Why laid-off tech workers should push back against 12-weeks’ notice

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Howard Levitt and Puneet Tiwari

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Over the last several weeks, we have been seeing terminations across several industries, especially the tech sector. What is unique about these layoffs is that they are mainly sales and engineering staff — employees earning $150,000 plus.

These employees have been given their statutory minimums and then an offer of almost always the same amount of notice — 12 weeks’ total notice.

Why 12 weeks?

It is no coincidence that for late November terminations, employers often see 12 weeks as the perfect bet to have their employees accept without pursuing wrongful dismissal damages. Twelve weeks of notice takes employees through the holiday season and well into February when it should be easier to find a new role and mitigate their damages, especially now. Regardless of whether these employees have been employed for one year or five years (but not more), 12 weeks will often get the settlement done if the employee does not seek legal advice.

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Is 12 weeks the right amount of notice?

If an employee has only been at the company for a year or two, 12 weeks May be the right number, legally. It is important, however, to remember that this needs to be fully noticed. That 12 weeks’ notice needs to include bonus, RSUs (restricted stock units), benefits and any other part of an employee’s remuneration. For salespeople, the amount of notice must be based on fully commissioned earnings. Base salary alone will not do it.

There are several other factors that could increase the amount of notice to which you are entitled. It is difficult to gauge accurate notice periods for short-service employees even for seasoned employment lawyers. It is even more difficult for the employees to guess themselves.

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This is important to remember as many of these employers in the tech sector are American companies without the benefit of internal Canadian HR or legal counsel. They might not know better, so employees must push back.

For employees who are given the 12-week offer and have been at the company for more than a couple of years, the best advice is to immediately contact legal counsel. Based on several factors including age, length of service, salary and the current economic climate in the tech sector, a longer notice (severance) period is likely warranted, maybe even vastly longer. Remember, there have been cases of employees who worked only two weeks have received as much as 12 months. At least, the notice must be full or Matthews Noticemeaning each and every part of the employee’s remuneration must be included.

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For employees in the tech sector, here are some terms to look out for in your settlement packages.

Base Salary — This is indeed the bare minimum. All notice periods must include at least your base salary. The statutory notice period should also account for vacation pay during this time.

Bonus — If your job includes bonus, sales commissions, or other variable compensation, these amounts need to be accounted for through your notice period. Any bonus or commission that was set to be paid out during the notice period must be paid to you unless there is explicit language that says otherwise. If the bonus was discretionary, that does not mean that you are not entitled to it. Discretion must be exercised reasonably by your employer. if everyone else receives a bonus, you will be entitled to one as well. if you have always received one, you will during the severance period.

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RSUs/Stocks — Restricted stock units for publicly traded companies that were set to vest during the notice period (and sometimes beyond) must be accounted for. You are entitled to these RSUs or damages in lieu thereof. Any other Short/Long Term Incentive Plans (STIP/LTIP) must also be accounted for. A lawyer will work through these numbers with you.

Benefits — All benefits must be accounted for. This includes health and dental benefits which can be continued or you may receive payment in lieu, car allowances, cell phone allowance, gym memberships and the like.

Tech sector employees are often too quick to settle for and accept packages in the 12-week range as it often appears to be a perfect package leading into February. But do not be short-changed by the initial offer. Have a lawyer review your package to ensure you are getting what you are entitled to. Only then can you be guaranteed a happy holiday.

Howard Levitt is senior partner of Levitt Sheikh, employment and labor lawyers with offices in Toronto and Hamilton. He practices employment law in eight provinces. He is the author of six books including the Law of Dismissal in Canada. Puneet Tiwari is with Levitt Sheikh.

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