upon as legal advice.  To provide legal advice on your problem, a lawyer must first understand your specific situation.

We offer free half-hour consultations in person at our Coquitlam office or virtually via software. To book a consultation, please give us a call toll-free 1 (877) 708-8350 or locally (604) 475-0041. You can also book your free consultation online here.