Benefits After Termination
- Unless a written employment contract says otherwise (and absent just cause), employees are entitled to reasonable notice of termination.
- Reasonable notice is based on: the employee's age, length of service, position and the availability of similar employment.
- For a severance package to comply with the requirements of reasonable notice, it must put the employee in the same position he or she would have been in, had the contract of employment been performed according to its terms.
Benefits After Termination: Risks to Employers
- If an employer fails to provide reasonable notice, it is liable to an employee for all damages suffered as a result. This includes:
- Value of lost salary; and
- Value of lost benefits and/or out of pocket expenses incurred by the employee during the notice period.
- Claims for lost benefits during the notice period
- may relate to:
- Medical and dental benefits;
- Short Term and Long Term Disability;
- Life insurance;
- Pension or RRSP contributions;
- Equity compensation;
- Car allowances / company vehicles; and
- Vacation pay, etc.
- Different ways to assess the loss:
- The employer's cost of providing the benefits;
- The replacement cost to the employee; or
- Out of pocket expenses incurred by the employee as a result of the lost benefits.
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