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Posts Tagged ‘wrongful dismissal duty to mitigate mitigation severance package’

Why employees are entitled to severance pay and packages.

Monday, January 25th, 2010

Our customers can best use our service if they understand the REASON why courts award severance pay and why employers pay severance packages. You have a contract with your employer.  Therefore, if your employer decides to terminate the contract, they have to compensate you for terminating that contract.  Severance pay is intended to put you in the same position that you would have been if you had been given proper notice.

Severance pay at its most basic includes the wages and vacation pay that you would have received if you had stayed with your employer during the length of the notice period.  Included in your severance pay may also be other employment benefits (like bonuses) that would have been paid to you during this time.

This means that it should be more than just your cash salary, you have the right to receive all of the benefits and other compensation you would have received if you had kept working up to the end of your notice period.

If, for example, your employer owes you a notice period of four months, and your employer chooses to pay you a severance package, your payment should be more than four months’ of your salary.

It should also include:

  • bonuses you would have earned and been paid during the four months
  • stock options you would have earned that would have vested during the four months
  • RRSP contributions
  • medical coverage
  • extended medical coverage
  • dental coverage
  • long-term disability insurance
  • short-term disability insurance
  • life insurance

If you have a fixed-term employment contract, severance pay is based on the wages and benefits that you would have earned until the end of the fixed term, unless there is an early termination clause.

Thicken My Wallet, a blog providing general financial advice, gives general advice on severance pay here: http://www.thickenmywallet.com/blog/wp/2009/02/10/severance-pay-what-am-i-entitled-to-part-i/

You can’t stay still: The employee’s duty to find work after a wrongful dismissal

Thursday, December 3rd, 2009

Many employees don’t know that they have what is called a duty to mitigate.  That is, if you lose your job you are under legal obligation to do everything you can reasonably do to find another one.

When employees sue for wrongful dismissal, an employer’s first defense is often to claim that the employee has failed to mitigate his or her damages.

This means the court will require you to demonstrate that you’ve tried to find a job.

You can do this by showing that you’ve been: checking the newspaper and the classified adverts, doing any necessary networking, or submitting your resume to different potential employers. There’s any number of different ways that you can demonstrate this, but you have to show that you’ve made every reasonable attempt to find a job.

The key word is reasonable.

If you have an illness, or some other concern that makes it impossible to look for another job, you must show that this concern has prevented you from finding a job, and that as soon as this concern has been addressed you will continue looking for a job.

But what if employment conditions are poor and there are simply no jobs available?

The extent to which an employer can argue that you should be looking for a job that requires a lesser skill set is questionable.  How reasonable is it for you to accept a lower paying position, or a less prestigious position with fewer duties?

The courts will generally require that you accept another job within reason, which may include slightly less pay or slightly less responsibility.  You won’t, however, be required to find something that is dramatically below the level of what you’ve been doing.

It won’t, for instance, be expected that a chief executive officer (CEO) would take a frontline service position at the customer line.  However, this person would still need to demonstrate that he or she was willing to take something other than a CEO position, like a middle management position, depending on the kinds of companies that have been solicited.