Common Law Termination Pay

Common law termination pay refers to a financial award made by a court in favour of an individual following a claim being filed with the court. Statutory common law also means government-made civil law, i.e. law. However, when talk of common law rights, severance and severance pay only mean the identical thing: the money that an individual gets in lieu of notice of the termination of his employment.

These are also referred to as ‘common law’ rights because they are derived from a body of law known as the’statute of limitations’. This is actually a rule put into effect by the federal government and every Canadian government at least has a say in how the law works in this regard. In two cases mentioned above, there were two separate but overlapping employment circumstances. Both examples involved an employee who had been employed for a considerable period of time with the company but who had been let go in recent times.

The first case pertained to a case which involved an employee who was an engineer and was let go by his employer because the said employer had not adhered to the employment standards act. The employee did not accept any redundancy at that point of time and did not bring about any grievance before the employment tribunal which is one of the bodies set up to handle such cases. He therefore claimed for wrongful dismissal or common law termination pay which would have been decided by the tribunal based on the facts that there had been a valid employer-employee relationship for at least two years. This was however ruled against by the employer and the case was lost.

How Much Does a Common Law Termination Pay Look Like?

The second case concerned an accountant who was also an employee of the same employer for some ten years. He had been let go when the company went bankrupt and he had then applied for unemployment compensation. Although this did not represent a problem with him for claiming for wrongful dismissal or common law termination pay, the company did not accept his claim before the employment tribunal and the matter was lost. This made way for him to appeal to the Employment Relations Authority which ruled that there had been a sufficient termination of employment for him to be entitled to reasonable notice of dismissal and that the employer must make good the loss of earnings by making suitable changes to his working conditions.

It should be noted that these rules and regulations apply only if the employer can show that the employees have a right to be protected by the contract or if the employment contract contains a severability clause. In the first instance, if the contract provides for a severability clause, an appeal can be brought by the employer, but in the second instance, it has to be proved that there was no valid contractual relationship between the parties and that the employees were effectively deprived of their right to continued employment by the defendant. The Employment Relations Authority is used very often in these cases as it can look after the employment issues that are referred to the court in order to make sure that the employee receives fair notice of dismissal and that they are paid their common law termination pay.

In order to know how much you can expect to receive for your common law termination pay, it is advisable to calculate the number of days worked over a twelve month period and then compare this with the length of service. The calculation would be as follows: Number of days worked x 12 months / number of days worked x 3.5% + (number of days worked – number of days) x 100. You could even use a calculator that shows the number of days worked over a fixed period of time. To calculate other types of common law termination pay, you will have to contact an employment solicitor.

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