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Insufficient severance pay can give rise to a wrongful dismissal claim

On Behalf of | Jan 5, 2023 | Employment Law |

Employers and employees in British Columbia are typically familiar with the term “wrongful dismissal”, but what does it actually mean? This blog post is intended to clear up some common confusion about what it means to have a “wrongful dismissal” claim.

What is wrongful dismissal? 

At law, “wrongful dismissal” refers to the type of civil claim available to an employee. At its core, a “wrongful dismissal” claim is a claim that there has been a breach of the employment contract’s terms. This can include:

  • A claim by an employee who was told that they were being immediately fired on the basis of just cause for dismissal, but is disputing that just cause existed, and takes the position that they should have been provided with notice or payment in lieu of notice of their termination; or
  • A claim by an employee who has been offered notice or payment in lieu of notice on a without cause basis, but who did not receive sufficient notice or payment in lieu of notice.

Most employees can be let go for almost any reason without cause in British Columbia, but they must receive sufficient notice of termination or payment in lieu of that notice in the eyes of the law. What this means is that an employee may have a potential wrongful dismissal claim not only if they did not receive any notice or payment in lieu of notice, but even if the amount of notice or payment in lieu of notice that they received was not enough.

Employees may not have received sufficient notice or payment in lieu of notice if they received less than what was required in their employment contract, or if they are found to be entitled to what is known as reasonable notice at common law above the amounts received from the employer. For example, an employee in British Columbia may have received statutory termination pay under the British Columbia Employment Standards Act, but still have a claim in wrongful dismissal for additional compensation.

What is severance pay?  

Payment in lieu of common law notice is commonly referred to as “severance pay”. For example, rather than telling an employee that their employment will end in twelve months, an employer may choose to end the employment immediately and provide twelve months’ severance pay. Severance pay generally consists of monetary compensation and/or benefits that would have been provided to the employee over the notice period.

At law, the amount of severance pay that should be provided to an employee will depend on various factors including: the specific terms of the employment contract and whether they are enforceable, the employee’s age, length of service, the type of position, and the availability of comparable employment.

The obligation of an employer to provide notice or payment in lieu of notice in British Columbia may also be affected depending on whether an employee falls under provincial or federal jurisdiction, and if the employee is part of a union.

Employees who feel they have not been adequately compensated upon the termination of their employment, whether or not they actually received any payment from the employer, may have a claim in wrongful dismissal. If so, employees may choose to take legal steps to demand fair compensation. Employers may benefit from speaking with an experienced British Columbia employment lawyer prior to terminations of employment in order to understand what might be legally required of them in order to avoid wrongful dismissal claims.



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