# Lay off-Severance Package fairness



## showmethemoney45 (Feb 27, 2015)

Hi, just looking for some experienced advice...
I was laid off recently and given 5 months till my last day of work. I was given 24 weeks of severance pay on top of that (with no RRSP/health benefits added). The company is in bad shape and this was not malicious or surprising so I would like to keep things civil.
Details:
I've worked there for 12 years
I'm 35 years old
had several rolls with the company (5 years with lower management position but thats not my current position).

A few younger people with less years service were given 3 weeks/year severence so I'm wondering if I have a case to argue. I would also like to argue to add in their company matching RRSP benefits and health insurance costs for my severence period. Do I have a shot in hell?


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## 0xCC (Jan 5, 2012)

Are the people that are being given 3 weeks per year of service also getting 5 months until their last day of work?


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## showmethemoney45 (Feb 27, 2015)

0xCC said:


> Are the people that are being given 3 weeks per year of service also getting 5 months until their last day of work?


yes, same notice


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## iherald (Apr 18, 2009)

Not sure where you are. In Ontario the law states one week per year. You could ask for three weeks, and see what they say. I wouldn't sue over it, since it's unlikely a court will say they owe you more than the statutory minimums.


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## Feruk (Aug 15, 2012)

Depends where you are. From those I know laid off in Calgary (lots), it's been between 3 to 5 weeks/year. Probably doesn't apply at all to Ontario. Were those people who got 3 weeks/year in more important positions? Severance is (in theory) based partly on ability to get another job. There are less manager jobs than joe schmoe jobs, therefore the weeks/year will be higher for someone higher up. I doubt you've got a shot at RRSP or health benefits.


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## showmethemoney45 (Feb 27, 2015)

Feruk said:


> Depends where you are. From those I know laid off in Calgary (lots), it's been between 3 to 5 weeks/year. Probably doesn't apply at all to Ontario. Were those people who got 3 weeks/year in more important positions? Severance is (in theory) based partly on ability to get another job. There are less manager jobs than joe schmoe jobs, therefore the weeks/year will be higher for someone higher up. I doubt you've got a shot at RRSP or health benefits.


I'm in Alberta...
All the info on line I'm reading says they should be compensating you for ALL benefits during severence period (benefits/bonus etc)


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## birdman (Feb 12, 2013)

If I understand this correctly you are being given 5 mos notice AND 24 weeks pay. If I am correct this seems like a very fair package. From my experience there are a host of issues dealing with severance but mainly include such things as position, length of employment, age, and perhaps a few others. Also, province have labour standards which outline the severance to be paid. As a general guideline I would suggest you use 2 weeks per year. Now, severance can be by way of "notice" which in your case was 5 months OR "pay in lieu of notice". 
After this, it becomes a bit more complex in that the provincial labour code is the "minimum" and in many cases it can be argued by a lawyer for considerably more under "civil law". I suggest a ballpark number could be a month year (either "notice" or payment "in lieu of notice") for a manager such as yourself. 
Remember, these are some guidelines only and to be more accurate you will need to check out your provincial labour code and perhaps talk to your lawyer. In any event, if your employer is providing you both notice and severance on the basis you have stated I suggest you are being treated very well.


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## Plugging Along (Jan 3, 2011)

From what I could tell based on other people I know in Calgary, what you are being offered is fair. The package is based on the severance and the amount of working notice, which works out to almost a month a year for service for you. 

If you think it's unfair, you may want to consult a labour lawyer before you sign anything. I believe every situation is a little different.


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## showmethemoney45 (Feb 27, 2015)

So do I have grounds to complain if others in same department are getting 8 months for 4 years service?


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## OnlyMyOpinion (Sep 1, 2013)

Recent discussion of this question here as well: http://www.financialwisdomforum.org/forum/viewtopic.php?f=30&t=118787


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## GoldStone (Mar 6, 2011)

showmethemoney45 said:


> Details:
> I've worked there for 12 years
> I'm 35 years old
> had several rolls with the company (5 years with lower management position but thats not my current position).


What do you mean by several rolls? Did you leave and rejoin the company? Did they officially recognize prior service when you rejoined?


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## showmethemoney45 (Feb 27, 2015)

Started off in a junior role obviously...managed a small group for roughly 5 years in between but really wasn't my thing. I much more enjoy doing the actual work


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## birdman (Feb 12, 2013)

showmethemoney45 said:


> So do I have grounds to complain if others in same department are getting 8 months for 4 years service?


Not in my opinion and as I suggested everyones situation is different. From the limited information you provided I reiterate that I think your package was a good one. Don't worry about the other person. For example, if the other person was solicited from another company, is older in age, and perhaps promises were made, the company may have felt additional severance was warranted. I also would think the company had professional advice before offering the settlements. Also, legal fees would most likely eat up any action you may wish to start. Again, I think you did very well and nobody is guaranteed a job forever.
I had a pretty big job (Pres & CEO) and was involved in a number of these and would like to think we were very fair. This also included my own severance where I did a merger and knowingly merged myself out of a job. I was 56 at the time and as chances for similar employment were slim this was built into my severance.


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## james4beach (Nov 15, 2012)

showmethemoney45 said:


> I was laid off recently and given 5 months till my last day of work. I was given 24 weeks of severance pay on top of that (with no RRSP/health benefits added).


Sorry to hear about the layoff. Please make sure you apply for EI as soon as possible; you've paid into this insurance system. Now it can help you out as you search for a new job.

There are both legal minimums, *and* unwritten rules about how much severance a company pays beyond the legal minimum payment-in-lieu. Generally it increases with years of service, and it's generally more for older adults because they tend to have fewer options after layoffs.

5 months notice + 24 weeks seems very fair to me, and above what the unwritten rules say for that kind of situation, given your age. I would have said that even the legal minimum notice + 24 weeks would be enough, but they're giving you 5 MONTHS notice?

Seems fair to me. For instance they could have given you [X weeks] legal minimum notice + 24 weeks severance + benefits that last beyond the legal minimum notice.

Instead, as I understand it, they're giving you 5 months notice + 24 weeks severance + benefits that last for the 5 months. Am I correct about this? Will your benefits continue for the 5 months?

If so, it sounds very fair to me. I don't think you can get caught up on what others are getting. And have you considered their ages?


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## 0xCC (Jan 5, 2012)

GoldStone said:


> What do you mean by several rolls? Did you leave and rejoin the company? Did they officially recognize prior service when you rejoined?


I read "rolls" as "roles" and I think this post basically confirms that:



showmethemoney45 said:


> Started off in a junior role obviously...managed a small group for roughly 5 years in between but really wasn't my thing. I much more enjoy doing the actual work


As to whether the severance is fair based on other people with less service getting more weeks of pay per year of service I think generally that is what happens when you get to higher years of service. Your overall package is larger which makes sense since you had more years of service with the company.

Having said that, what is the downside to asking for more? The won't reduce what you have already been offered, right? Will you sour relationships that could help you out in a search for a new job? Will you sour relationships for the remaining five months of work you have? Is that risk worth the bump in the package you might be able to get? These really are questions that only you can answer.


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## james4beach (Nov 15, 2012)

When I said apply for EI ... I don't know how it works when you have months of notice of the layoff. So I could be wrong, perhaps you would apply in 5 months if you don't have a new job by then.


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## 0xCC (Jan 5, 2012)

james4beach said:


> When I said apply for EI ... I don't know how it works when you have months of notice of the layoff. So I could be wrong, perhaps you would apply in 5 months if you don't have a new job by then.


I think (and I could be very wrong about this so it is worth contacting EI to figure out for sure) that as long as you are receiving pay from your [former] company you can't collect EI. So if that 24 weeks of pay is not paid in a lump sum but is paid on the same schedule as if you were working then you can't collect EI until that runs out. As to when you need to apply for EI, I'm not totally sure about that, it might be once you stop going to the workplace daily or it could be just before your severance runs out. In either case it seems like it will be as long as 11 or 12 months before showmethemoney45 can start collecting EI.


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## My Own Advisor (Sep 24, 2012)

If I also understand correctly...

5 months notice (working until then) + 24 weeks of severance pay. 

That's 2 weeks per year worked. Seems fair.
http://www.severancepaycalculator.com/


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## Plugging Along (Jan 3, 2011)

showmethemoney45 said:


> So do I have grounds to complain if others in same department are getting 8 months for 4 years service?


I think you should go speak with an employment lawyer. Severance package are not necessarily linear. i have seen lay offs with new person with 18 months with the company get 12 weeks them someone with 5 years get 22. You change is not based on what others are getting, so that may not be a negotiation point but rather the other factors that were listed on the other thread.


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## showmethemoney45 (Feb 27, 2015)

0xCC said:


> I read "rolls" as "roles"


lol, didn't realize I was so bad at spelling. I should use my free time to catch up on my Grade 2 english


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## 0xCC (Jan 5, 2012)

showmethemoney45 said:


> lol, didn't realize I was so bad at spelling. I should use my free time to catch up on my Grade 2 english


You can just blame it on autocorrect.


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## nobleea (Oct 11, 2013)

24 weeks severance isn't a bad thing. I've always heard for professionals, it's about 1 month/year of service, so this isn't that far off. The 5 months notice is interesting. I'm sure there's been studies done on this that say giving a lot of advance notice helps people deal with it in a professional manner, and they don't slack off or worse for the next 5 months. Probably easier emotionally than a total blindside on Friday afternoon.

There is no harm in asking for more. You can use other people as a guide, or rule of thumbs. Bluff and be firm, but in a professional manner. They may say take it or leave it, or they may say we'll review. If their steadfast, then oh well, and sign the current offer.

It seems like this would keep the money coming in until mid November 2016. That's a pretty sweet arrangement. Gives you lots of time to pare down the finances and get used to living on one income. Calgary is going to be a tough go for the next few years.


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## Plugging Along (Jan 3, 2011)

showmethemoney45 said:


> So do I have grounds to complain if others in same department are getting 8 months for 4 years service?





james4beach said:


> When I said apply for EI ... I don't know how it works when you have months of notice of the layoff. So I could be wrong, perhaps you would apply in 5 months if you don't have a new job by then.


OP can apply, but it won't kick until until all servance has run out and there is a two week waiting period after the last day of severance. It actually may be better or worst to wait to apply. The reason is, the number of weeks you get for EI is based on unemployment rates. If Calgary, unemployment rates increase, then the duration of EI may also increase. Reverse if it getsif it gets better. It's based I think on when the application is put in. My spouse applied immediately when he was laid off. He did receive EI until four months later due to his severance (really lousy). The employment rate was worst when he started to receive it, but he gets the time he applied. It's only about 2 weeks difference ,but I think that is our case




0xCC said:


> I think (and I could be very wrong about this so it is worth contacting EI to figure out for sure) that as long as you are receiving pay from your [former] company you can't collect EI. So if that 24 weeks of pay is not paid in a lump sum but is paid on the same schedule as if you were working then you can't collect EI until that runs out. As to when you need to apply for EI, I'm not totally sure about that, it might be once you stop going to the workplace daily or it could be just before your severance runs out. In either case it seems like it will be as long as 11 or 12 months before showmethemoney45 can start collecting EI.


Doesn't matter if the package is lump sum or not, it's based on when the severance would run out. Also need to factor if there is any vacation pay in there.


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## Daniel A. (Mar 20, 2011)

Most companies now day's simple show people to the door.

Having notice plus severance takes a degree of trust, if your inclined there is no reason you could not speak to someone in charge and clarify differences.
From a legal point you would loss.


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## lonewolf (Jun 12, 2012)

iherald said:


> Not sure where you are. In Ontario the law states one week per year. You could ask for three weeks, and see what they say. I wouldn't sue over it, since it's unlikely a court will say they owe you more than the statutory minimums.


 Most likely have to work x minimum hours with in a year to get a week. 1800hrs ?

Severance pay can be directly put in an RRSP without effecting the limit. Severance must go directly into RRSP account to be eligible.


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## fraser (May 15, 2010)

I doubt very much that you can apply for EI before you are actually laid off. EI will want a separation certificate from your employer. You do not get this until your employment has bee terminated. You severance and vacation pay will be taken into account by the EI folks. 

You can roll your severance package directly into an RSP however there are limits on the amount. It is based on your years of employment AND the type of pension that you may have had at your workplace, ie DB or DC, or none.

Cannot comment on the severance pay. The amount you mentioned is well above the minimum legal requirements. Severance is based on many things...age, industry, position, etc. 

You are certainly fortunate to have the five months notice. You should be aware that this can change in an instant. Your employer could decide next week to sever your employment if business conditions deteriorate.

You might be very wise to consider your separation date to be much closer than your employer has stated and plan accordingly.


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## gibor365 (Apr 1, 2011)

iherald said:


> Not sure where you are. In Ontario the law states one week per year. You could ask for three weeks, and see what they say. I wouldn't sue over it, since it's unlikely a court will say they owe you more than the statutory minimums.


1 week/year for termination pay - up to 8 weeks,
1 week/year for severance pay ,
so minimum for 12 years is 20 weeks as per Ontario Labour Act...

From my understanding, medical benefits should be included in 8 weeks termination pay period



> 5 months notice (working until then) + 24 weeks of severance pay.


 it's very good , considering that 5 month you don't have to work reallly hard


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## gibor365 (Apr 1, 2011)

lonewolf said:


> Severance pay can be directly put in an RRSP without effecting the limit. Severance must go directly into RRSP account to be eligible.


Can severance pay be directly put into RRSP and I run out of limit? and would I pay taxes on severance pay ?


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## OnlyMyOpinion (Sep 1, 2013)

As I read it (please correct me if I'm wrong), your ability to transfer depends on having worked for the company for long time - since before 1996 and 1989. 
Per CRA:
_You can transfer part of your retiring allowance directly or indirectly to your RRSP, specifed pension plan (SPP), pooled registered pension plan (PRPP) or your registered pension plan (RPP)....
You can only transfer the eligible part of your retiring allowance to your own RPP or RRSP.
The eligible part is:
$2,000 for each year or part-year of *service before 1996* in which you were employed by the employer or a person related to the employer from whom you received the retiring allowance.
You can also transfer an additional *$1,500 for each year or part of year of service before 1989* in which you had earned no pension or DPSP benefit from employer contributions that either vested in you at the time of payment or that were previously paid to you.
You will receive a contribution receipt for any amount directly transferred to your RRSP.
Tax will not be withheld from the eligible part of your retiring allowance if your employer directly transfers it to your RRSP or your RPP._

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/trnsfrrng/lgbl-eng.html


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## showmethemoney45 (Feb 27, 2015)

OnlyMyOpinion said:


> As I read it (please correct me if I'm wrong), your ability to transfer depends on having worked for the company for long time - since before 1996 and 1989.
> Per CRA:
> _You can transfer part of your retiring allowance directly or indirectly to your RRSP, specifed pension plan (SPP), pooled registered pension plan (PRPP) or your registered pension plan (RPP)....
> You can only transfer the eligible part of your retiring allowance to your own RPP or RRSP.
> ...



I'm not that old so I don't need to worry about that


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## Beaver101 (Nov 14, 2011)

gibor said:


> 1 week/year for termination pay - up to 8 weeks,
> 1 week/year for severance pay ,
> *so minimum for 12 years is 20 weeks as per Ontario Labour Act...
> 
> * ...


 ... are you sure that is the "minimum"? sounds works out to getting 1.67 for each year of service?


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## Beaver101 (Nov 14, 2011)

gibor said:


> Can severance pay be directly put into RRSP and I run out of limit? ?


 ... and the rules from http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/trnsfrrng/lgbl-eng.html:



> You can only transfer the eligible part of your retiring allowance to your own RPP or RRSP.
> 
> The eligible part is:
> •$2,000 for each year or part-year of service before 1996 in which you were employed by the employer or a person related to the employer from whom you received the retiring allowance.
> ...






> .. and would I pay taxes on severance pay ?


 ... ?? ... maybe not directly, but it'll be deducted ... don't you love this simple-taxing country?!


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