If you’ve recently been terminated from your job in British Columbia, understanding your rights to severance pay is critical. At TZ Law, we specialize in severance reviews and wrongful dismissal claims, helping employees in Vancouver, Burnaby, Richmond, Surrey, and across the Lower Mainland, and surrounding areas secure the compensation they deserve.
What Is Severance Pay?
Severance pay is financial compensation owed to employees whose employment is terminated without cause. It serves as a safety net while you transition to new employment opportunities.
In BC, severance entitlements are governed by two key frameworks:
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Employment Standards Act (ESA): Sets minimum severance entitlements for employees.
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Common Law: Courts often award additional compensation based on specific circumstances.
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Who Is Entitled to Severance in BC?
Employees in BC may be entitled to severance if:
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Their employment is terminated without cause.
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They receive insufficient notice or no notice at all.
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Their termination qualifies as constructive dismissal, where significant workplace changes force them to resign.
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Severance is generally not owed if:
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You voluntarily resign or retire.
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You are dismissed with just cause for reasons such as gross misconduct.
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You work on a fixed-term contract that ends as scheduled.
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How Much Severance Pay Should You Receive?
The amount of severance depends on two factors:
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Minimum Standards Under the ESA:
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After 3 months of service – 1 week’s pay.
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After 12 months – 2 weeks’ pay.
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After 3 years – 3 weeks’ pay, plus 1 additional week for each additional year of service (up to a maximum of 8 weeks).
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Common Law Entitlements: Common law provides greater compensation, taking into account:
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Your length of service.
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Your age.
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Your job position and salary.
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The availability of comparable employment.
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Why Should You Review Your Employment Contract?
Employment contracts often include termination clauses that attempt to limit severance to ESA minimums. However, poorly drafted or outdated clauses may not hold up in court, giving you the right to claim full common law severance.
Unionized employees should consult their collective agreement for severance terms, as these differ from non-unionized entitlements.
How Is Severance Paid Out?
Employers may choose one of three methods to pay severance:
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Lump-Sum Payment: Full payment upfront, offering immediate financial support.
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Salary Continuance: Regular payments over a set period, often including benefits.
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Deferred Payments: Payments spread out over years, offering potential tax advantages.
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Is Severance Pay Taxable?
Yes, severance pay is considered taxable income. The tax implications depend on how the severance is paid:
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Lump-Sum Payments: Subject to income tax withholding but exempt from CPP and EI deductions.
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Salary Continuance: Taxed as regular income, including CPP and EI contributions.
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RRSP Contributions: You can request your severance be deposited into an RRSP, deferring taxes until withdrawal.
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What to Do If You’re Offered a Severance Package
If you’ve been presented with a severance package, don’t feel pressured to sign immediately. Employers often offer less than what employees are entitled to under common law. Here’s how to proceed:
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Pause and Review: Avoid signing any documents without careful consideration.
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Consult a Lawyer: A legal review ensures you receive the full compensation you deserve.
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Negotiate: An experienced employment lawyer can help you negotiate a better package.
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What Is Wrongful Dismissal?
If your employer fails to provide adequate notice, severance pay, or terminates your employment without just cause, it may qualify as wrongful dismissal. Employees in such cases can seek:
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Full Severance Compensation: Based on common law entitlements.
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Additional Damages: For emotional distress or reputational harm caused by the dismissal.
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FAQs About Severance Pay in B.C.
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What is the maximum severance pay in B.C.?
Common law severance can reach up to 24 months’ pay, depending on your situation.
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What if I’m pressured to sign quickly?
You have two years to claim severance, so take time to review offers with a lawyer.
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Can I claim severance if I’m laid off?
Yes, unless it’s a temporary layoff under specific ESA conditions.
Resources for Employees
How TZ Law Can Help
At TZ Law, we specialize in employment law and severance reviews, assisting employees across Vancouver, Burnaby, Richmond, Surrey, the Lower Mainland, and surrounding areas. We work tirelessly to:
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Evaluate severance packages.
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Identify flaws in termination clauses.
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Maximize your compensation.
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Represent you in wrongful dismissal negotiation and claims.
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Contact TZ Law for a Severance Review
If you’ve been terminated or are unsure about your severance package, don’t navigate the process alone.
Contact TZ Law for a Severance Review. Our team at TZ Law is here to protect your rights and secure the compensation you deserve. If you’ve been terminated or are unsure about your severance package, our team at TZ Law is here to protect your rights and secure the compensation you deserve. Let us help you understand your options and take the next steps with confidence. Consult with our lawyers today.