A “job for life” is a thing of the past. Most Canadians will receive a termination notice at least once in their career. Don’t leave getting the best possible treatment in your severance to chance. If you are hesitating getting legal advice before signing on the dotted line, consider the following:
1.The termination agreement is an offer, often up for negotiation. There very well be more money and protection available to you, but only if you ask. The request should come in the form of a legal letter from an experienced employment lawyer. The letter infers that you mean business and infers the potential cost of litigation which can motivate the employer to offer better terms.
2.The cost of legal advice is tax deductible. Legal fees paid to collect money owed to you for severance, pension benefits, or a retiring allowance are deductible on your tax return under “Other Deductions”. Keep in mind that your fees can’t be reimbursed by your employer and the amount collected must be considered income. For example, if your entire severance was transferred to an RRSP, the legal fees are not deductible that year. You can carry the deduction forward for 7 years though to deduct against other income. *
3.Ask for financial planning – A career interruption is the perfect time for a comprehensive financial plan. A planning engagement will help you manage through a period of unemployment and help you assess a range of employment options you may want to consider.
4.Insurance benefits are important – Ensure that your benefits extend along with your period of salary continuance. In most cases, group disability insurance benefits are difficult to negotiate inclusion. Transition disability insurance is designed to fill this specific gap and you can negotiate payment of the premium for such coverage into your termination agreement.
5.You will feel empowered – Job loss, even from a job you disliked, is emotionally draining. Taking control of the severance experience, is a confidence builder. Even if the ultimate terms remain unchanged because they were fair to begin with, you will have taken an important step in protecting your rights.
A termination notice can be upsetting, but if you empower yourself to be treated fairly, you will face the next phase of your career with greater confidence.
This information of a general nature and should not be considered specific advice, as each reader's personal financial situation is unique and fact specific. Please contact your financial advisor or Caring for Clients prior to implementing or acting upon any of the information contained herein.