What Reviews Affect Federally Regulated Employee Severance Pay?
Reviews Affect Federally Regulated Employee Severance Pay
When you work in a federally regulated industry, such as banking or air transportation, your employer may be subject to labour laws that differ from those of the provinces. These laws decide how much your employer is legally required to owe you in the event of a layoff, or even termination without cause.
The Canada Labour Code (CLC) governs non-unionized employees, whereas provincial employment legislation, such as the Employment Standards Act (ESA), applies to unionized employees. This means that if you work in a federally regulated business, you are likely entitled to a more generous Federally Regulated Employee severance pay than your provincially regulated peers.
The CLC includes a “unjust dismissal” protection that typically allows wrongful terminations of federally regulated employees to be restored with back pay by an adjudicator. This is a significant job security safeguard that makes the CLC a far more valuable tool for protecting jobs of non-unionized employees than the bare bones safety net of ESA.
What Reviews Affect Federally Regulated Employee Severance Pay?
For this reason, it is not uncommon for employers to be required to provide a more generous severance package when they are terminating federally regulated employees. As such, it is important for employees to understand what they are entitled to under the CLC before signing any releases or accepting severance packages.
As a result of the unjust dismissal safeguard in the CLC, an employee who is terminated without cause and is not offered a severance package should contact a lawyer to consider filing a complaint against their employer for breach of the CLC. The FCA recently ruled in the case of BMO Bank of Montreal v. Li, 2020 FCA 22 that an employee’s right to make a unjust dismissal complaint is not suspended by the signing of a release or acceptance of a severance package.
Bonus payments: Any bonuses that form an integral part of the employee’s compensation or are contained in the employment contract must be included in the severance package. This includes bonus payments that are earned but not yet received at the time of termination, as well as commissions and other incentive earnings.
Stock options/equity compensation: Depending on the language contained in the governing plan documents, an employee may be entitled to bank employee severance package equal to the value of any stock options or equity that would have vested during their notice period.
Severance tax: An employer must deduct income taxes from any severance package that is paid to an employee. For this reason, it is important for an employee to set aside enough money for income taxes, even after receiving a full severance package.
Many employers will offer severance in the form of a lump sum, or in periodic payments over a specified period of time. Some people prefer to receive periodic payouts, because a lump sum can push them into a higher tax bracket. If you are considering taking a lump sum, it is worth consulting with a tax professional to ensure that the amount you will be receiving will be sufficient to cover your taxes.