Wednesday 10 July 2013

If I Reject a Severance Offer Does it Mean I Get Nothing?

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If you get fired and your employer offers a severance package what happens if you think, or are told, that the package is not fair or reasonable? The short answer is that you should advise your employer that you are rejecting their offer and want to be paid more. But, as I am often asked, does that mean that the employee may end up getting nothing?

The answer to the question, "If an employee rejects a severance offer will he or she get nothing?", is almost certainly "no."

Why Rejecting a Severance Offer Does Not Mean You'll Get Nothing

At Ontario law, unless an employer has “just cause” to terminate an employee’s employment, or the employee is otherwise enumerated as an employee not entitled to notice of dismissal, a legal obligation exists to provide that employee with notice of the dismissal.

Pursuant to the provisions of the Ontario Employment Standards Act, 2000, there is a minimum amount of notice that must be provided to dismissed employees. That amount is, generally, one week of notice per completed year of service to a maximum of eight weeks.

Unless you expressly agreed to accept only the minimum amount of notice prescribed by the Employment Standards Act, 2000, (and on that point it would always be prudent to seek a professional legal opinion) you are entitled to reasonable notice of dismissal in accordance with the common law.

As is more fully explained on the page “What is Wrongful Dismissal, calculating reasonable notice is more of an art than a science, and there is no mathematical formula used to calculate reasonable notice. Anyone who tells you that you always get one month per year of service, or two weeks, or three weeks, etc. is wrong.

However, no matter what, the legal obligation to provide the dismissed employee exists.

What Will Happen if I Reject a Severance Offer?

If you reject a severance offer, then your employer must provide you with at least the minimum amount of notice of dismissal or pay in lieu, as prescribed by the provisions of the Ontario Employment Standards Act, 2000. Pursuant to section 61 of the Employment Standards Act, 2000, if the amount is to be paid in lieu of notice, then the amount must be paid in a lump sum at the time of dismissal.

So, What About the Rest of the Offer?

What will likely happen when the employee tells his or her employer that he wants more severance is one of two things: the employer will either increase their severance offer or they will refuse to increase it.

As is explained in the post Do I Have to Sign a Release to Get a Severance Package? must cases resolve by way of a negotiated settlement. That negotiation can take time, but that is typically how cases resolve. The money will likely come, although it can take time. How much time? It depends. I have resolved cases within hours, although typically it takes a few weeks to a few months. Very rarely, cases take years.

Can the Employer Reduce Their Severance Offer?

Might the employer decrease their initial severance offer? They might - but reasonably, if the employee did not like the original offer, why would the employee accept a reduced offer? Reducing a severance offer will almost invariably invite a wrongful dismissal lawsuit.

Can I End up With Less Than the Initial Offer?

Sometimes it is possible that by rejecting a severance offer an employee can end up with less than if he or she had simply accepted the initial offer.

For example, if a severance offer does not include a duty to mitigate, and the employee rejects the offer and then finds new employment, then the employee may end up with less.

So What Should I Do?

The moral of this story is that employees should not, generally, be afraid about rejecting a severance offer. The right to notice exists at law and the law will typically assist where employers refuse to abide by it.

However, as the above caveat makes plain, employees who find themselves suddenly unemployed should also seek a legal opinion. A review of a severance package costs a lot less than you might think and can often result in an increased offer. At the very least, you'll know if the offer is a good one.

If you have recently found yourself suddenly unemployed and you are in Ontario, the professional and experienced employment lawyers at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Contact Me

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

Sean P. Bawden is a partner with Kelly Santini LLP, located in Ottawa, Ontario, Canada. He practices in the areas of employment law and civil litigation. He has also taught Trial Advocacy for Paralegals and Small Claims Court Practice at Algonquin College in Ottawa.

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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.

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