Executive Severance Package: What You Need To Know

Being let go of a job can be a difficult thing. When employees are terminated from their job without cause, they must be given adequate working notice or payment in lieu of notice. For most employees, calculating how much notice or payment in lieu of notice they should receive is based on a series of calculations. However, things can be a little bit different for executive-level employees.

 

Because executive-level employees constitute a small fraction of the overall workforce, and because their positions are more difficult to come by, their circumstances are distinct from those of the traditional white or blue-collar employees. As such, distinct considerations apply to determining what executive-level employees will be given in terms of notice or severance pay. 

 

How is Executive Severance Calculated?

 

Under the common law, for regular employees, severance pay is calculated using factors that originated from Canadian courts. These factors (sometimes called Bardal factors) include:

• The nature and character of the employment;
• Length of service;
• Age of the employee, and
• Likelihood of securing similar employment considering the employee’s experience, training, and qualifications.

These factors apply only to employees who have been terminated without cause and help employers and courts determine how much notice or payment in lieu of notice an employee should receive. 

 

When determining how much notice or payment in lieu of notice, judges will take a moment to consider the employee’s relation to each of these factors. For example, an employee who has worked at a company as a mid-level employee for three years, who is around forty years old, and who worked a job that did not require a particularly specialized set of skills, might receive three months of notice or severance pay. This is because they would be awarded one month for each year that they worked there, without extra payment, because they are of average age and won’t have too much trouble finding a similar position elsewhere.

 

What should be considered for executive employees?

 

When it comes to executive-level positions, the courts have recognized their distinct nature in assessing the proper notice period. Courts have, for example, noted that executive-level positions are more difficult to come by, pay more than the average position, and require a unique and often specialized set of skills. A comparable position at a different company will therefore be more difficult to get, increasing the chances that the terminated executive will have to take a position at a company that has a less prestigious status and a lower rate of pay.

 

Due to all these factors, there is case law that supports executive-level employees who are terminated being given more months of notice, or more payment in lieu of notice, than the average employee.

 

As well, when terminating any employee, any source of income that the company gives them must be evaluated and calculated into their notice period or severance pay. That includes items like cell phone plans, car allowances, bonuses, stock options, and any other allowances that the employee is given. Executive-level employees often receive more of these fringe benefits, especially when it comes to stock options, so all those forms of compensation must be assigned dollar values and factored into the analysis of the proper notice period or severance pay for that employee. 

 

Taken together, all these features of executive employment have meant that executive-level employees typically receive more notice or payment in lieu of notice when they are terminated from their position.

 

I’m an executive-level employee and I’ve been terminated. What now?

 

If you have just been terminated from an executive level position at a company, make sure to have a lawyer read over the documents or severance package that you were given to ensure that you are getting what you should be from the situation. A lawyer can help you determine whether your former company is treating you fairly based on your position, and they can help you decide if you should take legal action if you are in a position to do so.

 

If your severance package does not adequately represent the level of your position, a lawyer may recommend that you take legal action to try to see a better outcome. Taking legal action will often involve start by writing a demand letter to your former company.

 

A demand letter will let your former company know that you want more than you were offered, and that if they do not make a new offer, you will proceed with further legal action. 

 

Conclusion

 

When terminating an employee, employers must give proper working notice of termination or payment in lieu of notice. How much notice or payment in lieu of notice they should be given will depend on the application of the Bardal factors to each individual case. 

 

When it comes to executive level employees who have been dismissed, the application of the Bardal factors tends to result in larger settlements for them. This reflects the nature of their position within the company. Since executive level positions are difficult to come by, pay more, and usually require a particular set of skills, all those factors must be reflected in the package given to an employee.

 

If you are an executive level employee who has been terminated from a position, make sure you reach out to a qualified employment lawyer at Achkar Law to make sure that you have been given a package that reflects your position. 

 

Contact Us

 

If you are an employer or an employee with questions about terminate executive level employees, our team of experienced human rights lawyers at Achkar Law can help. Contact us by phone toll-free at 1 (800) 771-7882 or email us at [email protected], and we will be happy to assist. 

 

If you are a small or medium-sized company looking for full-service support with a same-day response, visit our Chief Legal Officer Program page for our strategic solutions.

 

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