All You Need to Know About Severance Packages

What are severance packages?

Severance packages are pay and benefits that employees are entitled to receive when they leave a company involuntarily — for example, when a company is downsizing, when a position is being eliminated, or when the company is looking to cut costs.

What's included?

The package will outline the purpose of the severance plan, the conditions for paying severance, how the severance pay has been calculated, and how the pay will be administered — whether as a lump sum, biweekly, monthly, and so on. It's not required.

Severance packages are not required unless stipulated in your employment contract. The only requirement a company must fulfill is providing you with a "Notice of Employment Standards," as set out by the Ontario Ministry of Labour. The amount of compensation you may be entitled to is determined by how long you have been with the company. Speak with a lawyer.

Depending on your situation, you may want to speak with a lawyer before signing the severance package agreement. This is particularly recommended in situations such as:

• If you have been with the company for 30 or more years

• If you are nearing retirement

• If you anticipate having trouble finding another job with a similar salary

To learn more about severance pay in Ontario, you can click here and here. Watch Marc Belaiche, CPA, CA, President of Guhuza, discuss this topic here.

Guhuza is created in partnership with TorontoJobs.ca.

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