Microsoft Canada Layoffs and Severance Payteam
If an employer terminates an employee without cause, they may be required to compensate employees with severance pay. This type of pay is different from termination or notice pay. Severance pay is offered to long-term employees who have their employment “severed.” This practice compensates an employee for losses, such as loss of seniority. An employer can provide severance pay upon termination of employment instead of the necessary termination notice. The article below will discuss whether laid-off employees are entitled to severance pay. How a severance lawyer can help determine the laid-off employees’ severance package.
Microsoft Canada Layoffs
Microsoft Corporation (“Microsoft”) is the latest tech company to lay off workers amidst an economic downturn. The company laid off approximately a thousand employees across several divisions, affecting around one percent of its workforce.
Microsoft now joins other tech giants like Tesla, Netflix, Robinhood and Coinbase, who laid off employees in recent months. The reasons cited by these companies ranged from rising inflation to company-wide restructuring.
Microsoft did not specifically disclose if it was laying off any Canadian employees. However, the company indicated the layoff would impact employees in different positions, levels, and geographical locations.
In Ontario, when an employer lays off a non-unionized employee, the employee is entitled to certain payments, such as termination notice and severance pay. An employee’s termination entitlements vary depending on their employment contract, statutory law, and common law.
Are Laid-Off Employees Entitled to Notice and Severance Pay?
An employer’s termination of an employee’s employment for reasons other than their work performance is commonly referred to as a “layoff”. Usually, employers lay off employees in groups for reasons such as corporate restructurings and economic downturns. Regardless of the employer’s reasons, the employees facing the axe are entitled to certain payments on their dismissal.
When an employer terminates an employee without cause, they must give the employee a notice of termination which contain their notice entitlements. An employee’s notice entitlements depend on the terms of their employment contract. Usually, the employment contract limits an employee’s notice entitlements to the Employment Standards Act (“ESA”) minimum of one week per year of service.
Further, the employees are entitled to different notice periods if the employer terminates fifty or more employees at their establishment within the same four-week period. In such cases, if the employer terminate
- More than fifty but less than two hundred employees, the employees are entitled to a notice of at least eight weeks;
- More than two hundred but less than five hundred employees, the employees get at least twelve weeks of notice;
- More than five hundred employees, the employees get at least sixteen weeks of notice.
In addition to the notice pay, an employee employed for five years or more might be eligible for severance pay on their termination if:
- The severance occurred because of permanent discontinuance of the employer’s business at the establishment, and the employee is one of fifty or more employees who had their employment relationship severed within a six-month period due to the discontinuance; or
- The employer’s payroll is $2.5 million or more.
Under the ESA, an employee can get severance pay equal to one week per year of service up to a maximum of twenty-six weeks.
How to Calculate an Employee’s Severance Package
An employee’s severance package is the total amount of pay and benefits they may receive on the termination of employment. In Ontario, an employee’s severance package consists of their minimum statutory entitlements under the ESA and their entitlements under common law.
Employees may be entitled to common law reasonable notice if:
- They have a verbal employment contract; or
- Their employment contract does not contain an enforceable termination clause restricting their termination entitlements to the ESA
The court will determine the employee’s common law reasonable notice by considering factors such as the character of employment, length of service, age of employee, and availability of similar jobs, among other factors. The employee may also be entitled to damages for loss of benefits, perks, pension contributions, and other forms of income, such as bonuses.
The court may award an employee common law notice pay equivalent to one month per year of service up to a maximum of twenty-four months.
On the other hand, under the ESA, an employee may be entitled to their regular earnings for the severance period, any accrued but unpaid vacation pay and wages, and benefits continuation for a maximum of eight weeks.
When an employer terminates an employee, they must pay the employee their ESA entitlements. The employer may have to grant the laid-off employee common law reasonable notice beyond the ESA pay in some cases. Usually, an employee gets common law reasonable notice in the absence of a written employment contract with an enforceable termination clause.
How a Severance Lawyer Can Help
An employer can offer employees more than their minimum ESA entitlements in exchange for a full and final release. If the employee accepts the employer’s terms by signing such a release, they may be unable to sue the employer for claims arising out of their job, including a wrongful dismissal.
It is important not to accept less than one’s entitlements. An employee may be entitled to more than what the employer offers. A severance lawyer can thoroughly examine the severance package your employer offers and advise you accordingly.
Calculating one’s legal entitlements on termination is a complex and nuanced task requiring specialized knowledge of employment law. A severance lawyer can negotiate with your employer to help maximize your severance package.
If the matter proceeds to litigation, a severance lawyer can assess the facts of your case, develop a legal strategy and advocate on your behalf in court. Your lawyer will use their knowledge of the law and legal process to help you achieve your desired result.
In Ontario, laid-off employees get their minimum ESA entitlements regardless of the terms of their employment contract. Depending on the facts, an employee might be entitled to common law reasonable notice in addition to the ESA pay. Further, the employer’s conduct might entitle employees to additional damages.
A severance lawyer can help you determine your severance entitlements and negotiate with your employer. If your employer is unwilling to grant you a severance package as per your entitlements, your lawyer can sue them on your behalf.
If you were laid off by your employer and need any help negotiating or litigating your severance pay, our severance lawyers at Achkar Law can help. Contact us by phone toll-free at +1 (800) 771-7882 or email us at [email protected], and we would be happy to assist.
If you are a small or medium-sized company looking for full-service support, check out our Chief Legal Officer (CLO) program page for our strategic solutions.
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