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Structuring Severance Packages

A costly mistake that employers frequently make is failing to include a clear and enforceable termination provision in their employment contracts. This is due to a number of reasons. A key reason is not wanting to consider details about how the relationship will end at a time when the relationship is just beginning. Another reason is thinking that the main terms of an employment agreement are limited to start date, position and duties and salary and benefits. Yet another reason is believing that the employment relationship is governed solely by employment standards legislation and that accordingly, the employer’s obligation is limited to satisfying Section 63 of the BCEmployment Standards Act (the "ESA").

The law, however, dictates that an employer who dismisses an employee without cause must provide the employee with reasonable notice or pay in lieu of such notice in accordance with the common law (“Reasonable Notice”). The presumption that an employer must give Reasonable Notice i...

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