How is Severance Calculated in Alberta?
Updated: Aug 21, 2020
Assuming that an employer does not have cause to fire an employee, how do you calculate the severance pay (also called pay in lieu of notice) that is owed to the employee? This analysis is for an indefinite employee whose contract does not otherwise restrict severance. It depends on the facts of the individual case, but the factors are well known. They were set out by the court in Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.). In that case the court said:
There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.
Other relevant factors are set out in other cases, include if the employee had been induced to leave a prior job, or if the employee had been assured that their job was secure. (As set out in Wallace v. United Grain Growers Ltd. 3SCR701).
Treatment of the employee upon termination can be relevant and lead to escalated damages. Conversely, the law puts an onus on employees to find work at a certain point, and failure to do so (or mitigate their damages) can lead to a reduced amount owing to employees.
Calculating the amount involves looking at relevant factors set out above, as well as similar cases. Employment lawyers have experience in doing this.
Generally in Alberta pay in lieu of notice caps out at 24 months’ salary.
If you are an employee in Alberta who has been dismissed and you would like to know if the severance amount you have been offered is fair, or if you are an employer in Alberta wishing to terminate an employee, please contact Floden Ward today.