What’s the most important factor that determines your severance entitlement at common law? It’s not your length of employment, age, management status, or salary. It’s reemployment.
That has several practical consequences that dismissed employees need to be aware of.
“Chances of reemployment” affects your severance entitlement
The four most important factors in determining your common law severance entitlement are your age, length of employment, character of employment, and chances of reemployment. That last factor is arguably the most important. Those with good prospects for quick re-employment — like cooks, waiters, and retail employees — tend to receive smaller severance packages compared to others.
Actual re-employment reduces your severance entitlement
On the day you are fired, you (technically) do not yet have any entitlement to severance pay at common law (but you may be entitled to ESA pay). That’s because wrongful dismissal damages compensate you for a loss of income resulting from the dismissal. For instance, if you are fired on the end of day Tuesday and you start a new job at the same pay Wednesday morning, your loss of income is zero.
Your post-termination job search affects your severance entitlement
Does that mean you should hold off looking for reemployment, so as to maximize your “loss of income”? Absolutely not – that’s one of the worst mistakes you can make.
The success of your wrongful dismissal case depends on your reasonable efforts to seek reemployment. The legal term for that is the “duty to mitigate”.
It’s common to feel demoralized after a dismissal. You might not want to look for another job. Maybe you know for a fact that you won’t find one. None of that changes your duty to mitigate. If you don’t meet your duty to mitigate, your common law severance entitlement will be significantly reduced. In some cases, that reduction can be upwards of 50%.
You need to consider re-employment in evaluating settlement offers
Whether a particular settlement offer is “good” depends on your specific circumstances. An early settlement — even for an amount that is “low” considering the normal factors — can be very good. It all depends on your evaluation of your chances of re-employing.
Contact Hyde HR Law today if you have questions about re-employment post-dismissal.
