Severance Review / Negotiation

Reasonable Notice

Most Alberta employees are entitled to “reasonable notice” of termination under the common law. “Reasonable notice” or the “reasonable notice period” is the amount of time it is expected to take an employee to find a similar job somewhere else, taking into account the type of position they just lost (i.e., managerial, technical, professional, niche, etc.), how long they were employed with their company for, their age, what the economic conditions are like at the time of their dismissal, and many other case-specific factors. Most people are referring to the reasonable notice period when they talk about “severance”, and so we will use the term “severance” interchangeably with “reasonable notice” on this page. 

Unlike the Alberta Employment Standards Code which states that an employee gets a set amount of notice based on their length of service, regardless of their role with a company or any other relevant factor, reasonable notice is determined by a judge on a case-by-case basis because no two employees or employment circumstances are quite alike. People often like to state that employees are entitled to one month’s severance pay per year of service for senior positions or well paying jobs, but that is not true. In some circumstances, an Alberta employee could be entitled to more than one month of severance pay per year of service depending on the factors that a judge will consider in their case.

Know What You Are Entitled To

For many employees in Calgary and throughout Alberta, different kinds of incentive compensation such as profitability bonuses, performance bonuses, stock options, commissions, RSU’s, PSU’s, STIP’s, LTIP’s, etc., are major components of their compensation.

Incentive compensation is also one of the first things employers try to avoid paying to employees when the employer’s economic performance is lower-than-expected, or when they lay-off or fire employees.

Often, employers who try to deny these payments are in the wrong. Here are some general rules:

• If you already earned something during your employment but it just had not been paid yet, normally you would be entitled to it as unpaid wages or as part of your severance after termination of employment;
• If you would have earned something in your reasonable notice (severance) period had you remained employed during that time, normally you would be entitled to it as part of your severance pay after termination of employment.

Cautionary Notes

• Employers in Calgary and across Alberta often put tight deadlines on signing a severance offer.  This is sometimes tactically motivated to put pressure on employees to sign quickly.  Severance offers often state something like, “This offer is open for acceptance until [DATE].  If you have not accepted the offer by that date, this offer will be withdrawn and you will only be provided with the statutory minimum you are entitled to pursuant to the Employment Standards Code.”
• When employees ask for an extension of 1 or 2 weeks on the offer to “consider it” or “get legal advice”, employers often grant an extension.  If you have a deadline for acceptance, you should seek legal advice immediately and it cannot hurt to try to get an extension (in writing is best) to give yourself a bit more time
• Often, the threat to give only the Alberta Employment Standards Code amount if an employee does not sign the initial severance offer, is a bluff.  We can never say for certain up front whether something is a bluff or not, but the reason employers do not usually hold to that position is because they often know they have some liability and want to settle instead of taking the risk of a higher judgment and legal costs in court.
• Things are not always as they seem
• The fact that a contract appears to say you are not entitled to some form of incentive compensation as part of your severance does not necessarily make it so
• The fact that HR for your company says you are not entitled to some form of incentive compensation as part of your severance does not make it so