Rafael Ruffolo sits down with Stacey Ball, an employment lawyer with Ball & Associates.
How to Get the Severance Package You Deserve
Rafael Ruffolo interviews Stacey Ball, an employment lawyer with Ball & Associates.
Q: If I’m unhappy with my severance offer, what is the first thing I should do?
A: Well, I think they should be contacting a lawyer because whether again it is a legal offer to make a contract or whether what’s been doing is being asked to contract potential rights that they may have. Some employees may be entitled to up to 24 months’ severance and they might be only offered 8 months or 6 months.
So, they should get a proper legal opinion to determine if the offer being made to them is in the range or in the ballpark.
Q: How many laid-off employees actually contest their packages?
A: Probably, not enough. What you see with some employers is that they will play the odds. They know – that a small percentage of employees will actually go and see a specialized employment lawyer and get a proper legal opinion even though ironically, that’s exactly what the employer has done in advance because the employer will know what its obligations are. So, the employee should have the same amount of knowledge that their employer does or I should say, a former employer.
Q: What is my employer thinking when offering me severance?
A: Well, they’re thinking dollars and cents and they know they have a legal obligation. They have a legal exposure but you’re trying to reduce it and that’s why they make the offers that they do. You know the reality of the situation is that you’re in an adversarial business relationship with your former employer. And the less money they can pay you, the more money for the shareholders and executive bonuses.
So, if you’re the employee, you probably want the money for…to cover debts, cover emergencies, and pay your mortgage.
Q: What if I try and negotiate the severance on my own?
A: Well, it probably is that they do not understand that the employer is not their friend. You know they’re no longer an employee – they’re a former employee – past perfect tense. People pay money because they know bad things can happen to them. And one bad thing that could happen to the employer is that they could have to go to court and pay the employee’s legal fees.
The employee acting for himself does not have the same bargaining power because the employee cannot go to the Superior Court himself – practically speaking – and commenced a wrongful dismissal action against the employer.
So, the employer has to know bad things can happen to it and because they know they could face exposure. They’re more inclined to pay the employee what he or she should be getting.
Q: Will my unemployment eligibility be affected by my severance?
A: What happens is that if you get a severance package, it basically causes the EI system to get frozen and suspended until the end of the severance term. And then if you’re still unemployed, you get EI. So, basically, it throws back the time before you can collect it. So, let’s say you have 12 months’ severance; all the time to collect EI is suspended by 12 months.
Q: How often do clients actually receive a better package?
A: I normally write a letter and they get a better package. If I don’t, I sue, and then they get a better package either initially or after mandatory mediation.
Q: Will challenging my severance affect my future employment?
A: Well, first of all, because the employer has proved cause, because the employer has proved the employee has not mitigated his or her damages, it’s hard for an employer to win. Because of that maybe 5% or less of cases go to trial…and because most cases settle, that means you make a bargain. You negotiate an agreement. You can negotiate all kinds of terms including a good reference. And so that would be normal. I think the employer will not say anything negative about the employee to any prospective third-party employer. So, that’s a good reason to retain counsel. So, you can negotiate these kinds of things.
Q: Final thoughts?
A: Well, I think it’s like I said…I think it’s important to be on a level playing field with your employer. It makes sense to retain counsel. The amount at stake can be quite large. I mean if you’re getting (15, 20, 18) months’ pay, that could be as similar as a small piece of property. So, you want to do it right.