When a person loses a job in Alberta among the first questions that comes to his or her mind is a simple question. How much severance am I owed. Most people think that the answer is only based on the length of their service with the employer. It does matter the length of service. Nevertheless, it is not the sole consideration that influences severance.
Some sources of severance exist in Alberta. It can be in the form of minimum termination pay as per employment conditions. It can also be the common law reasonable notice which can be much larger. This may vary with the job type age pay structure and the ease with which a similar position may be secured.
This paper justifies why length of service is just part of the severance puzzle and what other factors should be known by Alberta workers.
Why severance is not always a simple formula in Alberta
Many workers expect severance to follow a fixed rule. For example one week per year of service. That idea is common but it is not always accurate. Severance can vary widely between employees even when they worked the same number of years.
One reason is that there are different legal standards. Alberta Employment Standards sets minimum termination pay in many situations. But common law can provide more. Common law looks at what is reasonable notice in the circumstances. That often results in more compensation than the minimum.
Another reason is that each job loss has unique details. A short term employee may still receive meaningful severance if the role was senior and hard to replace. A long term employee may receive less than expected if a valid contract limits notice. The details matter.
Because there is no single perfect formula many people use tools to estimate what they might be owed. A good starting point is a Severance pay calculator for Alberta workers which can help you see how different factors may affect your potential severance range.
Severance is about fairness and context not just years worked.
The difference between Employment Standards termination pay and common law notice
Comprehending severance in Alberta begins with the knowledge of the two major ones. An Employment Standards minimum termination pay and the common law reasonable notice.
In most instances where an employer terminates employment without cause, he/she is obligated to pay employment Standards termination pay, which is the minimum. It is pegged on length of service to a large extent. It can be usually paid in the form of working notice or pay in lieu. This floor limit can be useful though not what you really deserve.
Common law reasonable notice is dissimilar. It is grounded on what a court would deem as fair notice in the situation. It usually leads to an increase of severance compared with Employment Standards. The common law severance is intended to provide a worker with time to seek similar jobs.
Most workers in Alberta are unaware of the fact that they can get more than the minimum. There is a tendency by employers to provide a package that is the minimum or near minimum. Other workers are signing hastily as they are in a hurry to stress or they are not even certain. That can be a costly mistake.
The main thing is that not all severance rights are the minimum termination pay. It is merely the floor in most cases.
Job position and seniority can increase severance significantly
The company position is relevant. It is common that courts would ask whether or not you had a senior position or specialized duties. A professional or manager executive can have a longer notice than an entry level employee who has had the same number of years of service.
This is due to the fact that high positions are normally difficult to fill. In many cases, they also demand experience in the industry and good contact. The recruitment process might be extended. Fewer vacancies may also be involved in job search.
In case you are a vital employee whose leadership role may raise the severance interest. The same can be said when your job was very specialized. Your skills might not easily transfer to another employer even in the case that you were not a manager.
Another factor that will be considered by the courts is the treatment of your role by the job market. Your reasonable notice period can take longer in case there are few similar jobs available in Alberta.
This is the reason why length of service is not the only factor. Two employees who have worked a decade can get extremely different severance when one is a top executive and the other was in a position where there were a lot of openings.
Age and re employment prospects play a major role
Another significant severance aspect is age. The more reasonable notice is accorded to older workers since it could take some time before securing a similar position. This is not a question of unjust advantage. It is regarding the reality of the job market.
An employee at the age of 50s and 60s might encounter additional obstacles in finding a job. They can also have made their career in one industry or employer. In case of sudden termination it may become more difficult to transition.
Employability is taken into account in courts. That would be education work history and the ease with which one will be able to locate similar compensation and rank. A younger employee who is highly demanded in his/her field could find employment quicker. An employee of a declining industry may not.
Severance is to give time to find a job without the imminent financial crisis. The notice period can be extended as well in the event the job hunt is expected to take an extended duration.
Age may still be relevant even to shorter service employees. An employee whose tenure of service exceeds three years can be provided with a more potent package in case his or her chances of re employment are low.
Your employment contract and termination clause can change everything
The employment contract is one of the largest severance factors. Most contracts contain an article of termination that restricts the notice to a minimum of Employment Standards. In the event that the clause is valid and binding it can lower severance by a large extent.
Not every termination clauses are enforceable however. Some are written poorly. Others do not follow the employment standards regulations. Others are ambiguous or too limiting. In case of inadmissibility of a clause, the worker can be granted the common law reasonable notice instead.
This is the reason why contracts are important. Two employees of the same job and years of service can be given quite different results in the severance based upon the terms they signed.
Other employees do not recall of having signed a contract. Other people put their signatures one year ago and never looked at it since then. In the severance disputes however that document comes into play.
It is also good to be aware that sometimes the employers may alter the contracts or introduce new contracts as time goes by. The terms may be influenced by promotions of new positions and revised policies.
In case a severance package is offered, it is prudent to verify that there is a restriction to the entitlement of your contract. It is also wise to find out whether such a limitation is valid.
Bonuses commissions and benefits can be part of severance
Severance does not necessarily consist only of base salary. A lot of employees in Alberta are paid higher via bonuses commissions or overtime allowance or other incentives. Such benefits as health coverage and pension contributions can also be valuable.
Totals compensation should be reflected in severance in most instances. In the event that you used to receive bonuses or commissions the amount might be paid during the period of the notice in accordance with the terms of the plan and the way your payment was organized.
Benefits matter too. Being deprived of health cover can be a huge financial burden particularly to families. There are severance packages where the benefit is continued over a certain time. Instead, others offer additional remunerations.
In some jobs, stock options profit sharing and vehicle allowances may also come in. More complicated compensation models tend to be associated with high earning employees. That may add to the severance claim.
This is the other reason why the length of service is not sufficient. Employees with the same years might receive quite different compensation frameworks as well as this severance value can vary significantly.
The concept of compensation will aid in determining whether an offer is fair.
Final Thought
Length of service is an issue in Alberta severance but not all. Depending on legal standards of job seniority age of re employment prospects and total compensation, severance may be based. Common law reasonable notice may in most instances be transferred significantly above minimum termination pay.
One of the things you should do is to see the big picture in case you have been fired. Do not think that the first offer is the best one you can have. Never think severance is a matter of years. Additional information about your case can make you more entitled.
