Money & Career

How to negotiate a layoff package

Author: Canadian Living

Money & Career

How to negotiate a layoff package

This story was originally titled "Severance Deals" in the June 2010 issue. Subscribe to Canadian Living today and never miss an issue!

After the shock of being laid off fades, you need to ask yourself: Did I get a fair package? Under common law, an employer should give you reasonable notice if they’re going to let you go. In most cases, employers choose to give you pay in lieu of notice. If you've worked for the same employer for less than five years, you're entitled to termination pay. But if you've worked for the company longer than five years, you should receive severance pay, says Craig Colraine, a partner with Birenbaum Steinberg Landau Savin and Colraine LLP in Toronto.

A common-law severance package amounts to more than termination pay and rewards your seniority while also compensating you for your loss of benefits. Payouts vary widely and factor in such things as the nature of your position, how long you worked for the employer and the availability of similar jobs in your field.

Though all employers are required to pay a minimum severance pay of one week’s salary per year of employment, a month per year is more common, says Robbie Fleming, a Vancouver-based employment lawyer. But some companies offer just below what’s reasonable, expecting you to return to the table with a request for larger payout.

You may not get all that money up front, though. Your employer may prefer to continue to pay your salary for a set period of time, hoping you'll find a job. That's because if you find employment while collecting severance pay, your former employer can immediately stop your payments.

Negotiate, negotiate
If you are let go, don't sign any agreements that day, says Fleming. And don't be intimidated by the two-week deadline many employers impose for a response. Bill Gale, an employment lawyer in Toronto, says although a handful of employers will refuse to negotiate beyond those two weeks, the deadline is not legally binding and can be extended.

Page 1 of 2 - tips on finding a lawyer on page 2.

A severance package is not just about earnings – it can also include compensation for a variety of perks you may have received. If you got an annual bonus, for example, you should be able to receive a portion of that amount prorated to the number of months of the year you've worked. Health and dental benefits can also be extended. If you're covered under your spouse's plan, you can ask for cash in lieu of these benefits.

Do I need a lawyer?
Everyone's situation is different and that’s why it's "a good idea to obtain legal advice before accepting an employer's offer," says Colraine. A lawyer can go over the full details of your employment terms and termination. If a lawyer helps draft a revised offer, the average rate of $400 per hour is tax-deductible. To save time and money, organize documents that apply to your case, such as stock-option plan information and pay stubs, ahead of time. You could also represent yourself and negotiate directly with the human resources department of your organization.

Help is a click away
If you're seeking information about severance packages but don't want to consult a lawyer, visit For $40, this site will advise you on how much severance pay you're entitled to; for an additional $20, it will draft a counter-offer letter. You can also get key information from employment sites, including these three: (click on "Losing a Job"); (Ont.);
• and (B.C.).

Read about how to tell your kids you've lost your job here.

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Money & Career

How to negotiate a layoff package