What is Termination pay?
Termination pay is when an employee receives monetary compensation for the loss of their job. This enables an employer to immediately terminate an employee, as long as their entire compensation pay is given. Employers can also provide employees with a combination of written notice and termination pay.
Termination pay entitlement
The ESA states that BC employers must pay final wages, which is everything an employer owes the employee (including termination pay), by the following time periods:
- If the employer terminates the employee: The employer must pay the final wages within 48 hours after the employee’s last work day.
- If the employee quits: The employer must pay the final wages within six days after the employee’s last work day.
It is important to note, if an employee is terminated with ‘just cause’, the employer is no longer required to provide written notice or termination pay.
Properly calculating termination pay
The amount of termination pay the employer must provide is dependent on the duration of the employee’s employment.
- Three months = one week of notice and/or pay
- One year = two weeks of notice and/or pay
- Three or more years = three weeks of notice and/or pay, plus one week of notice/pay for each additional year of employment (to a maximum of eight weeks)
When are employers not required to pay notice pay?
There are several situations where employers aren’t required to give compensation or notice pay:
- Notice or compensation is not required if the employee quits, retires or is fired for just cause
- Is hired for a definite term to be completed in 12 months
- Turns down reasonable alternative work
- Is a teacher employed by a board of school trustees
Are you handling termination pay correctly in your organization?
As an employer, it is your responsibility to comply with British Columbia’s Employment Standards Act. If you have questions about how the law applies, give us a call. We are here to help employers through our dedicated advice line: 1 (833) 200-5103. Speak with one of our HR experts today.