Severance Pay Calculator
You Might Be Entitled To:
Important: This severance calculator does not constitute legal advice, and the results provide no guarantee of your entitlements. Consult with an employment lawyer to seek legal advice about your specific situation.
About Our Severance Pay Calculator
Our severance pay calculator is designed to give you a basic idea of how to calculate severance pay at common law. It is not legal advice. It is just a reference tool.
The common law dealing with termination of employment is the same in all jurisdictions in Canada, except Quebec.
Therefore, our tool is not only a severance pay Ontario calculator. It can fairly be called the Canada severance pay calculator, because it works in Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, P.E.I., and Newfoundland.
Our employment severance pay calculator was designed with reference to over 3,000 wrongful dismissal cases decided over the last 40 years, from across Canada.
Severance pay is designed to carry you over (or bridge the gap) between your old and new jobs. That is why severance pay is usually discussed in terms of “weeks” or “months”.
It is common to use the terms “severance” and “notice period” interchangeably – because they both typically refer to an amount of time. For example, a six-month severance package can also be called a six-month notice period.
How Our Severance Pay Calculator Works
How is severance calculated?
Our employment severance pay calculator relies on a proprietary algorithm we developed.
It looks at three of the top factors that courts consider when determining a person’s severance pay or “notice period”:
Your age: For the most part, the older you are at the age of termination, the more weight will likely be given to your age as a factor in considering your notice period. The basic rationale is that the older you get, the more difficult time you will have in finding re-employment, because you will be competing against younger, cheaper workers. For a detail article on how age affects your severance pay calculation, click here.
Your length of service: An employee’s length of service is an important factor in severance pay calculation. For one thing, it has been said by our courts that a long-term employee has a moral claim which has matured into a legal entitlement to a longer notice period. Other courts have observed that having served one employer for such a lengthy period of time, a potential new employer may view that individual as rather set in his ways and not as adaptable to change. Whatever the reason, courts have considered long term service as a factor towards increasing the notice period.
Importantly, short service does not preclude long notice periods if the following are present: high compensation, important levels of responsibility, inducement, poor re-employment prospects or specialized skills.
Your Job Type: Generally speaking, jobs that are managerial or specialized tend to attract higher notice periods and so a common law severance calculator will tend to show greater severance pay amounts for those positions.
Other Factors That Can Increase Your Severance Pay
When calculating severance pay, the law can consider a variety of other factors (in addition to age, length of service, and job type). These include:
The availability of similar jobs in the marketplace: If it can be demonstrated that there are few comparable jobs available to you, you would be entitled to greater severance. Conversely, if there are lot of jobs available to you, your severance would likely be less.
You were induced to leave secure employment: If you were induced to leave secure employment in order to join a new company, and then you were terminated not long afterwards, you might be entitled to a longer-than-normal notice period. In fact, in one case, the court suggested that it would double the amount of severance pay.
You were a specialist: If your job entailed a specialized skill set, it is likely that there are fewer employment opportunities available to you, and therefore, you ought to be entitled to greater severance.
You have limited formal education and skills: If you lack formal education, certifications, or other training, you are at a disadvantage. Re-employment will likely take you longer to achieve and therefore you should receive greater severance pay.
You are in poor health: If you are suffering from a disabling condition, it is generally thought that you will have a more difficult time finding re-employment, and therefore calculating severance pay will take this into account.
You were terminated during a bad economic climate: If you were terminated during a bad time (either generally or within your industry), then your severance pay should be greater.
The manner of dismissal: Courts tend to pay special attention to employers who terminate their employees in harsh or insensitive ways. It is common for courts to award higher notice periods to employees that have been treated badly.
What is the Dollar Value of Your Severance Pay?
Our severance package calculator gives you a realistic snapshot of the amount of severance you might be entitled to in “months”.
But, how is severance calculated in terms of in dollars and cents? That requires more explanation.
Generally speaking, if you are entitled to (for example) six months’ notice or severance, then you should be entitled to all forms of compensation you would have earned had you actually worked those six months.
Unless there is clear, contractual language to the contrary, the calculation of your severance should include everything of value, which might include base salary, commissions, bonuses, car allowance, benefits, stock options, employee discounts, a promised raise, RRSP, pension, deferred profit-sharing plans, tuition / relocation reimbursement, etc.
Additional Facts About Severance Pay
Fact: Our severance pay calculator does not calculate what your minimum entitlements might be under your provincial employment legislation. While your minimum statutory entitlements are automatic, they are often much, much lower than what you might be entitled to at common law. This is why you should consult an experienced employment law firm – to determine if you are owed more than your minimum statutory entitlements.
Fact: When calculating severance pay, you should understand that, with limited exception, you will be taxed on severance pay.
Fact: Creating a severance pay tax calculator would be far too complicated, but know this: if your severance pay is paid out as a lump sum, it is referred to as a “retiring allowance” and although the employer will withhold and remit some of it to the government (for taxes) you will not accumulate credits toward CCP or EI on that severance pay. Withholding rates for “retiring allowance” depend on the amount of the lump sum.
Fact: With limited exceptions, severance pay does have an affect on your employment insurance benefits. In most cases, receipt of severance pay will either delay your entitlement to employment insurance benefits or else you may be required to repay employment insurance benefits (if you receive severance pay after you receive employment insurance benefits).
Fact: Although it is not the norm, some employers will provide “working notice” instead of a lump sum severance payment. Employees don’t like to hear this but: “working notice” counts toward your severance.
Fact: With limited exceptions, a person who is terminated has an obligation to look for replacement employment, and the failure to do so can negatively impact his/her severance entitlements.
How Can We Help With Your Severance Pay?
If you’ve tried our severance pay calculator, and you want to learn more about our services, ask us for a free consultation.
We’ll discuss your severance package and give you our honest appraisal of it.
We’ll also discuss your goals, what we think we can achieve for you, our fees, how long things will take, and any other concerns or questions you can think of.
In the vast majority of cases, we are able to negotiate better severance, without legal proceedings. That’s because of our well-earned reputation.
Give us a call. Our help can make all the difference.
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