Termination Of Employment

A number of expressions are typically used to explain situations when work is terminated. These consist of “release,” “released,” “dismissed,” “fired” and “completely laid off.”

Under the Employment Standards Act, 2000 (ESA) a person’s employment is ended if the employer:

– dismisses or stops utilizing an employee, consisting of where a staff member is no longer utilized due to the bankruptcy or insolvency of the employer;

– “constructively” dismisses a worker and the staff member resigns, in action, within a sensible time;

– lays a staff member off for a duration that is longer than a “short-term layoff”.

Most of the times, when a company ends the employment of a staff member who has been constantly employed for 3 months, the employer must supply the employee with either composed notice of termination, termination pay or a combination (as long as the notification and the number of weeks of termination pay together equivalent the length of notification the worker is entitled to receive).

The ESA does not require a company to give an employee a reason their work is being ended. There are, however, some scenarios where a company can not end a staff member’s employment even if the employer is prepared to offer proper written notification or termination pay. For example, an employer can not end somebody’s employment, or punish them in any other way, if any part of the factor for the termination of employment is based upon the employee asking concerns about the ESA or working out a right under the ESA, such as refusing to work in excess of the everyday or weekly hours of work optimums, or taking a leave of lack specified in the ESA. Please see the chapter on reprisals.

Receiving termination notice or pay in lieu

Certain workers are not entitled to discover of termination or termination pay under the ESA. Examples include: employees who are guilty of wilful misbehavior, disobedience, or wilful neglect of duty that is not insignificant and has not been condoned by the company. Other examples consist of building employees, workers on short-lived layoff, employees who decline a deal of affordable alternative work and workers who have actually been employed less than 3 months.

There are a variety of other exemptions to the termination of employment arrangements of the ESA. See “Exemptions to see of termination or termination pay.” Please also describe the unique guideline tool.

The termination-of-employment rules are completely separate from any privileges a staff member may need to be paid severance pay under the ESA.

Constructive dismissal

A constructive termination may happen when a company makes a significant modification to a fundamental term or condition of a worker’s employment without the worker’s actual or implied consent.

For instance, a staff member might be constructively dismissed if the employer makes changes to the worker’s terms of work that lead to a considerable decrease in salary or a considerable unfavorable modification in such things as the employee’s work place, hours of work, authority, or position. Constructive termination may also include circumstances where an employer pesters or abuses a worker, or an employer offers a worker an ultimatum to “quit or be fired” and the worker resigns in response.

The staff member would need to resign in response to the modification within a sensible period of time in order for the company’s actions to be considered a termination of work for functions of the ESA.

Constructive termination is a complex and challenging topic. To learn more on useful dismissal, please contact the Employment Standards Information Centre at 1-800-531-5551.

Temporary layoff

An employee is on short-lived layoff when an employer cuts down or stops the staff member’s work without ending their work (for example, laying somebody off at times when there is insufficient work to do). The mere reality that the company does not specify a recall date when laying the staff member off does not always suggest that the lay-off is not short-term. Note, however, that a lay-off, even if intended to be temporary, might lead to positive dismissal if it is not allowed by the work agreement.

For the functions of the termination arrangements of the ESA, a “week of layoff” is a week in which the worker earned less than half of what they would generally make (or makes on average) in a week.

A week of layoff does not consist of any week in which the employee did not work for several days due to the fact that the worker was not able or offered to work, underwent disciplinary suspension, or was not offered with work because of a strike or lockout at their place of work or elsewhere.

Employers are not needed under the ESA to provide staff members with a written notice of a momentary layoff, nor do they have to supply a reason for the lay-off. (They may, nevertheless, be required to do these things under a collective agreement or an employment agreement.)

Under the ESA, a “temporary layoff” can last:

1. not more than 13 weeks of layoff in any duration of 20 consecutive weeks;
or

2. more than 13 weeks in any duration of 20 consecutive weeks, but less than 35 weeks of layoff in any period of 52 consecutive weeks, where:- the staff member continues to receive substantial payments from the employer;
or

– the employer continues to make payments for the benefit of the employee under a genuine group or worker insurance plan (such as a medical or drug insurance coverage plan) or a legitimate retirement or pension strategy;
or

– the staff member gets additional unemployment advantages;
or

– the staff member would be entitled to get extra unemployment benefits however isn’t getting them because they are used elsewhere;
or

– the company recalls the employee to work within the time frame approved by the Director of Employment Standards;
or

– the company recalls the staff member within the time frame set out in an agreement with a worker who is not represented by a trade union;
or

3. a layoff longer than a layoff described in ‘B’ where the company recalls a staff member who is represented by a trade union within the time set out in an arrangement between the union and the company.

If a worker is laid off for a period longer than a momentary layoff as set out above, the company is considered to have ended the employee’s work. Generally, the worker will then be entitled to termination pay.

Written notice of termination and termination pay

Under the ESA, a company can terminate the work of a staff member who has been employed constantly for 3 months or more if either:

– the employer has provided the staff member proper written notification of termination and the notification duration has ended

– the company pays termination pay to the staff member where no composed notice or less notice than is needed is provided

Written notification of termination

A worker is entitled to see of termination (or termination pay rather of notification) if they have actually been continually used for at least three months. An individual is considered “utilized” not only while they are actively working, but also throughout any time in which they are not working but the employment relationship still exists (for example, time in which the employee is off sick or on leave or on lay-off).

The quantity of notification to which a worker is entitled depends upon their “duration of work”. A worker’s duration of employment includes not only perpetuity while the employee is actively working however likewise any time that they are not working however the work relationship still exists, with the following exceptions:

– if a lay-off goes on longer than a short-lived lay-off, the worker’s work is deemed (or considered) to have actually been ended on the first day of the lay-off-any time after that does not count as part of the staff member’s duration of employment, although the staff member may still be employed for purposes of the “continually employed for 3 months” qualification

– if 2 separate periods of work are separated by more than 13 weeks, just the most recent duration counts for functions of notification of termination

It is possible, in some circumstances, for a person to have actually been “continually utilized” for three months or more and yet have a period of employment of less than 3 months. In such situations, the staff member would be entitled to observe because a staff member who has actually been constantly utilized for a minimum of 3 months is entitled to see, and the minimum notification privilege of one week applies to a staff member with a period of employment of any length less than one year.

The following chart defines the amount of notification required:

Note: employment Special rules identify the quantity of notice needed when it comes to mass terminations – where the employment of 50 or more workers is terminated at an employer’s facility within a four-week duration.

Requirements during the statutory notification duration

During the statutory notice period, a company needs to:

– not decrease the staff member’s wage rate or modify any other term or condition of employment;

– continue to make whatever contributions would be required to preserve the employee’s benefits strategies; and

– pay the employee the earnings they are entitled to, which can not be less than the staff member’s regular earnings for a routine work week weekly.

Regular rate

This is a worker’s rate of pay for each non-overtime hour of work in the staff member’s work week.

Regular earnings

These are wages other than overtime pay, getaway pay, public holiday pay, premium pay, domestic or sexual violence leave pay, termination of project pay, termination pay and severance pay and specific contractual privileges.

Regular work week

For a worker who normally works the same number of hours each week, a regular work week is a week of that many hours, not consisting of overtime hours.

Some employees do not have a routine work week. That is, they do not work the exact same variety of hours every week or they are paid on a basis besides time. For these workers, the “regular wages” for a “routine work week” is the average quantity of the regular wages earned by the staff member in the weeks in which the worker worked during the period of 12 weeks immediately preceding the date the notification was given.

A company is not permitted to set up a staff member’s vacation time during the statutory notification duration unless the employee-after getting written notice of termination of employment-agrees to take their trip time throughout the notification duration.

If a company supplies longer notice than is required, the statutory part of the notification period is the last part of the duration that ends on the date of termination.

How to provide written notice

In many cases, composed notice of termination of work need to be addressed to the employee. It can be provided in individual or by mail, fax or e-mail, as long as delivery can be verified.

There are unique rules for supplying notice of termination if a staff member has a contract of work or a collective contract that offers seniority rights that enable a worker who is to be laid off or whose work is to be ended to displace (” bump”) other staff members.

Because case, the employer must post a notification in the workplace (where it will be seen by the staff members) setting out the names, seniority and task classification of those employees the employer plans to terminate and the date of the proposed termination. The posting of the notice is considered to be notice of termination, as of the date of the posting, to a staff member who is “bumped” by a worker called in the notice. However, this notice of termination should still satisfy the length requirements set out in the ESA.

There are also unique rules concerning how notice is offered when there is a mass termination.

Termination pay

A worker who does not receive the written notice required under the ESA needs to be provided termination pay in lieu of notification. Termination pay is a swelling sum payment equivalent to the regular incomes for a routine work week that an employee would otherwise have actually been entitled to during the composed notification duration. A worker makes trip pay on their termination pay. Employers must likewise continue to make whatever contributions would be needed to keep the benefits the staff member would have been entitled to had they continued to be used through the notification duration.

Example: Regular work week

Sarah has worked for three and a half years. Now her job has been gotten rid of and her work has actually been terminated. Sarah was not given any written notification of termination.

Sarah worked 40 hours a week every week and was paid $20.00 an hour. She also got four per cent trip pay. Because she worked for more than three years but less than four years, she is entitled to 3 weeks’ pay in lieu of notification.

Sarah’s routine salaries for a routine work week are computed:

$ 20.00 an hour X 40 hours a week = $800.00 a week

Her termination pay is calculated:

$ 800.00 X 3 weeks = $2,400.00

Then her vacation pay on her termination pay is calculated:

4% of $2,400.00 = $96.00

Finally, her getaway pay is added to her termination pay:

$ 2400.00 + $96.00 = $2,496.00

Result: Sarah is entitled to $2,496.00. The employer needs to likewise make sure ongoing protection for any benefit or pension that applied to her for 3 weeks.

Example: No regular work week

Gerry has actually worked at a retirement home for 4 years. He works every week, however his hours vary from week to week. His rate of pay is $25.00 an hour, and he is paid 6 percent getaway pay.

Gerry’s company eliminated his position and did not offer Gerry any written notice of termination. Gerry was ill and off work for 2 of the 12 weeks right away preceding the day his employment was terminated. Gerry made $1,800.00 in the 12 weeks before the day on which his employment ended.

Gerry is entitled to 4 weeks of termination pay.

Gerry’s average earnings per week are determined:

$ 1,800.00 for 12 weeks/ 10 weeks (Gerry was off ill for 2 weeks for that reason these weeks are not consisted of in the estimation of typical incomes) = $180.00 a week

His termination pay is calculated:

$ 180.00 × 4 weeks = $720.00

Then his vacation pay on his termination pay is calculated:

6% of $720.00 = $43.20

Finally, his trip pay is contributed to his termination pay:

$ 720.00 + $43.20 = $763.20

Result: Gerry is entitled to $763.20. The company needs to likewise guarantee ongoing coverage for any advantage or pension that used to him for 4 weeks.

When to pay termination pay

Termination pay should be paid to an employee either seven days after the worker’s employment is ended or on the staff member’s next regular pay date, employment whichever is later on.

Mass termination

Special guidelines for notice of termination might apply in cases of mass termination (when an employer is ending 50 or more employees at its facility within a four-week duration).

Meaning of “facility”

An “facility” is a location at which the company carries on business. Separate locations can be considered one establishment if either:

– they lie within the same municipality, or

– a worker at one area has contractual seniority rights that extend to the other location, permitting the employee to displace another staff member (also called “bumping rights”).

Effective October 26, 2023, in cases of mass termination, the term “establishment” includes a worker’s home, however just if the staff member works from home and does not work at any other area where the company carries on company.

This will require that staff members who work specifically from another location be considered for inclusion in the count when identifying whether 50 or more workers have actually been terminated.

Note that where an employee performs work both from their home and from another area where the employer carries on business (for instance, a workplace), their home is not included in the definition of “facility”. Instead, the worker is thought about to have a connection to the workplace location and, therefore, for the function of mass termination, the staff member is included with regard to that workplace place.

Example: where multiple places are considered one “facility”

ABC Company has a workplace and a warehouse situated in London, ON. Sabrina lives in London and works for ABC Company solely remotely: she performs work for the company from home and does not work at the office.

For the function of mass termination, the business’s London office, London storage facility and Sabrina’s London home are considered one “facility.”

Employer obligations in a mass termination

When a mass termination takes place, the employer should finish and deliver the Form 1 (Notice of termination of work) to the Director of Employment Standards (Director) by:

– e-mail to esa_form1_notice@ontario.ca.

– fax to (416) 326-7061.

– individual shipment to the Director’s workplace on a day and at a time when it is open.

– mail delivery to the Director’s workplace, if the shipment can be validated.

The office of the Director of Employment Standards is found on the 9th flooring, 400 University Avenue, Toronto ON M7A 1T7.

Any notification to the affected workers is ruled out to have actually been provided till the Form 1 is received by the Director; simply put, notification of mass termination is ineffective up until the Director receives the Form 1.

In addition to offering employees with private notices of termination, the company must, on the first day of the notification period:

– post a copy of the Form 1 provided to the Director in the workplace where it will concern the attention of the affected workers.

– provide a copy of the Form 1 to each impacted employee.

The quantity of notice workers need to receive in a mass termination is not based on the employees’ length of work, but on the number of staff members who have actually been terminated. A company must provide:

– 8 weeks notice if the work of 50 to 199 employees is to be ended

– 12 weeks discover if the employment of 200 to 499 staff members is to be ended

– 16 weeks notice if the work of 500 or more workers is to be ended

Exception to the mass termination rules

The mass termination rules do not use if these 2 things use:

– the number of staff members whose work is being terminated represents not more than 10 percent of the staff members who have been used for at least 3 months at the establishment

– none of the terminations are triggered by the irreversible discontinuance of all or part of the employer’s service at the establishment

Mass termination: resignation by an employee

An employee who has actually gotten termination notification under the mass termination rules who wishes to resign before the termination date offered in the company’s notification need to give the company at least one week’s composed notification of resignation if the employee has actually been employed for less than 2 years. If the employment period has been two years or more, the employee needs to offer at least two weeks’ composed notification of resignation. However, the employee does not have to offer notice of resignation if the employer constructively dismisses the staff member or breaches a term of the contract.

Temporary work after termination date in notice

An employer can offer work to a staff member who has been notified of termination on a momentary basis in the 13-week period after the termination date set out in the notification without affecting the initial date of the termination and without being required to supply any additional notification of termination to the staff member when the short-term work ends.

If an employee works beyond the 13-week period after the termination date and then has their employment ended, the staff member will be entitled to a brand-new composed notification of termination as if the previous notification had never been offered. The worker’s duration of work will then also include the period of temporary work.

Recall rights

A “recall right” is the right of a worker on a layoff to be recalled to work by their company under a term or condition of employment. This right is commonly found in cumulative arrangements.

An employee who has recall rights and who is entitled to termination pay since of a layoff of 35 weeks or more might pick to:

– keep their recall rights and employment not be paid termination pay (or severance pay, if they were entitled to discontinuance wage) at that time;
or

– offer up their recall rights and get termination pay (and severance pay, if they were entitled to severance pay).

If a staff member is entitled to both termination pay and discontinuance wage, they should make the same choice for both.

If a worker who is not represented by a trade union chooses to keep their recall rights or fails to decide, the company must send the quantity of the termination pay (and discontinuance wage, if any) to the Director of Employment Standards, who holds the cash in trust.

If a worker who is represented by a trade union elects to keep their recall rights or fails to choose, the employer and the trade union need to try to come to a plan to hold the termination pay (and severance pay, if any) in trust for the staff member. If they can not pertain to an arrangement, and the trade union encourages the company and the Director of Employment Standards in writing that efforts have failed, the employer should send out the termination pay (and discontinuance wage, if any) to the Director of Employment Standards, who holds the cash in trust.

If an employee selects to give up their recall rights or if the recall rights expire, the cash that is kept in trust should be sent to the staff member.

If the employee accepts a recall back to work, the cash that is held in trust will be gone back to the company.

Exemptions to see of termination or termination pay

A number of these exemptions are intricate. Please contact the Employment Standards Information Centre, 1-800-531-5551, if you need more information. Please also refer to the special guideline tool.

The notice of termination and termination pay requirements of the ESA do not apply to an employee who:

– is guilty of wilful misbehavior, disobedience or wilful overlook of task that is not insignificant and has not been excused by the employer. Note: “wilful” includes when a worker meant the resulting repercussion or acted recklessly if they knew or need to have understood the impacts their conduct would have. Poor work conduct that is accidental or unintentional is typically ruled out wilful;

– was employed for a specific length of time or until the completion of a particular task. However, such a worker will be entitled to discover of termination or termination pay if:- the work ends before the term expires or the task is completed; or

– the or the task is not finished more than 12 months after the work started; or

– the employment continues for 3 months or more after the term expires or the job is completed;

See also: Employment Standards Self-Service Tool

Wrongful termination

Rights greater than ESA notification of termination, termination pay, discontinuance wage

The guidelines under the ESA about termination and severance of employment are minimum requirements. Some workers may have rights under the common law that are greater than the rights to notice of termination (or termination pay) and severance pay under the ESA. A worker might desire to sue their former company in court for “wrongful termination”. Employees must know that they can not take legal action against an employer for wrongful termination and file a claim for termination pay or severance pay with the ministry for the exact same termination or severance of employment. A worker should choose one or the other. Employees may want to acquire legal recommendations worrying their rights.