Am I still entitled to a profit-sharing payment after being let go?

THE QUESTION

I was let go from a permanent position last October after 11 years. The company offered compensation such as termination and vacation pay in a six-month severance package, but says I will be ineligible for the February profit-sharing payment. HR say the policy is, you must be actively working at time of distribution. Am I entitled to receive the payment?

THE FIRST ANSWER

Daniel Lublin

Partner at Whitten & Lublin employment lawyers, Toronto

A proper severance package will provide you with all of the compensation, benefits and perquisites that you held while employed, over a fair period of time. This includes items such as health and dental benefits, and pension or RRSP contributions, but should also include everything else that you would have received had you remained working over the severance period. Essentially, a severance package is a payment in lieu of remaining at work.

It is a little trickier to assess whether profit-sharing payments and discretionary bonuses are required as part of a severance package. Many employers do not offer to pay them although in many of those cases they should. The key is whether or not there is a properly implemented policy or contract that makes it clear that you are ineligible for payment during a severance period. Contractual language stating that you must be "actively employed" usually meets this test, as the language means that if you are receiving severance and not actually at work, there is no obligation to make a payment that would otherwise be required.

THE SECOND ANSWER

Faith Tull

Senior vice-president, Human Resources, Randstad Canada, Toronto

Once you understand your rights from a legal perspective, you can start to consider where you go from here. Departing from a company after long service is never easy, especially if this was unexpected for the affected employee. After getting over the initial shock of the change, it is important that the employee take the necessary time to plan and prepare for their next move.

A majority of employers continue to offer assistance to the transitioned employees by way of their employee assistance benefit programs as well as outplacement services. When an employee has been out of the job market for a long period of time, it is highly recommended to make use of the services offered through these programs to their fullest.

In most cases, these services will help you to manage through the range of emotions you may be experiencing, help you to prepare your résumé, develop and make use of your network, prepare for interviews and assist with identifying and targeting your next potential employer.

As well, if you wish to start your own business, they may even be able to point you in the right direction for that.

An employee may even take the time to upgrade their skills through programs offered through HRDC [Human Resources Development Canada], local colleges and universities or even through professional associations to which they may belong.

In this digital age, online presence is extremely important as well, and potential employers will review a candidate's social media footprint. Taking the time to update professional profiles on LinkedIn, for example, is strongly recommended. Ensuring that any other social media profiles reflect the person you'd want potential employers to see is also important.

Involuntary separation from your organization does not mean the end of your career. After you have appropriately grieved the loss of your position, your company "family" and your daily routine, find a way to quickly take charge of the situation and manage yourself successfully into your next career opportunity.

Clarification: An Ontario Court of Appeal decision released in August, prior to publication but after this column was filed, noted that contractual language attempting to exclude certain payments following termination is no longer determinative of an ex-employee's rights.  Damages should be awarded based on what an employee would have earned had he or she kept working.  A future column will further address the impact of this decision. 

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