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Employment & Labour

Seek legal advice, take your time with severance offers

Terminated employees should not feel pressured into accepting a severance package, says Vaughan labour and employment lawyer Arthur Zeilikman.

Zeilikman, principal of Zeilikman Law, says it’s common for employers to impose artificial deadlines on the acceptance of a package, but he advises employees to consult a lawyer before making any decisions, even if they’re happy with an apparently generous offer.

“The first thing to do is take a deep breath and seek legal advice. You have a right to take some time to consider your decision, and you should never sign anything right away,” he tells AdvocateDaily.com.

When dealing with cases of termination without cause, Zeilikman explains that offers are often divided into separate sections, dealing with the two types of pay potentially available to a terminated employee. The first deals with the minimum entitlements set out in Ontario’s Employment Standards Act (ESA).

A second, which typically is the subject of the time limit, may deal with the generally more generous wrongful dismissal damages available under the common law’s reasonable notice requirement, he says.

“The deal is that you can only get the extra common law amount if you sign a release attached to your termination package. If you don’t sign the attached release, then they’ll only give you the ESA amount, which they are required to anyway.”

If more time is needed to find a lawyer and think things over, Zeilikman says employees should ask for an extension of the deadline.

He says they may need extra time anyway while a lawyer determines what a terminated employee may be entitled to, since common law notice periods — or pay-in-lieu — will vary according to a number of factors, including the person’s age, length of service, level of responsibility and ability to find a new job.

Some employment agreements require employees to contract out of their common law entitlements by including termination clauses expressly limiting workers to the ESA minimums. But Zeilikman says it’s possible to challenge the enforceability of the clauses, depending on their wording, noting that a number of recent court decisions have gone against employers judged to have "incorporated provisions that were statutorily non-compliant."

“It’s always good to have a lawyer review your offer — even if you’re OK with the amount — because there are other traps you will want to avoid,” he says. “The release or termination letter will sometimes include restrictive covenants that were never part of the employment agreement, or seek to bind the employee in other ways that they shouldn’t be doing.”

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