As recently highlighted in various publications including the Toronto Star, there has unfortunately been an increasing amount of layoffs recently in the tech sector.
In times like these, it is essential for employers and employees to understand their rights (and obligations).
Recent layoff have not been confined to startups feeling the pinch of venture capital drying up, but also affects established tech giants streamlining their operations (including here in the Lower Mainland). Regardless of the reasons behind these layoffs, the impact of a layoff or termination on employees can be significant and often stressful.
One key aspect to understand is that although they're used interchangeably colloquially, "layoff" and "termination" mean two separate things from a legal standpoint. A "layoff" as in a "temporary layoff" is a situation where an employee is told to not report to work for a period of time due to a shortage of work. A "termination" on the other hand, is where the person's employment is ended.
Both a "temporary layoff" and a "termination" can potentially entitle an employee to a significant amount of severance pay, depending on the terms of their employment agreement (if any).
Understanding Severance Packages
When layoffs occur, companies, particularly larger organizations, typically will offer severance packages to affected employees. However, it's important to note that these packages may not fully reflect an employee's legal entitlements.
Your Legal Entitlements
In British Columbia, employees (in the absence of an enforceable termination clause), are entitled to reasonable notice or pay in lieu of notice when terminated without cause. This also applies where an employee has been "constructively dismissed" due to being placed on a temporary layoff without their consent (and without a clause in their contract that allows the employer to do so).
Because employees' severance entitlements vary based on a wide range of factors, what is offered in a severance package may not reflect the employee's actual entitlements (for example, an employee who is in fact entitled to over 9 months' pay in lieu may only be offered 3 months).
Conclusion
If you're facing a temporary layoff or termination, it's crucial to seek legal advice before agreeing to or signing anything. Once you sign a release accepting the severance package, it's usually impossible to go back and ask for more.
An experienced employment lawyer can help you understand your rights and potentially negotiate a better package on your behalf.
At KSW, our employment law team has extensive experience representing both employers and employees, including tech sector employees and executive-level employees. We understand the unique challenges of this industry and are here to help. If you're facing a challenging employment situation, don't hesitate to reach out to us for a consultation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
