Laid off? Here’s how much severance you can expect

Years of service, age, position, industry and level of compensation all factor into a severance package

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From the June 2014 issue of the magazine.

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job_loss_484So you’ve come into work to find out it’s your last day. Years of service, age, position, industry and level of compensation all factor into a severance package, says Michael Wright, an employment lawyer with Cavalluzzo. But unless terms are spelled out in an offer letter or written employment agreement there’s no set rule to determine a payout, he warns. As these purely illustrative examples show, packages vary. Seek legal advice if you ever find yourself in this position.

      Play: Mark Brown talks severance pay with 680 News’ Mike Eppel

See which of the below scenarios most applies to you.

Name: Young and Employable

Age: 27

Position: Entry-level

Salary: $45,000 (plus 50% off company services)

Possible severance: Three months or $11,250 (plus continuation of 50% discount for that period)

Employers might push for two months, but it’s tough to land a job in eight weeks. Don’t expect much more than that. Someone at this age and experience should have an easier time finding an equivalent job and pay than someone in a more senior role with more experience.

Name: Mid-Life Crisis

Age: 45

Position: Junior manager

Salary: $88,000

Possible severance: 12 months or $88,000 (plus benefits and bonuses)

At age 45 most workers are still very marketable, but it could take time to find equivalent employment at a similar income level. It ’s worth noting, though, that someone who has worked a few years more or a few years less might b e entitled to the same severance. That’s key. You don’t just multiply years to come up with a severance payout.

Name: Not Ready to Retire

Age: 64

Position: Manager

Salary: $120,000

Possible severance: 24 months or $240,000 (plus pension contributions)

Being laid off near retirement age doesn’t mean you can afford to retire, or even want to. A big payout is possible, provided the affected employee is diligently looking for new work. Collecting a pension shouldn’t affect severance either, as it is essentially a form of deferred wages.

4 comments on “Laid off? Here’s how much severance you can expect

  1. Question on a company that is going to reduce my pay by up to 35% what should I expect if I ask for early retirement or constructive dismissal I am 59 and have worked for this company for 28 years presently income of $113,000 salary next year is $40,000 plus 5% commission on approximately $650,000 in sales if things stay the same and no accounts gained, or lost, if you could give me some type of guideline would be apppreciated, thanks, Jim


  2. More and more mid to senior level managers are getting the boot at 50 to 55. What can one expect during negotaition for severance? Does the rule of 1 month of severance for every year of service still hold? And is there a cap?


    • I would suggest to both of you to first download the “severance calculator app” if you have a smartphone its free, gives a quick guideline for you. Your questions are complex, go to a good labor lawyer, there is usually one in each major center. Their consultation is usually free and their fee is something they charge the employer additionally on top of your severance payout. If your in a bad situation don’t be afraid to ask and do something about it. It won’t hurt to have a consultation.


    • one MONTH of severance + 4 weeks. A lawyer I consulted suggested settlements vary from 2 WEEKS to 4 WEEKS per year, so I’d guess that one MONTH/YEAR is at the high end. Note also that in Ontario, employers can be exempted by law from paying severance either by size of payroll, or number of employees. SEE A LAWYER EXPERIENCED IN EMPLOYMENT LAW. My 15 minute discussion was free.


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