Termination pay is sometimes called "Severance Pay" colloquially,. In Alberta, (and across Canada in the common law provinces) Termination Pay is composed of two components: "Severance Pay" and "Pay-in-Lieu of Notice." The Supreme Court of Canada recently spoke of this in Matthews v. Ocean Nutrition 2020 SCC 26. To read our summary of that case, you can click here: https://www.flodenward.com/post/fired-in-alberta-supreme-court-of-canada-clarifies-bonus-and-good-faith-issues-in-employment-law.
The Supreme Court of Canada said severance compensates employees for the years of service and for losses they suffer when their employment terminated. In Alberta and BC, severance caps out at 8 weeks, so the value put on years of service and the losses employees suffer is not high.
Pay in lieu of notice is paid as damages for the employer ending the contract of employment. There is an implied term in contracts of employment that, while employers can fire people, they will pay notice. The courts set out pay in lieu of notice based on a number of factors, as originally set out in Bardal v. Globe and Mail. These include things like age, years of service, type of job, salary, economic conditions on termination, manner of termination among other things. To read more see our article on how it is calculated: https://www.flodenward.com/post/how-is-severance-calculated-in-alberta.
Practically, in a lawsuit, courts will often award pay in lieu of notice and severance globally as one judgment. The courts look at pay in lieu of notice as bridge to the employees next position, not an absolute right. Courts require employees to mitigate their damages i.e. actively look for another similar job- and if they don't look for a job the amount of money they are paid is reduced. If they do find another job, their damages are reduced accordingly. For more on mitigation, please see our article: https://www.flodenward.com/post/fired-mitigation-and-employment-law-in-alberta.
If you have been terminated and wish to know whether your severance or pay in lieu of notice has been sufficient, please feel free to contact us.
The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.
