Am I Entitled to Severance Pay in Canada? Know Your Rights

Termination can be overwhelming, especially when it happens unexpectedly. In the midst of stress and uncertainty, many employees are left wondering what they are legally entitled to, particularly when it comes to severance pay.

What most people don’t realize is that they may be owed more than just a final paycheque.

Understanding “am I entitled to severance pay”, what is severance pay and when it applies can help ensure you are not unknowingly leaving money on the table.

What Is Severance Pay

Purpose and Legal Context

Severance pay is compensation provided to an employee when their employment is terminated without cause. This means the employee did not do anything wrong to warrant the dismissal, such as misconduct or poor performance.

The main purpose of this compensation upon termination is to provide compensation in lieu of your right to receive advance notice of the termination of your employment. This compensation effectively provides financial support while you search for new work.

It’s important to understand that this is different from the minimum standards set by Alberta’s Employment Standards Code. The Code outlines only the basic termination pay requirements, what you’re legally entitled to at a minimum. However, many employees may be entitled to more than these minimums.

Who Is Entitled to Severance Pay?

Typical Eligibility Criteria

If you were terminated without cause, there’s a good chance you are entitled to this compensation. When determining how much is appropriate, courts look at several factors, including:

• The terms of your employment contract
• How long you were employed
• Your age and seniority
• The type of work you performed
• How long it may take to find similar employment

Every case is unique, which is why it’s helpful to get advice tailored to your specific situation.

What About Terminations With Cause?

When an employer claims you were terminated for cause, they are saying you did something serious enough to justify firing you without severance.

However, this is a high legal standard, and the employer must provide clear evidence to back up that claim. In many cases, employers mislabel terminations as “for cause” when they actually don’t meet the legal threshold.

If you were dismissed for cause, it’s worth speaking to a legal professional, your employer may still owe you compensation.

The Role of Employment Contracts

Limiting Clauses

Some employment contracts include clauses that try to limit the amount you can receive. These are often called termination clauses, and they often attempt to restrict your compensation to the minimum standards under Alberta’s Employment Standards Code.

However, even if you signed an employment contract, you may still be entitled to more severance than the contract outlines.

Why Contract Terms Are Not Always Final

These clauses are only enforceable if they are clear, specific, and legally compliant. If a termination clause is vague, overly broad, or inconsistent with employment legislation, it may not hold up in court.

In other words, just because a contract says you’re only entitled to a certain amount doesn’t mean that’s the final word.

What to Do If You Are Offered Severance Pay

Immediate Steps

Being handed a termination package offer can feel like pressure to sign quickly, but it’s important to take a step back. Before you agree to anything:

• Do not sign any documents until you’ve received proper legal advice.
• Keep a record of all emails, letters, and verbal communications related to your termination.
• Consult an employment lawyer to understand what you’re truly entitled to and whether the offer reflects that.

Even a short conversation with a legal professional can help prevent costly mistakes.

How We Can Help

If you’ve been offered a compensation package upon termination, our employment lawyers are here to provide clarity, peace of mind, and strategic support. Here’s what we do:

• Take over communication with your employer so you don’t have to manage stressful conversations.
• Review your offer in detail to determine if it’s fair and legally appropriate.
• Guide your next steps with a clear strategy so you can move forward with confidence.

Common Myths About Severance Pay

“Short Service Means No Severance”

Many employees believe that if they’ve only worked for a short time, less than a year, they aren’t entitled to severance. This is not true.

Even employees with a few months of service may be entitled to several months of pay, depending on factors like age, role, and how long it may take to find new employment.

“The Contract Says I Get Nothing”

Just because your contract says you’re not entitled to severance doesn’t make it legally binding. These types of clauses aren’t enforceable if they:

• Fail to meet legal standards
• Are poorly worded or unclear
• Contradict Alberta’s Employment Standards Code

“Bonuses and Commissions Do Not Count”

Severance is based on total compensation, not just your base salary. If bonuses, commissions, or other incentives made up a regular part of your pay, they may be included in your package.

Courts often consider:

• Whether you earned these payments consistently
• Whether they were tied to your performance or the company’s success
• Whether you would have reasonably expected to continue earning them during a notice period

Why Legal Advice Matters

If you’ve been terminated or offered a severance package, working with an employment lawyer can make a meaningful difference. Here’s how legal support helps:

Peace of Mind – Support You Can Trust

• Confident Decision-Making: We take the pressure off by managing communication with your employer and advocating for your best interests.
• Personal Attention: Your case is handled with care and respect, and we ensure you feel supported and informed every step of the way.

Clarity – Bringing Clarity to the Unknown

• Straightforward Explanations: We translate legal language into clear, simple terms so you fully understand your rights and options.
• No Guesswork: You’ll know exactly where you stand and what you’re entitled to, without relying on assumptions or generic advice.

Strategy – A Plan Tailored to You

• Personalized Legal Strategy: We work with you to develop a personalized plan that is based on your specific situation. 
• Negotiation Support: Whether it’s improving the offer or pursuing a better outcome, we act with your long-term interests in mind.

If you have been let go or received a severance offer, it is important to review it.

Book a consultation with one of our Calgary employment lawyers today.

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