Vacation Part of Federally Regulated Employee Severance Pay
Whether you are a Federally Regulated Employee (FRE) or not, it is important to understand that severance pay is different from termination pay. Although the terms are often used interchangeably, severance pay is actually compensation for a loss of employment that varies depending on many factors such as age, position and length of service. Severance pay can be an important tool to use if your job is terminated and you need to find new work.
While the “rule of thumb” is that you should receive a month’s notice or pay for every year you have worked, it is important to note that this is only a guideline. In fact, depending on the circumstances of your case and your employer’s practice, you may be entitled to significantly more.
A number of changes are coming into effect on February 1, 2024, that will enhance FRE Federally Regulated Employee severance pay entitlements. These changes include enhancements to the amount of working notice or pay in lieu an employer must provide for a FRE when they terminate without cause, and increases in this requirement with each additional year of service. Additionally, employees who have worked for their employers for more than 12 months will be eligible to receive two days of severance pay per completed year of service (or some combination thereof).
Is Accrued Vacation Part of Federally Regulated Employee Severance Pay?
In addition to this, the Canada Labour Code will require federally regulated employers to give FREs greater termination pay if they are involuntarily separated from their jobs, such as through a layoff. These changes will increase the minimum termination pay to one week of pay for each complete year of employment, or some combination thereof, up to a maximum of eight weeks.
The new requirements are in addition to the minimum provisions provided for in the Canada Labour Code, or at common law in the provinces except Quebec. The Code will not change the benefits or rights of any workers covered by an employment contract, civil law in Quebec, or by an applicable collective agreement, however, those arrangements can set out higher standards than the minimum requirements under the Code.
A final point to consider is that it is illegal for a business to put a Federally Regulated Employee on a temporary layoff unless there is a written agreement to do so, or the arrangement is addressed in their employment contract. A person can treat a temporary layoff as a termination through constructive dismissal and claim their full bank employee severance package.
The best way to ensure that you receive a fair severance package when you are terminated is to contact a lawyer. A lawyer can review your situation and determine what is owed to you under the Code, the relevant collective agreement, or at common law. They can also negotiate with your employer to get you the severance pay that you deserve. For non-unionized FREs, a proper severance package can be up to 24 months’ pay. This can even apply to employees who have been wrongly fired for cause or constructively dismissed.
