Is Severance Pay Required?

Employment Law | May 24, 2022

Severance pay is a widely discussed and often misunderstood element of employment law. While most employees will feel as though they are entitled to severance pay upon termination from their employment, this is not always the case. To help you determine if severance pay is required for your termination, the employment lawyers at Linley Welwood have compiled some information on severance requirements and the amount you may be entitled to.

Learn when an employee should hire an employment lawyer to assist them.

When is Severance Pay Required?

Severance pay is mandatory in BC when:

  • Your employment is terminated unilaterally by your employer. This can be done through termination without cause or constructive dismissal.
  • Your employer incorrectly fires you with cause.
  • You are not provided a working notice period or the period is not long enough and additional compensation is required.
  • You submit a notice with your intention of leaving the company, but your employer decides to let you go before the end of the notice period. In this situation, an employer must pay you severance for the remainder of that period.

When is Severance Pay Not Required?

Severance pay is not required in the following situations:

  • When you quit without providing notice.
  • When you resign or retire.
  • If your limited-term contract ends.
  • When you are given the option to take a different position within the company.
  • You are accurately terminated for cause.

How Much Severance Pay Are You Entitled to?

If you have completed three months of continuous employment and meet one of the aforementioned conditions, you are entitled to severance. The longer you have served the company, the more you can expect from any severance package.

  • After serving three months, you are entitled to one full week’s pay as severance.
  • After twelve consecutive months of employment, you are entitled to two full week’s pay.
  • After three consecutive years of employment, you are entitled to three full week’s pay.
  • After each additional year of employment, you are entitled to another week’s full pay.

The maximum amount of severance available in BC is up to 8 weeks of pay. It is important to note that the Employment Standards Act does not include your full entitlements under common law. Common law severance is set directly by court decisions and is influenced by a variety of factors including age, length of employment, employee position, benefits, and other elements.

To learn more about severance pay, termination, and other important areas of employment law, get in touch with the team at Linley Welwood. We can be reached through our online contact form and will be happy to answer any questions you may have regarding our services or the details of your case.

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