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Law.Hut
Law.Hut, Lawyer
Category: Canada Law
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Experience:  with over 15 years experience.
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I live in BC. I worked for my company for just over 5 years

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I live in BC. I worked for my company for just over 5 years as their business manager and director of ops. On Oct 23 I had a meeting with one of the owners of our company to determine how I would end my employment with them. She said that after discussion with the other owners they were prepared to offer me 5 months severance. We then determined that I would work until the end of November, training new staff and finishing off a project.

After a few days I emailed the first owner and asked her for a letter with our agreement (and I spelled out what we had agreed to). She said yes she would provide that. She left on holidays but one of the other owners met with me and provided me a letter that he suggested I have "looked at" and then to sign it.

The letter said it was effective Nov 5 and that the company would provide me with 5 months of salary (paid monthly) and that the first month would be November - during which I would continue to work - (working notice). And that - should I find a job in the following 4 months, they will pay out 50% of the remaining money (clawback). They did include in the letter that they would pay out my vacation and bonus (and prorated bonus for current year.)

I feel like I lost a month...and I don't like the 50% clawback. But I'm not sure if this is something worthy of "going to court" over. Is what they've proposed fair?
Submitted: 8 months ago.
Category: Canada Law
Expert:  Law.Hut replied 8 months ago.
Hello:


We cannot give you legal advice here. I can tell you that a very rough rule of thumb is that a higher level employee might get one month of severance pay or working notice for each year of service. That would include pay and any benefits that would normally be paid during that many months of employment. Tax would be payable on the award as with any income. But the exact length of severance time is up to a judge- there are no fixed guidelines or rules, and the court is supposed to consider factors such as length of service, but also the job market at the time. If the economy is doing well and there are relatively high number of comparable jobs available, that will decrease the time for severance. So the outcome even if you are totally successful in the litigation is subject to some risk and uncertainty.

Other factors to bear in mind are that you will have a duty to try and mitigate any type of loss by trying to obtain other similar or comparable work as soon as possible. If you do happen to locate such work, that then reduces any damages that you could be awarded. You would have an obligation to try all reasonable efforts to locate such comparable work as soon as possible. So if you start a lawsuit and then managed to find similar paying work within, say, 5 months, you would be limited to obtaining damages for the pay you would've received in your prior job for those 5 months only.

So the proposed clawback is not totally out of line, nor all that unusual in a severance package. And in fact the claw back so to speak of a court decision would be 100 per cent, if it was a comparable job.

You must also consider the costs of proceeding with the lawsuit or lengthy negotiations. It would not be mandatory to have a lawyer, but law and procedure involved in suing is not simple, and you would be far more likely to get a better result by using a lawyer. But even if you are entirely successful, it is very rare that the court will order the defendant to pay your full legal bill. That generally only happens if the defendant has engaged in some conduct that the court finds reprehensible, such as deliberately misleading the court. Simply losing the lawsuit would result in an order that the defendant employer pay you some costs based on a tariff , but those tariff rates are usually far less than actual legal fees So if you were entirely successful in the litigation and receive an extra month or two of pay above what has been offered, you could still have a legal bill of easily $25,000 to take such a case right through to trial, but would receive costs of perhaps $5000 payable from the defendant. Most matters to settle out of court prior to a full trial, but there is never a guarantee that this will occur in any particular case.

There's of course the personal cost of litigation. It is time consuming and stressful to be involved in a lawsuit and have to testify in court. It is also a public proceeding, and any future employers that you may be trying to get hired on with could become aware of the litigation and this could affect your employability.

I hope this can give you some information useful to making your decision, as we are not allowed due to site rules to actually advise on what you should do. And a lawyer giving such an opinion would likely want to have a detailed interview to get much more information from you, review any employment agreement, and the written severance offer.

I hope this is helpful. If you have no further questions, please rate the answer positively, as otherwise the site does not credit me, even if you have paid a deposit. You can still ask follow up questions after rating though, if you wish.
Law.Hut, Lawyer
Category: Canada Law
Satisfied Customers: 7034
Experience: with over 15 years experience.
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