Sponsored by:
Recessions and economic downturns aren’t fun for anybody. They’re hard on workers, hard on businesses, and hard on our communities as a whole. And while some companies determine they need to reduce their staff to stay afloat during those tough times, that doesn’t mean they can fire employees without paying proper severance packages. In fact, if you’re fired during a recession, you could be owed more severance pay than usual.
Given the current uncertainty and news about being in a possible recession right now, we spoke to Lior Samfiru, employment lawyer and national co-managing partner of Toronto-based Samfiru Tumarkin LLP, Canada’s largest employee-side employment law firm, to learn about the five key things you need to know about severance pay if lose your job during a recession.
Employers can't avoid paying severance
Businesses may not like to hear it, but in Ontario, economic hardship doesn’t override employment laws or legislation. If your employer decides to lay you off due to a recession, they’re still legally on the hook to pay you a full and fair severance package.
Samfiru says, “Many employers mistakenly think that a recession or economic downturn absolves them from providing severance to downsized employees. That couldn’t be further from the truth. In Ontario, even if an employee is let go due to economic challenges, it’s considered a termination without cause, and they are legally entitled to full severance pay.”
Fired employees are typically owed more severance during a recession
Being let go is never easy, especially during hard times. But there’s a silver lining. If you’re fired or let go during a recession, your employer must pay you more severance, because finding a new job might be tougher.
To find out what your severance package might look like when you lose your job during or outside of a recession, check out the Pocket Employment Lawyer from Samfiru Tumarkin LLP. It includes a severance pay calculator and tools that address various employment issues to help you understand your options based on your own personal situation.
Severance packages aren’t “one size fits all”
Severance pay is tailored to individual circumstances, which means if there’s a mass layoff in Ontario, each employee will get a different severance package. You likely won’t get the same amount as your co-worker.
Many factors go into calculating a severance package in Ontario, including how long you’ve worked at the company, your salary, your age, and other points like benefits, commission, bonus, pension, stock grants or options, and car allowances. It’s also important to know that what you are entitled to by law in many cases far exceeds the minimum amount of severance suggested by the province’s Ministry of Labour, and can run as much as 24 months’ pay.
Even if you’re an independent contractor, not a full-time employee, there’s a good chance you’ll be owed severance pay if you’re fired during a recession.
Ignore their severance offer deadline
If your now-former employer does offer you severance, they’ll probably give you a tight signing deadline. However, this imposed urgency largely serves their agenda, not yours. They’re applying pressure during a stressful and confusing time because they hope you’ll accept less money than you’re actually owed, as that’s in their best interest. For your best interest, it’s important that you take some time to understand their offer and digest what’s on the table. Consulting with an employment lawyer can help you determine if it’s a fair severance package and guide your next steps.
Samfiru tells us, “If you’re handed a termination or layoff notice, hold off on signing that severance package right away. You don’t work for them anymore, and aren’t obligated to help them out by signing immediately, especially if it might cost you the fair severance you truly deserve and need.”
Ultimately, companies lay off employees because they’re looking after their own bottom line. And you need to make sure you’re taking care of your bottom line as well, which means getting the best severance pay possible.
In Ontario, you legally have two full years from the moment you lose your job to claim severance after a wrongful dismissal, Samfiru emphasizes.
“Take advantage of this time to understand your rights and options. I can’t stress this enough: in nearly two decades of practice, my team has assessed thousands of severance offers, and the majority don’t measure up to what individuals truly deserve.”
Temporary layoffs or major changes to work are a termination
Your employer may tell you the layoff is temporary and promise to bring you back or re-hire you when the economy turns around. The fact is, temporary layoffs in Ontario are illegal. This stoppage in work is a fundamental change to your job. If you don’t agree to it, either in writing or through a clause in a signed employment contract, you can view your employer’s actions as an outright termination.
You also can’t be forced to agree to any sort of significant and negative change to your pay, work duties, location, commission, bonus, or job title. If they do try to force these changes, that constitutes a constructive dismissal, meaning you could quit with full severance pay. However, you should always consult an employment lawyer before doing so.
It’s never easy to lose your job. But losing your job during a recession adds even more stress to the situation. Before making any decisions, talk to an employment lawyer at Samfiru Tumarkin LLP to understand your rights and secure the severance package you deserve.
Contact employment lawyer Lior Samfiru, national co-managing partner at Samfiru Tumarkin LLP, to get the advice and compensation you need by calling 1-888-861-4555, emailing Ask@EmploymentLawyer.ca or filling out an online contact form.
His law firm represents non-unionized employees in Ontario, Alberta and British Columbia. Discover your employment rights by watching Lior on Ask a Lawyer every Wednesday at 9:30 p.m. on CP24.
