30 Oct Can I still collect severance pay if I quit during my notice period?
If an employee has recently been terminated, they will be provided either termination notice or pay in lieu of notice. A notice period is the amount of time an employee is provided to find new employment while still working and collecting regular pay from their former employer. When dismissed, there is also a chance an employee is entitled to receive further compensation upon termination known as severance pay. Pay in lieu of notice is different from severance pay because pay in lieu of notice is paying for the work hours lost while actively seeking new employment, and severance pay is compensating for the dismissal itself.
In a case where an employee was provided termination notice instead of a pay in lieu of notice, would the employee still be eligible for severance pay if they quit and didn’t complete their notice period?
This question is complicated because if an employee resigns from their position voluntarily, they most likely will not receive severance pay. On the other hand, if the employee is dismissed from their employment and entitled to severance pay, it is the employer’s responsibility to provide this compensation. In a case where the employee has been dismissed and may decide to resign during their notice period, it becomes a combination of the two scenarios.
When drafting employment contracts, employers can choose to provide their employee more notice than the minimum notice the Employment Standards Act (ESA) provides. For example, if an employee works for ten years, the ESA outlines that the employer must provide eight weeks’ notice (at minimum), however, the employer may decide to provide a greater notice period of five months. When the employee is provided a longer notice period than the minimum, the ESA minimum notice period, known as the statutory period, begins on the date of termination. Once the statutory period ends, the common law notice period begins, which is the additional notice the employer has provided the employee. For instance, in reference to the previous example, the eight weeks of notice is the statutory period beginning on the employee’s date of termination, and after the eight weeks, the additional three months would be the common law notice period.
This is crucial to understand as an employee who wants to both resign during their notice period eligible for severance pay and collect their severance pay. If this employee wishes to initiate their resignation, they must provide their employer at least two weeks’ notice and the resignation must be within the statutory period of their termination notice to nevertheless receive their severance pay.
If you have been terminated and want your termination package reviewed, please contact KCY at LAW by filling in an online consultation request or contact us by phone at 905-639-0999 to book your consultation today!