THE QUESTION
I've been working for a company for 40 years. I'm 62 years old, and they are laying people off with packages. What is a reasonable severance package?
THE FIRST ANSWER
Daniel Lublin Employment lawyer, Whitten & Lublin, Toronto
The reasonableness of a severance package is based mostly on your age, tenure, position, re-employment prospects and the comparable precedents – court cases with similar facts as yours.
Employees with more than 40 years' tenure and older than 60 years of age should receive packages at the highest end of the possible spectrum, which is generally in the range of two years' pay or a little more. For example, in a recent case that I argued in court, an employee who was a little older than you but with a similar tenure received 27 months' severance. This was one of the highest severance awards ever rendered.
Numerous other factors are considered to determine what is fair in your case, but one key factor is whether you have an employment contract or have signed any document that specifies the amount of severance you should receive. This is something that any good employment lawyer should ask to see first.
The severance package you are offered may not necessarily be exactly what you are entitled to. Many companies choose to offer employees less than what a court would award them, hoping they will not ask for more.
Get good advice before signing anything.
THE SECOND ANSWER
Bruce Sandy Principal, Pathfinder Coaching & Consulting, Vancouver
A general guideline for management positions is one month for your first year of service and two weeks for every year after that. With this type of formula, you would be entitled to about 20 months pay.
Many companies have policies that put a cap on the amount of severance that will be paid out after a certain number of years of employment.
Check to see what severance policies your company has in place.
If you are a unionized employee, you will want to see what your collective agreement stipulates with respect to severance or layoff packages. Speak to a human resources representative about the policies and your shop steward if you are a union member.
Unused vacation, sick time and unpaid overtime needs to be factored into your severance package as well.
Review your company policies regarding payout of unused vacation, sick time and overtime.
Request that your payroll officer give you accurate figures and ensure they are included in your severance package.
If you are in senior management, you likely have an employment contract. Refer to the severance clause in your agreement.
Check to see what relocation or career transition support may be available or negotiated.
Speak with an employment lawyer before you accept a severance package from your company to ensure that you are getting a reasonable package.
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