Saturday 22 June 2013

How Much Time Do You Have To Consider A Severance Package?

How much time do you have to consider a severance package under Ontario law? The answer can both simple and complex.

The simple answers are that you have as long as your employer gives you and that there is no time limit imposed by the Ontario Employment Standards Act, 2000. So, on the one hand, if your employer gives you a week, you arguably have a week. But, you can also have more time than what the employer says.

Where the issue arises for most employees who find themselves suddenly unemployed is when employers only give the employee a very short period to consider the offer, say one or two days. The offer usually comes with a time limit and a threat that if the offer is not accepted by the deadline, then the employer will only pay the employee the minimum amount required by law.

Two questions come emerge: What is the reasonable time limit? And can an employer arbitrarily impose any time limits?

Understanding Severance Packages

Let's take a step back for a moment. In order to understand severance packages and how they work, you first need an understanding of why employers even offer them.

As is more fully explained on the page "What is Wrongful Dismissal?" at Ontario law unless an employer has "just cause" to fire an employee, the dismissed employee must be provided with reasonable "notice of dismissal."

"Notice of dismissal" is typically calculated with reference to units of time, usually weeks or months.

Often when an employee is let go, the employer will provided the employee with a payment in lieu of notice. This means that the employee is no longer required to work for the employer, but the employer will provide the employee with a payment instead of requiring the employee to continue working.

Recall that law demands that the amount of notice or the payment in lieu of notice must be "reasonable." Because assessing reasonable notice is as much an art as it a science, most people wish to have their severance packages reviewed by an employment lawyer. The challenge some people run into, however, is that their employer provides them with very little time to have the offer reviewed.

The Thing About Severance Packages

Here is the thing about severance packages, recall what was said above, "unless an employer has just cause to fire an employee, the dismissed employee must be provided with reasonable notice of dismissal." There is no requirement in there for the employee to accept the first offer made to him or her, nor is there a legal requirement to sign a release of liability.

If the fails to abide by the employer-imposed time line, then the requirement on the employer to provide the employee with reasonable notice still exists.

How Time Lines Can Come Into Play

Time lines can come into play, however. Employers are often as eager as employees to resolve the matter. To that end, sometimes, in consideration of the timely resolution of the case, an employer may offer an employee a severance package that is slightly more generous than they would be obligated to provide. In that case, meeting the time lines can be important.

But Why More Often Than Not Time Lines Do Not Matter

More often, however, the offer provided is not more generous than what the law would impose. In that case, there is no need to meet the employer-imposed deadline because it would be imprudent to accept the offer to which the deadline attaches.

Think of it this way, if someone told you that in order to receive a punch in the nose you had to be at a certain place by 3:00, would you rush to get there on time? Of course not; you would ignore the deadline in favour of a better offer.

Practically, What Does All This Mean?

What all this means is that you only have to abide by the employer-imposed deadline if you are 100% sure that you wish to accept your employer's offer. If you are unsure about the reasonableness of the offer or wish to reject it, you have time to consider it. Practically, I have never seen an employer retract a severance offer because the employee failed to meet the unilaterally imposed deadline. Of course, that is not to say that it can't or won't happen, and past practice is never a guarantee of future events.

Of course, if you wish to reject your employer's offer or are advised by an employment lawyer that it would be prudent for you to reject the employer's offer, then there is no requirement to abide by the employer's deadline; it's like rushing to get punched in the nose.

What About the Statute of Limitations?

There is one deadline that must be observed, however, and that is the deadline imposed not by employers but by the Ontario Limitations Act, 2002. That law prescribes that if an employee in Ontario wishes to sue his or her former employer for wrongful dismissal, then he or she must do so within two years of the date of termination. (Technically there are some cases that say that the employee may have slightly more time than that, but the most prudent course of action is to observe the two years from date of dismissal rule.)

How Have Judges Reacted to These Employer-Imposed Deadlines?

At least one Ontario judge has unfavourably reviewed such deadlines. In Rubin v. Home Depot Canada Inc., 2012 ONSC 3053 summarized on this blog in the post Getting Time to Think the Honourable Justice Thomas R. Lederer held that notwithstanding that an employee had signed a “release” in favour his employer with respect to his entitlements on dismissal, given the way in which the release was put to the employee and signed, the release would not bind the employee.

In that case, the employee was given almost no time to review the severance offer. Even though he signed the offer, and the offer exceeded (albeit just barely) the minimum standards prescribed by Ontario law, Justice Lederer refused to allow the employer to rely on the worker's acceptance of the offer because he had not been given sufficient time to consider the offer. The judge awarded Mr. Rubin considerably more notice than The Home Depot had offered him.

Take Away for Employees with Labour Pains

If you are in Ontario and you have been offered a severance package by your employer the prudent thing to do would be to have it reviewed by a professional, experienced employment lawyer. You may be owed considerably more than your employer is offering you or the offer may be reasonable. Knowing is better than wondering. The professional, experienced, and cost-effective employment lawyers at Ottawa's Kelly Santini LLP would be happy to be of service to you by reviewing your severance package and providing you with an opinion on its reasonableness. If we provide you with the opinion that it is unreasonable, we can assist you in attempting to get more either through negotiation or litigation.

Takeaway for Employers with Labour Pains

If you are an Ontario employer and for one reason or another have to dismiss an employee it may be prudent to seek professional legal advice. The professional, experienced, and cost-effective employment lawyers at Ottawa's Kelly Santini LLP would be happy to be of service to you by: providing you with an opinion on what a reasonable amount of notice would be; providing you with an opinion on whether severance must also be paid; drafting the letter of termination for you; and providing you with advice on how to present the termination letter to the employee. We can also give you an opinion on how much time you should give the employee to consider your offer.

Contact Me

To reach the author of this blog, Sean Bawden, email or call 613.238.6321 x260.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He has also taught Trial Advocacy for Paralegals and Small Claims Court Practice at Algonquin College in Ottawa.

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