The Outrage about Severence Pay

The Toronto Community Housing Corp. was in the media last week, for amongst other things, paying severance to 26 employees it dismissed in 2013.

The stats show the payment of severance at the TCHC is up from pervious years. No kidding.

I would imagine most companies reviewing their severance statistcs find they are paying more severance or wrongful dismissal Judgments than they have in the previous 10 year period. The reason for this is that Judges are awarding longer periods of Notice to dismissed employees and the case law has made it incredibly difficult to terminate for cause.

It is for the above reasons our firm strongly recommends all employees be hired with contracts that limit the amount of Notice and Severence they will be paid on dismissal to the Minimum required under the Employment Standards Act. You cannot avoid paying or giving Notice and Severence pay, but you can certainly quantify the amount with certainty at the start of the employment relationship.

The caselaw trend of longer Notice to employees and the virtual elimination for cause will lead to frustration for many ill prepared employers. You can’t handle employee terminations on your own anymore: ensure you’ve obtained legal advice before terminating an employee – it’s cheaper to plan ahead than be sued.

Inga B. Andriessen JD
iandriessen@staging.andriessen.ca