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Is Vacation Pay Considered During a Severance Settlement?

Is Vacation Pay Considered During a Severance Settlement?

If you have recently been dismissed from your place of employment, you’ve likely given some thought to severance pay. Though not every employee will be entitled to severance pay in Ontario, those who have been working for the same employer for at least three months are generally entitled to at least one week’s pay for every year of employment. Though severance pay is important, you may also have questions about other employee entitlements upon dismissal.

Vacation pay is something that all employees are entitled to, and when an employee is terminated or resigns from their employment, they are still entitled to their earned vacation pay. Knowing how much vacation pay and severance pay an employee is entitled to will depend on the unique circumstances of each employee. In this post, the expert employment lawyers at Soni Law Firm outline the basics of what both employers and employees should know about vacation pay after termination of employment.

How Does Vacation Pay Impact Severance Pay?

Vacation pay and severance pay are two separate issues that need to be considered when employment is terminated by an employer. As an employee, you are entitled to be paid for any unpaid vacation time that has been earned during employment. You may also be entitled to severance pay. By understanding your rights as an employee, you will be better prepared to protect them if your employment is terminated.

Knowing how much vacation pay you are entitled to will depend on factors such as your employment agreement and how much you have already used. Like vacation pay, severance pay is also influenced by a variety of factors. It is always a good idea to consult with a termination lawyer to ensure that you are receiving what you are entitled to as an employee. For more information on severance pay, see our posts, Understanding Severance Pay in Ontario, and Can Starting a New Job Impact Severance Pay?

What Employers Need to Know About Severance and Vacation Pay

Employers should know that when an employee is terminated without cause, they are likely entitled to adequate notice or pay in lieu of notice and also may be entitled to severance pay. Many employers also wonder, do you have to pay vacation pay on severance? Employees are also entitled to receive pay for any vacation time that has been earned at the time of dismissal. This is also true when employees choose to resign from employment. Severance pay and vacation pay are separate issues, though how each is paid out can sometimes be confusing for employers.

In some cases, it may be a good idea to have an employment lawyer assist with the process of terminating an employee. By working with an employment lawyer, you can feel confident that you are honouring the rights of your employee while also protecting the interest of your company. When looking for an employer defence lawyer Toronto, businesses turn to the experts at Soni Law Firm. Book a free consultation today to learn how we can assist you.

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About Post Author


Rahul founded Soni Law Firm, a boutique employment, labour, and human rights law firm, with the goal of taking his Downtown Toronto litigation experience and making it accessible to Ontario’s Main Street employees and employers.