What is Fair Severance Pay in Alberta?

The majority of Albertans are entitled to severance pay which is far greater than the minimum amounts established by the Employment Standards Code. 

The question of what is proper severance pay depends on the unique facts of your situation. There is no “rule of thumb” such as “1 month per year of service”. Alberta Courts have rejected this concept. 

Every case is unique and there are many other factors which can be relevant in determining the amount of severance that you are entitled to. Our research findings concluded that Canadian Courts have reviewed over 100 different factors when considering the question of fair compensation for wrongful dismissal. 

Factors which influence severance pay include: 

  • Whether or not you have a written agreement which pre-determines your severance pay. Note that even if you have such an agreement, you should have it reviewed to ensure that it is valid. Many of these agreements are improperly drafted and are unenforceable.
  • Your years of service with the employer, including any breaks or interruptions in service.
  • Your age.
  • The type of job. Typically, the more specialized or unique the job, the more severance someone is entitled to.
  • How quickly you will be able to find similar work.
  • Your medical status and particularly if this was a factor in the termination of your employment. 
  • Whether you were recruited and enticed to leave secure employment to join your current employer. 


Your Next Steps

Please contact our Intake Specialist at workplacelaw@lypkielaw.com or 780-669-4542 should you require assistance with an Employment Law matter.

All Forms of Compensation must be Included

Generally, severance is discussed in terms of weeks or months. For example, you may be offered a severance package equal to “12 months compensation”. 

It is extremely important that your severance package include all forms of compensation that you would have earned during the severance period. This would include wages, but also overtime pay, shift differential pay, bonuses, stock options, employee benefits, pension or RRSP contributions, and many other forms of compensation. 

In our experience, most employee’s benefits and other compensation are worth more than 10% of their base pay. For salespeople or executives, these other forms of compensation can often be greater than their base salaries. 

As a result, be weary of severance offers which are calculated upon base salary only. Ensure that your severance package is properly reviewed and seek legal advice as to how best to negotiate and optimize your severance package.