It’s been said that life isn’t so much in holding a good hand, as playing a poor hand well. And while you may be out of a job, don’t let difficult circumstances prevent you from negotiating maximum fair severance package from your former employer.
After you’ve been fired and decide not to accept your employer’s typically deficient first offer, professional battle plan is critical to maximizing your fair severance compensation package. Accordingly, the streetwise employment lawyer not only adds essential credibility to fallback threats of wrongful dismissal proceedings in court, but effective counsel will further advise you on what to ask for, who you’ll talk to, and just what you'll want to achieve before attending a productive negotiation session. Most importantly, your lawyer will help prioritize critical elements of your severance package as follows.
Maximize your termination pay.
The longer you’ve worked for your employer, the more negotiation leverage you have. Although many employers will initially offer 1-2 weeks pay for each year worked, courts generally award one-month per year of service adjusted upwards in circumstances of improper employer behaviour, higher level job responsibilities, inducement from other employment, and advanced age of the employee being dismissed.
Meanwhile, definitely stall for time when negotiating your package, as it may well take you several days if not weeks to shop around for competent legal counsel to quarterback the negotiations and/or otherwise proceed to court as necessary. And while many employers extend mere 7-days or less for you to accept their often insulting first offer, rest assured that Ontario law provides you up to two-years during which to pursue wrongful dismissal proceedings in court should your employer still refuse to negotiate following expiry of their completely arbitrary negotiation deadlines proposed for their convenience only.
Where possible, avoid settlements whereby your termination pay ceases upon your landing replacement employment. Rather, negotiate for a lump sum or other arrangement whereby you’re not penalized with full clawback of termination pay for having effectively mitigated your damages by landing a new and higher-paying job. While employers may prefer paying your severance package over time for increased leverage in holding you to confidentiality and/or non-compete terms of your settlement agreement - lump-sum payoff will be preferred by employees looking to sooner cut ties with their former employer, not to mention ability to invest your monies immediately and/or pay mounting bills.
Since severance pay is taxable, it may be advantageous to defer at least some of your settlement income to the following tax year, when you may be paying less taxes. Meanwhile, reasonable portions of your settlement package attributed to pain & suffering damages and/or reimbursement for legal expense may escape significant income tax altogether.
Maximize your separation benefits.
While some employees will fight to the Supreme Court over medical, dental, insurance, and other health benefits for their families, others would much rather negotiate for the additional cash value of generally useless benefits like outplacement services, career counselling, and resume-writing consultants. In any event, if your spouse is already receiving full-family benefits from his/her employment, then why not offer to accept 50% cash-value of worthless benefits in your own severance package negotiations?
Your right to continued stock-options will typically vanish upon termination. But if you were fired for “without cause” reasons of downsizing and/or corporate restructuring - then ask for acceleration of vesting periods required to exercise your stock-options, even at the expense of less upfront termination pay. This way, both parties are better off, costing your employer less money in the short run, but yourself potentially gaining much more in the future should your former employer’s shares ironically take-off as a result of the very restructuring that got you down-sized in the first place.
If still on relatively polite terms with your employer following termination, ask for use of a spare office or cubicle, personal telephone line, mail facilities, and even secretarial assistance to assist in your job search - hunting for new employment without prospective employers knowing you’re already out of a job.
Negotiate continued use of your notebook computer and/or company car if you have them, as you may be able to take over underlying leases at your employer’s far-reduced corporate rates where applicable.
Stand-up to hard-nosed employer negotiation tactics.
Hard-nosed employers will tell you they’re not inclined to pay you more money until you’ve first signed their release. Don’t fall for this tactic under which you’ve just signed off on all your litigation remedies, and no further leverage should the your employer renege on his promises of increased generosity. Rather, remind this underhanded employer of their duty to pay minimal Employment Standards Act termination plus vacation pay irrespective of signed release, and absent which your lawyer will be filing next-day complaint for formal Ontario Ministry of Labour sanctions and maximum punitive damages claim against your employer believing itself beyond ethics of fair negotiation.
Overall then, employees are always better off seeking professional legal advice from lawyers well-versed in the workings of severance package negotiations - while letting your employer know that you’re not alone in your negotiations, that you know your rights, and that you have a team of litigation-loving lawyers just begging you to sue should maximum fair severance not be immediately forthcoming your way.