Severance Packages


Severance Packages

Is an employer required to give severance pay to an employee they terminated?

If you terminate an employee without cause, you are required to give them working notice or severance pay instead of notice. At a minimum, the amount of notice or severance pay will be determined by the terms of the employment contract or, if there is no written employment contract, by statute. Minimum severance provisions are provided for in the BC the Employment Standards Act and, for federally regulated employers, the Canada Labour Code.

In some circumstances, you may however be required to give an employee a longer notice period or a higher severance payment. If you are unable to negotiate a reasonable severance payment with your employee, the amount of notice or severance could be determined through a wrongful dismissal action brought by your employee in court.

If you terminate an employee for cause, and have a basis for justifying the cause alleged, you are not required to provide any notice or severance pay.

Can I require an employee that I terminated to sign a release as a condition that must be satisfied before I give them a severance package?

You cannot require an employee to sign a release if you are simply providing them with the notice or severance pay required by the applicable statute. However, if you are offering a severance package that exceeds the requirements of the statute, you may require that the employee sign a release in exchange for any amounts in excess of the statutory minimum.

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