Recently, the Toronto Police Service Board decided not to renew Police Chief Bill Blair’s employment contract for a third term. The Toronto Sun reported that Chief Blair’s contract states he would be paid one year’s salary if he was terminated. Mayor Rob Ford was reported to have said that “the average person does not get that” and that the severance package was “steep.” But was it?
How much pay an employee is entitled to when terminated depends on three main things:
- the employment contract;
- the Employment Standards Act; and
- the common law.
Employees are often provided with offer letters or employment contracts to sign before they start a new job. This offer letter or employment contract can contain a termination clause.
Chief Blair may have negotiated a termination clause which provides he is entitled to receive one year’s salary at the time of termination. We always recommend that employees have a lawyer review an employment contract before signing and that the employee negotiate the terms, where possible.
The minimum termination and severance pay that an employer is required to pay an employee is set by the Employment Standards Act and is roughly one week per year of service for each. There are several factors that apply; for more information on termination and severance pay, see here. Since Chief Blair was employed for just under ten years, he would receive 16 weeks termination and severance pay under the ESA, if he were terminated today.
While many employment contracts contain termination clauses limiting termination and severance pay to the amounts in the ESA, we believe it is very unlikely Chief Blair agreed to accept the minimum termination pay and severance pay he was entitled to receive under the ESA.
The Common Law
Unless there is a termination clause in an offer letter or employment contract, an employee is generally entitled to “reasonable notice” of termination, which can be up to 24 months (or more) pay.
The courts look at a number of factors to determine what is reasonable. The factors include the employee’s age, length of service and position. The availability of employment given the employee’s education and experience also come into play.
Chief Blair was employed for nearly 10 years and is over 40 years of age. If he were terminated today and did not sign an employment contract with a termination clause, then, he would likely be entitled to nine to 12 (or perhaps more) months’ notice of termination.
In this case, Chief Blair was provided approximately eight months’ notice of termination and is receiving a lump sum equivalent to one year’s salary as well. It would be interesting to know whether Chief Blair’s contract stipulated that he would receive one year’s notice of termination or one year lump sum at the time of termination. If the former, and if he receives eight months’ notice of termination and 12 months’ termination pay, that is significantly more generous than what the average person in his circumstance would receive.
If you have been provided an employment contract or severance package and would like to speak with an employment lawyer about your rights, please contact us at [email protected] or 1-888-640-1728 (toll free) or 647-633-9894 (within the GTA).
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