Representation for Severance Package Negotiation
When employment ends with or without cause, an employer may offer a severance package that outlines compensation (i.e. severance) and other benefits in exchange for, , in most cases, a signed release.
This page provides legal representation for employees who have received a severance package and require advice on reviewing and negotiating its terms.
Disclaimer: This is not legal advice and should only be used for general information. If you require advice specific to your situation, please connect with a lawyer:
What Is a Severance Package Under BC Law?
A severance package is the compensation an employer provides when ending employment without cause. In some cases, an employer may assert that they have just cause for dismissal, but will still choose to dismiss the employee on a without cause basis.
In British Columbia, entitlement to severance is governed by both the Employment Standards Act and common law.
The Employment Standards Act sets out statutory minimum notice or pay in lieu of notice based on length of service. These minimums are the legal baseline.
Unless a valid employment contract limits entitlement, most non-unionized employees are also entitled to common law reasonable working notice. The term “common law” means the body of decisions that judges make. In other words, judge-made law.
Common law entitlement to reasonable working notice is often greater than the statutory minimum under the Employment Standards Act, and is assessed based on four main factors:
Length of service
Age
Nature and character of employment
Availability of comparable employment at comparable pay
When an employer chooses not to provide working notice, but instead, decide to pay the employee, that payment is called severance.
Severance entitlement is contextual and depends on the employee’s specific circumstances and the terms of the employment agreement.
A severance package may reflect only statutory minimums, or it may reflect common law reasonable working notice. Determining the difference requires legal analysis grounded in legislation and case law.
Why Negotiating a Severance Package May Be Appropriate
In British Columbia, an initial severance package does not always reflect an employee’s full legal entitlement. Employers frequently base offers on statutory minimum requirements under the Employment Standards Act. However, unless a valid employment contract limits entitlement, common law reasonable working notice may apply and may result in a higher amount.
Aside from calculating working notice or severance, it is important to assess whether there are other legal issues that could increase an employer’s liability to pay at the end of a working relationship. For example, if the employer engaged in discriminatory conduct or in breach of occupational health and safety laws, increased compensation could be negotiated.
Employees are not required to accept a severance package immediately. They are generally entitled to a reasonable period of time to review the offer and obtain legal advice.
Severance offers also typically include a release. A signed release can limit an employee’s ability to pursue further claims arising from the employment relationship. The scope and wording of that release should be reviewed carefully.
Negotiating a severance package involves assessing whether the offer reflects statutory and common law entitlement within the established legal framework.
Should You Consider a Severance Negotiation?
Severance negotiation is commonly considered in situations such as:
The severance package reflects only Employment Standards Act minimum notice or pay.
The employee held a managerial, executive, or specialized position.
Compensation included regular bonuses, commissions, or incentive pay.
The employee was recruited or induced to leave secure employment.
There are concerns about bad faith conduct, or bullying and harassment.
The employee was forced out of their job.
There are concerns about discriminatory or retaliatory conduct.
The termination clause in the employment contract may be unenforceable.
Each of these circumstances requires legal assessment as they either affect the calculation of severance, or raise separate legal issues for the employer may be liable to pay.
What a Severance Package May Include Beyond Salary
A severance package is not limited to base wages. Depending on the structure of the employment relationship, compensation during the notice period may extend to other components of pay.
These may include:
Lump sum payment or salary continuance
Bonuses or commissions that form part of regular compensation
Continuation of benefits
Pension contributions
Equity or stock options, where applicable
How compensation is structured can affect overall value and tax treatment. The wording of the employment contract and the terms of any bonus or incentive plan are often central to this analysis.
We Can Help
If you have received a severance package, it is important to understand whether it reflects your full legal entitlement under British Columbia law.
PortaLaw provides legal guidance focused on reviewing and negotiating severance packages within the framework of the Employment Standards Act and common law reasonable notice.
Frequently Asked Questions About Severance Packages
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In many cases, yes. If an employee is entitled to common law reasonable notice, the initial offer may be open to negotiation. The assessment depends on the employment contract and the surrounding circumstances.
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Employers typically provide a deadline, but employees are generally entitled to a reasonable period of time to review the offer and seek legal advice. The appropriate timeframe depends on the context.
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An employer may set an expiry date on an offer. Whether an offer can be withdrawn depends on how it was structured and whether it has been accepted.
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Bonuses and commissions may form part of reasonable notice if they are an integral component of compensation. The entitlement depends on the wording of the employment agreement and incentive plan.
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Under common law, employees have a duty to mitigate their losses by seeking comparable employment. Income earned during the notice period may affect the amount of compensation owed, depending on how the severance package is structured.