Federally Regulated Employee severance pay
The hiring process is only one side of the employer/employee relationship. The other side is workforce reductions and layoffs, which are a natural part of business operations. When it comes to those employees who must be let go, a severance package can help ease the transition. But is severance pay mandatory in any particular circumstance?
In Canada, a federally regulated employee is someone who works in a company whose labour and workplace laws are subject to the jurisdiction of the government. This includes government jobs, as well as private sector businesses such as banks and transportation companies, including airlines and airports, and broadcasters and telecommunication providers.
Those employees are subject to the provisions of the Canada Labour Code (CLC), which sets out basic employment rights and responsibilities for both employers and employees. In the case of federally regulated workers, the CLC stipulates that in addition to statutory termination entitlements, such as notice or pay in lieu, those workers are entitled to Federally Regulated Employee severance pay. This is generally two days of wages for every completed year of service, with a minimum of five days. In addition, severance pay may be enhanced or supplemented by the terms of an enforceable employment contract or by any applicable provincial or territorial legislation, such as the WARN Act in New Jersey.
Is Federally Regulated Employee severance pay mandatory?
Some federally regulated workers are also covered by the Public Service Supervision and Control Act, which provides them with even more protections when it comes to their job security. In fact, a recent Supreme Court of Canada decision established that non-unionized federally regulated employees can only be dismissed for cause, such as serious misconduct or because their position no longer exists.
While this ruling has been widely criticized, it does mean that telecommunication employee severance pay is not required when an employer terminates the worker for a reason other than those outlined in the CLC. Nevertheless, the CLC has recently been amended to bring it in line with similar provincial employment standards regulations, such as Ontario’s, and employers should ensure their policies are in compliance.
If an employer is trying to introduce significant changes in a worker’s position, such as changes to their title or job responsibilities, this could be deemed constructive dismissal and could lead to a claim for severance pay and additional damages. Therefore, it’s best to speak with a lawyer right away if an employer is trying to make these changes.
Similarly, if an employer is planning to close their facility or conduct a mass layoff, it’s important that they consult with their lawyer regarding the specific requirements of any applicable state labor laws. This is especially true for multi-state employers, since each province has its own rules.
With these changes, federally regulated employees should be aware that their severance pay is likely to increase. For those who are unsure of their current entitlements, they can access the government’s Severance Pay Calculator here to see how much they might be owed. This tool is easy to use and can provide an estimated severance pay figure in minutes. It’s a valuable resource that should be made available to all federally regulated employees.
