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Employers usually fire employees immediately and pay severance instead of giving working notice, but that is their choice. The employee’s preference does not matter.

Jupiterimages/Getty Images

If you're among the thousands of Canadians affected by the spate of recent job cuts, the severance package you get might have to last you a while.

Jeff Schwartz, executive director of Consolidated Credit Counselling Services of Canada Ltd., said sums paid to departing employees are too often treated as "lottery winnings."

"And that's the exact wrong thing to do. This should be rationed out. It should be saved," he said.

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Severance is meant to "bridge the gap" for taking care of the essentials while an employee is out of work, he said, so any lump sum should be kept readily available. Paying down debt or investing should take a backseat for the time-being.

A lot of Canadians are in a tough spot these days. U.S. retailer Target announced last month it's closing up shop in Canada, leaving 17,000 staff out of a job. Oil prices have shrivelled below $50 (U.S.) a barrel, leading to widespread cutbacks across Alberta's oil patch. Some 350 Tim Hortons employees are out of work.

Lawyer Kim Nutz figures her office is fielding between 30 and 50 calls a day from folks seeking a severance review. Her firm, Kahane Law Office, is based in Calgary, the white-collar heart of the oil patch.

Some employees may be afraid to go up against the "so-called big, bad employer" if they feel they've been short-changed. But getting a second opinion is worthwhile, especially in these gloomy times.

"Having it reviewed might at least give you the peace of mind" that you've been treated fairly, Nutz said.

Be certain you're getting a good deal before signing any papers, said Robert Sider with Lawson Lundell LLP in Vancouver.

"Once you sign that release, you're done," he said.

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And it's not just about the salary. Other considerations include health benefits and life insurance, said Sider.

Bob Sawers, co-founder of employment-law focused firm Sawers McFarlane, had a client who he believed was entitled to 12 months worth of severance, but was only offered three.

"And in today's world, if you jump on three months and you remain unemployed for nine or 12 months, you're hooped," he said.

Bonuses earned before an employee gets the axe — sometimes worth hundreds of thousands of dollars — can be a point of contention, said Sawers.

There might also be additional provisions imposed on the way out, such as a clause preventing you from working for a competitor for a set amount of time.

There's no cut-and-dried rule for how many months of severance an employee ought to get, said Josh Sutherland, a lawyer at Walsh LLP.

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Employers are required to give "reasonable" working notice that employment is to be terminated, or — as is often the case — pay in lieu.

There are legislated minimums at the provincial or federal level, but often the contract an employee signed when he or she was hired will lay out entitlements exceeding those.

Factors that are taken into consideration are age, length of service, the type of job and how easy it will be to find similar or equal employment.

Going to court is a last resort, and the "vast, overwhelming majority" of cases don't come to that, said Sutherland. When there's a disagreement, a negotiated settlement is the preferred route.

"If the parties don't want to go to court, you have to understand that you'll have to give up a little to get a little."

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