EXPECT THE BEST

Severance Checklist

1. REASONS FOR TERMINATION (ii) the employer has a payroll of $2.5 Million or Do reasons for termination contravene the Human more. Rights Code, Employment Standards Act, 2000, or other statute? (c) Reasonable Notice • Determine what is reasonable notice to be given to If termination is for cause: employee having regard to such factors as the employee’s age, length of service, level of respon- (a) Do you have grounds to terminate immediately? sibility, salary and circumstances of hiring • Check with your insurance agent to determine (b) If not, have you warned the employee properly what benefits, if any, may be continued during in writing, setting out concerns, giving the employee notice period. NB. disability coverage is usually not an opportunity to improve and advised employee available to an employee after termination that his (her) job is in jeopardy if there is no • Determine whether any benefits have conversion improvement within a reasonable period of time? privileges • Consider obligations to continue other forms of If any of these issues are a concern, you should compensation such as company car, pension, car consult a lawyer before termination. allowance, commissions, bonus, low interest loans etc. 2. FACTORS TO CONSIDER WHEN • Consider method of payment? salary continuance PREPARING A SEVERANCE PACKAGE vs. lump sum • Check with Employment Insurance Commission to (a) Termination pay determine if employee is in receipt of benefits • The Employment Standards Act provides minimum • Get a Release notice or pay in lieu of notice (termination pay) • Most employee benefits must be continued during this period 3. OTHER FACTORS TO CONSIDER • Notice periods vary depending on length of service • Reference letter/exit story of employee and number of employees terminated • Outplacement counselling • Legal Fees (b) Severance pay • Confidentiality agreement • Non Competition clause Non-Solicitation clause The Employment Standards Act, 2000 provides for • Return of company property severance or pay to be paid by some employers to • Tax consequences employees with 5 years seniority or more. 4. MATERIAL TO BE GIVEN TO EMPLOYEE Severance pay is payable if: UPON TERMINATION • Final pay cheque payable no later than next regular (i) 50 or more employees are terminated in a 6 pay day month period and the terminations are caused by • Vacation Pay the permanent discontinuance of all or part of the • Record of Employment business of an employer at an establishment; or • Severance Offer • Release