statutory and common law severance
Can employees receive both statutory and common law severance? This is a question many workers ask when their employment ends and they are presented with a termination package that appears modest compared to their expectations. The short answer is that employees do not usually receive statutory and common law severance as two separate, stacked payments. Instead, statutory entitlements form the minimum baseline, and common law severance often replaces or significantly exceeds that baseline when the circumstances justify it.
Employment standards legislation establishes the minimum amounts of notice and, in some cases, severance pay that employers must provide when terminating an employee without cause. These statutory payments are mandatory and cannot be reduced by contract. However, under the system of Statutory vs common law severance federal protections, statutory rights do not eliminate common law rights unless a valid employment contract clearly and legally restricts severance to the statutory minimums. In most non-unionized employment relationships, common law reasonable notice remains the default standard.
When an employee qualifies for common law severance, the statutory amounts are typically credited toward the total common law entitlement. For example, if a court determines that an employee is entitled to twelve months of reasonable notice under common law, and the employer has already provided eight weeks of statutory notice and severance, those statutory payments are deducted from the total award rather than added on top. The result is a single, larger severance package that incorporates the statutory minimums within the broader common law calculation.
Can employees receive both statutory and common law severance?
This structure reflects the purpose of each system. Statutory severance and notice provide a guaranteed floor of protection for all employees, ensuring basic fairness and consistency. Common law severance, by contrast, is designed to tailor compensation to the individual circumstances of the employee. Courts consider factors such as age, length of service, position, salary, and the availability of similar employment when determining what amount of notice is reasonable. This individualized approach frequently produces much higher compensation than the statutory formulas alone.
Employees often mistakenly believe that if they receive statutory severance, they are not entitled to anything further. In reality, unless their contract clearly limits severance to statutory amounts, they may have a strong claim for additional common law compensation. Many termination offers are framed around statutory minimums because those amounts are easier for employers to calculate and predict. However, accepting such an offer without legal review can mean forfeiting substantial additional compensation.
There are important exceptions. Unionized employees typically cannot claim common law severance because their rights are governed by collective agreements and labor arbitration. Employees dismissed for just cause are also not entitled to either statutory or common law severance. Additionally, employees with valid termination clauses that lawfully restrict severance to statutory minimums will generally be limited to those statutory payments.
Ultimately, while employees do not receive statutory and common law severance as separate windfalls, they often receive far more than statutory amounts when common law applies. The statutory payments form part of the total package, but common law principles ensure that the final result reflects the true economic impact of termination on the individual employee. Understanding this relationship empowers workers to evaluate termination offers more accurately and protect their long-term financial security.
