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There is often a misconception that “severance pay” is a condition of employment or labour law when a worker’s position is eliminated, their plant is closed, or the company would otherwise like to part ways. That workers are rewarded for their years of service and that transition into unemployment is softened by a severance package. However, we negotiate for strong language and standards when it comes to severance pay as without this language, the rights afforded to workers is minimal, and this is often one of the most overlooked advantages of a collective agreement.
Under the Saskatchewan Employment Act, an individual worker is entitled to either notice or pay instead of notice, which is a sliding scale depending on your years of service. This scale caps out at 10 years of service, where an individual worker gets eight-weeks notice or pay instead of notice, calculated at what a worker’s regular earnings are during a normal eight-week period. They are also given their unused time off entitlements, like their vacation. Other jurisdictions, though still limited, will throw in a number of days pay for each year of service as an added entitlement. After that, the worker is expected to get another job or hopefully have enough to retire.
This is why collective agreements do more than negotiate wage increases to service the immediate material needs of workers, and one of the most overlooked features of collective agreements is language around position eliminations. We negotiate strong position elimination language because in the event that a company decides a certain position is no longer necessary, a plant closes down, or a whole group of workers are left without work, the bare minimum requirements under provincial labour law is insufficient. Workers should have dignity for all the reasons a company might decide that their contributions as a worker are not needed or valued anymore. At the very least, they should get enough recognition for their years of service that they can pay the bills before finding another job.
Sometimes companies will calculate severance as though they do not have a contractual obligation to do so - that their generosity is why a worker sees a payout. Trade unions had to negotiate hard with employers to get the standards around position eliminations above labour legislation, because historically once a company no longer needed a worker or a factory, there was no net to catch those workers. This created an imbalance where a worker had to work to make ends meet up until their employer did not need them anymore. This meant that a worker had an obligation to their employer, but not the other way around.
Read your contract’s language on position elimination (and, for your own education, compare it to the relevant labor legislation). If you have any questions, don’t hesitate to contact your GSU staff rep.
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