Federally Regulated Employee severance pay

When a regulated employee is terminated from their job, they have rights to certain notice and pay. In Canada, this includes the federally regulated industries that operate banks; transportation companies like railways and airlines that cross provincial and international borders; telecommunication providers; and other industries where employers are subject to the Canada Labour Code (CLC). The CLC requires employers to give employees a certain amount of severance pay upon termination without cause. The amount owed depends on a number of factors. A rule of thumb suggests one month’s notice or pay for each year of service, but what is owed to a terminated federally regulated employee will vary.

In 2014, the Federal Financial Institutions Examination Council (FFIEC) issued a rule that required troubled institutions to have their severance pay plans and payments reviewed before they were made. This was intended to prevent the “gifting” of large sums to senior executives, which could be viewed as an illegal golden parachute payment. In order for an institution to qualify for a severance pay exemption, it must have a plan that meets the FFIEC’s definition of a nondiscriminatory benefit plan and has not been modified since it was first submitted to the FFIEC.

The FFIEC also requires the regulated entity to support its assertion that its Federally Regulated Employee severance pay plan is nondiscriminatory. It is important to note that this does not mean the regulated entity must demonstrate that its severance pay plan is “nondiscriminatory” in a strict legal sense. Instead, it must simply be able to show that it did not modify the severance pay plan to discriminate against lower-ranking workers.

Can Federally Regulated Employee severance pay be reconsidered?

It is critical that an employee seeking severance pay review consult an experienced employment lawyer before accepting any offer from their employer. An attorney can help them understand what is owed to them in their specific case and how much the employer must pay in order to avoid violating the rules of the FFIEC.

Whether you are a federally regulated or not, it is important to be aware of changes coming into effect on February 1, 2024 that will enhance employee termination entitlements. These include enhanced notice requirements and the requirement that employers provide terminated employees with a statement of benefits upon termination that details their wages, vacation, pay in lieu of notice, telecommunication employee severance pay and other benefits or payments received during their employment.

If you believe that your employer has violated the Code, contact an experienced wrongful dismissal lawyer at Samfiru Tumarkin LLP. We can review your situation and determine what you are entitled to. We can then guide you through the process of bringing a claim for damages in court. For a free initial consultation, call us today. We represent clients nationwide. Our office is located in Toronto, Ontario. For your convenience, we have satellite offices in Markham and Scarborough. We also provide consultations over the telephone and by video conference. We are dedicated to protecting the rights of our clients.