Let go from work? Never sign that first offer

A year after being laid off, worker still in battle with airline to win back benefits

Jeff Iacobucci is certainly not the only person to have lost his job during the pandemic.

But more than a year later, he’s still fighting to get what he believes is a fair severance package from his former employer.

Iacobucci worked at Air Canada for just over 22 years. Like many, near the end of March 2020, he went home and waited for weeks to find out whether he still had a job to return to.

In June, a phone call confirmed what he feared: He had been permanently let go.

When Iacobucci received his severance package, it wasn’t what he had hoped for. (Air Canada declined to comment on “confidential personnel matters.”)

The package included 12 months of Iacobucci’s base salary. But that wouldn’t include the bonuses he usually received, which were often “quite significant,” he said.

It also didn’t include the overtime and holidays Iacobucci often worked, he said — in other words, the base salary wasn’t anything close to what he would actually make in a year.

Iacobucci’s benefits were also cut — he got a few months of medical coverage, and no dental, he said.

But the most egregious thing for Iacobucci was a benefit he had been looking forward to. After 25 years of service, he said he was supposed to get flight benefits for life, meaning he could get flights for a nominal charge on standby.

Iacobucci was less than three years away from the lifetime of affordable flights he had been anticipating. Instead, Air Canada offered him 20 of those flights in the voluntary severance package, and when he refused that, offered a non-voluntary package with six.

“As soon as I saw the agreement I was like, oh, there’s no way I’m accepting this,” said Iacobucci.

After speaking to some employment lawyers, who told him the whole thing could be settled in a matter of months, Iacobucci hired one. They started with a letter to Air Canada, but the company refused to negotiate, said Iacobucci, so he proceeded with a claim via the Canada Labour Board, which was then referred to the Canada Industrial Relations Board.

After being set up with a mediator, Iacobucci says the airline has been pushing back the mediation date, which he thinks is a stalling tactic.

Iacobucci is especially frustrated with his experience because it’s been the opposite of what he was told it would be.

“The expectation is set up (that) this is going to be really quick and easy and simple,” he said. “My experience has been, it’s anything but that.”

Iacobucci’s lawyer, Howard Markowitz, said COVID-19 is holding labour cases up, making the process frustrating for both claimants and their lawyers.

“There’s a huge backlog,” he said.

Luckily, experts say most severance package disputes are settled before making it to court. If you’ve been terminated, here are some tips to help you tell whether what you’re being offered is a good deal, and how to proceed if you think you’re owed more.

How do I know if my severance package is fair?

Employment lawyer Lior Samfiru said a terminated employee should always assume their severance package is inadequate, and not sign right away.

If your employer has given you a deadline to accept the severance agreement, employment lawyer Stuart Rudner said not to panic.

“If you do not sign and return the documents, you will still receive your statutory entitlements, and you can pursue the additional compensation to which you are entitled,” he said in an email.

Markowitz said a Google search often brings up the legal minimum severance entitlement, and many people won’t look further than that to figure out what they could be entitled to.

There is no hard and fast rule to determine what a fair severance offer looks like, said Samfiru. It’s based on your age, the length of your employment, and the type of position you held at the company. For example, if two people who had each worked at a company for ten years were both laid off, but one was significantly older or had held a position higher up on the management chain, that person would be offered more than the younger, less senior person.

Rudner said most people underestimate how much they’re owed in severance.

“It sometimes surprises people to learn that, generally speaking, you are entitled to have a package that includes all forms of compensation, such as benefits, bonuses, commissions and car allowance,” said Rudner.

As a rule, Samfiru said these perks should continue for as long as your salary is paid out.

“Would I have gotten it had I continued working there over the severance period?” Samfiru said you should ask yourself. “If the answer is yes, then that has to be included as part of the severance.”

As for something like Iacobucci’s flight benefits, that’s a little more difficult to determine, said Samfiru.

But if a perk like those flight benefits would have kicked in had the severance period been a working period — in other words, if Iacobucci’s severance period pushed him over the 25year mark — then that perk should be on the severance deal too.

Another important component of the severance package is the clause concerning what happens if the terminated employee gets a new job. Samfiru said it’s important to make sure the clause not only extends your benefits until you’re receiving benefits at your new job, but also doesn’t cut off your pay entirely if your new job pays significantly less than your previous one.

Rudner agreed: “Negotiate a minimum income that will trigger this clause. Otherwise, if you work one shift at a grocery store, you could cost yourself months of severance.”

I don’t think I’m being offered a fair severance deal. What should I do?

If you’re unsure about the fairness of the deal you’ve been offered, Samfiru and Rudner suggest consulting an employment lawyer to review it.

Carolyn Levy, president of technology for human resources consultancy Randstad Canada, said you shouldn’t worry about what it will look like to consult a lawyer, as a third party is always helpful.

“Put yourself first,” she said, instead of worrying about what your former employer will think.

You may be able to use the lawyer’s assessment to negotiate on your own if you have a good relationship with the employer, Samfiru said. But having a lawyer send a letter to the company is an effective way to kick-start a negotiation and get a better offer.

Usually, these disputes are over pretty quickly, said Samfiru, as the employer is prepared to give you more, but hoping you don’t ask for it. The process can be more complicated if there are other documents involved, such as an employment agreement that limits your severance options, but those aren’t always binding, he said.

But if the negotiation doesn’t go as planned, your next step is a legal claim, which can still be settled fairly quickly through mediation, said Samfiru.

“Going to court is the rare exception,” he said, noting that it’s only worthwhile if there’s a lot at stake, and if you’re sure you have a good chance at winning.

It’s up to your lawyer to push if there are any unnecessary delays, said Samfiru.

That’s the position Iacobucci finds himself in now.

“It sometimes surprises people to learn that, generally speaking, you are entitled to have a package that includes all forms of compensation.” STUART RUDNER EMPLOYMENT LAWYER