Termination Of Employment

A variety of expressions are typically utilized to describe circumstances when work is terminated. These consist of “release,” “discharged,” “dismissed,” “fired” and “completely laid off.”

Under the Employment Standards Act, 2000 (ESA) an individual’s work is terminated if the company:

– dismisses or stops using an employee, including where an employee is no longer utilized due to the bankruptcy or insolvency of the company;

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

– lays an employee off for a period that is longer than a “temporary layoff”.

In many cases, when a company ends the work of a worker who has actually been continuously utilized for three months, the employer needs to offer the employee with either composed notice of termination, termination pay or a combination (as long as the notification and the variety of weeks of termination pay together equal the length of notification the worker is entitled to get).

The ESA does not need an employer to offer a staff member a factor why their work is being ended. There are, however, some circumstances where a company can not end an employee’s employment even if the company is prepared to provide proper composed notice or termination pay. For example, a company can not end somebody’s work, or penalize them in any other way, if any part of the factor for the termination of work is based upon the employee asking concerns about the ESA or exercising a right under the ESA, such as refusing to work in excess of the day-to-day or weekly hours of work optimums, or taking a leave of absence defined in the ESA. Please see the chapter on reprisals.

Getting approved for termination notification or pay in lieu

Certain staff members are not entitled to see of termination or termination pay under the ESA. Examples consist of: workers who are guilty of wilful misconduct, disobedience, or wilful disregard of task that is not minor and has not been condoned by the employer. Other examples include construction employees, workers on momentary layoff, employees who refuse a deal of reasonable alternative employment and workers who have actually been employed less than 3 months.

There are a variety of other exemptions to the termination of work arrangements of the ESA. See “Exemptions to notice of termination or termination pay.” Please likewise refer to the special rule tool.

The termination-of-employment guidelines are completely separate from any privileges a staff member might have to be paid severance pay under the ESA.

Constructive termination

A constructive termination might happen when a company makes a considerable change to an essential term or condition of an employee’s employment without the employee’s real or implied approval.

For instance, an employee may be constructively dismissed if the company makes modifications to the worker’s conditions of work that result in a significant decrease in salary or a significant unfavorable modification in such things as the staff member’s work area, hours of work, authority, or position. Constructive termination might likewise consist of scenarios where an employer harasses or abuses a worker, or a company offers an employee a final notice to “stop or be fired” and the employee resigns in reaction.

The employee would have to resign in action to the modification within an affordable duration of time in order for the company’s actions to be considered a termination of employment for purposes of the ESA.

Constructive dismissal is a complex and challenging topic. For more details on constructive dismissal, please contact the Employment Standards Information Centre at 1-800-531-5551.

Temporary layoff

A staff member is on short-term layoff when a company cuts down or stops the worker’s work without ending their work (for instance, laying someone off sometimes when there is insufficient work to do). The mere fact that the company does not define a recall date when laying the employee off does not always indicate that the lay-off is not momentary. Note, nevertheless, that a lay-off, even if intended to be momentary, might lead to useful termination if it is not allowed by the employment agreement.

For the purposes of the termination provisions of the ESA, a “week of layoff” is a week in which the employee earned less than half of what they would normally earn (or makes typically) in a week.

A week of layoff does not include any week in which the staff member did not work for several days due to the fact that the staff member was not able or available to work, went through disciplinary suspension, or was not provided with work because of a strike or lockout at their place of employment or employment elsewhere.

Employers are not required under the ESA to supply employees with a written notice of a momentary layoff, nor do they need to offer a reason for the lay-off. (They may, however, be needed to do these things under a collective contract or a work agreement.)

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

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

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

– the employer continues to pay for the advantage of the staff member under a legitimate group or employee insurance coverage plan (such as a medical or drug insurance coverage plan) or a legitimate retirement or pension;
or

– the staff member receives extra unemployment benefits;
or

– the staff member would be entitled to get extra unemployment benefits but isn’t getting them since they are utilized somewhere else;
or

– the employer remembers the worker to work within the time frame authorized by the Director of Employment Standards;
or

– the employer recalls the worker within the time frame set out in an arrangement with an employee who is not represented by a trade union;
or

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

If an employee is laid off for a period longer than a temporary layoff as set out above, the employer is thought about to have actually terminated the worker’s work. Generally, the employee will then be entitled to termination pay.

Written notification of termination and termination pay

Under the ESA, an employer can end the employment of a worker who has been utilized continuously for three months or more if either:

– the employer has offered the staff member proper written notice of termination and the notice period has actually ended

– the company pays termination pay to the employee where no written notification or less notification than is needed is given

Written notification of termination

An employee is entitled to discover of termination (or termination pay instead of notice) if they have actually been continuously utilized for at least 3 months. A person is considered “employed” not just while they are actively working, however also during any time in which they are not working however the work relationship still exists (for example, time in which the employee is off sick or on leave or on lay-off).

The amount of notification to which a worker is entitled depends on their “duration of work”. A worker’s period of work consists of not only all time while the staff member is actively working but likewise whenever that they are not working however the employment relationship still exists, with the following exceptions:

– if a lay-off goes on longer than a momentary lay-off, the staff member’s employment is deemed (or considered) to have been ended on the very first day of the lay-off-any time after that does not count as part of the staff member’s period of work, even though the worker might still be used for functions of the “constantly used for 3 months” qualification

– if 2 different durations of employment are separated by more than 13 weeks, only the most recent duration counts for purposes of notice of termination

It is possible, in some situations, for a person to have actually been “constantly employed” for three months or more and yet have a period of employment of less than three months. In such situations, the employee would be entitled to observe since an employee who has been continuously employed for a minimum of three months is entitled to see, and employment the minimum notice entitlement of one week applies to a staff member with a duration of work of any length less than one year.

The following chart defines the quantity of notice needed:

Note: Special guidelines identify the quantity of notification required in the case of mass terminations – where the employment of 50 or more staff members is ended at a company’s facility within a four-week period.

Requirements throughout the statutory notice duration

During the statutory notification duration, an employer needs to:

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

– continue to make whatever contributions would be needed to keep the employee’s benefits plans; and

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

Regular rate

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

Regular incomes

These are incomes other than overtime pay, trip pay, employment public vacation pay, premium pay, domestic or sexual violence leave pay, termination of task pay, termination pay and discontinuance wage and specific contractual privileges.

Regular work week

For a worker who typically works the exact same number of hours every week, a regular work week is a week of that numerous hours, not including overtime hours.

Some employees do not have a regular work week. That is, they do not work the very same number of hours every week or they are paid on a basis other than time. For these workers, the “routine wages” for a “regular work week” is the typical quantity of the routine wages earned by the staff member in the weeks in which the staff member worked throughout the duration of 12 weeks instantly preceding the date the notice was offered.

An employer is not allowed to set up a worker’s holiday time throughout the statutory notification period unless the employee-after getting written notification of termination of employment-agrees to take their getaway time during the notice duration.

If an employer offers longer notification than is needed, the statutory part of the notice duration is the tail end of the period that ends on the date of termination.

How to supply written notice

In many cases, composed notice of termination of employment must be dealt with to the worker. It can be supplied face to face or by mail, fax or e-mail, as long as delivery can be validated.

There are special rules for supplying notice of termination if a worker has an agreement of employment or a collective agreement that offers seniority rights that allow an employee who is to be laid off or whose work is to be terminated to displace (” bump”) other employees.

Because case, the company needs to publish a notification in the workplace (where it will be seen by the workers) setting out the names, seniority and task category of those staff members the employer plans to terminate and the date of the proposed termination. The publishing of the notification is considered to be notification of termination, since the date of the posting, to a worker who is “bumped” by a worker called in the notification. However, this notice of termination need to still fulfill the length requirements set out in the ESA.

There are also unique guidelines regarding how notice is offered when there is a mass termination.

Termination pay

A worker who does not receive the written notification required under the ESA needs to be given termination pay in lieu of notification. Termination pay is a lump sum payment equivalent to the regular incomes for a regular work week that an employee would otherwise have actually been entitled to throughout the written notice period. A worker earns trip pay on their termination pay. Employers should likewise continue to make whatever contributions would be needed to keep the advantages the employee would have been entitled to had they continued to be employed through the notice duration.

Example: Regular work week

Sarah has worked for 3 and a half years. Now her task has been removed and her work has been ended. Sarah was not offered any composed notice of termination.

Sarah worked 40 hours a week weekly and was paid $20.00 an hour. She also received four percent getaway pay. Because she worked for more than three years but less than 4 years, she is entitled to three weeks’ pay in lieu of notice.

Sarah’s regular wages for a regular work week are determined:

$ 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 computed:

4% of $2,400.00 = $96.00

Finally, her vacation pay is contributed to her termination pay:

$ 2400.00 + $96.00 = $2,496.00

Result: Sarah is entitled to $2,496.00. The employer must also guarantee ongoing protection for any advantage or employment pension plans that used to her for three weeks.

Example: No routine work week

Gerry has actually operated at an assisted living home for 4 years. He works weekly, but his hours differ from week to week. His rate of pay is $25.00 an hour, and he is paid 6 per cent holiday pay.

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

Gerry is entitled to 4 weeks of termination pay.

Gerry’s average incomes per week are calculated:

$ 1,800.00 for 12 weeks/ 10 weeks (Gerry was off sick for two weeks therefore these weeks are not included in the estimation of average revenues) = $180.00 a week

His termination pay is computed:

$ 180.00 × 4 weeks = $720.00

Then his trip pay on his termination pay is computed:

6% of $720.00 = $43.20

Finally, his vacation pay is added to his termination pay:

$ 720.00 + $43.20 = $763.20

Result: Gerry is entitled to $763.20. The company needs to also guarantee ongoing coverage for any benefit or pension strategies that applied to him for four weeks.

When to pay termination pay

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

Mass termination

Special rules for notification of termination might apply in cases of mass termination (when a company is terminating 50 or more staff members at its establishment within a four-week duration).

Meaning of “facility”

An “facility” is a place at which the employer continues service. Separate areas can be considered one facility if either:

– they are situated within the same municipality, or

– an employee at one area has contractual seniority rights that reach the other location, permitting the staff member to displace another employee (likewise called “bumping rights”).

Effective October 26, 2023, in cases of mass termination, the term “establishment” consists of an employee’s home, but only if the employee works from home and does not operate at any other place where the company carries on business.

This will require that employees who work solely remotely be thought about for inclusion in the count when determining whether 50 or more staff members have actually been ended.

Note that where an employee performs work both from their home and from another location where the employer continues business (for example, an office), their home is not included in the definition of “facility”. Instead, the employee is considered to have a connection to the workplace location and, therefore, for the purpose of mass termination, the staff member is included with regard to that workplace location.

Example: where numerous areas are thought about one “facility”

ABC Company has a workplace and a storage facility located in London, ON. Sabrina lives in London and works for ABC Company specifically from another location: she performs work for the company from home and does not operate at the office.

For the function of mass termination, the company’s London office, London warehouse and Sabrina’s London home are thought about one “facility.”

Employer commitments in a mass termination

When a mass termination happens, the company should finish and provide the Form 1 (Notice of termination of work) to the Director of Employment Standards (Director) by:

– email to esa_form1_notice@ontario.ca.

– fax to (416) 326-7061.

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

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

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

Any notice to the impacted staff members is not considered to have actually been offered till the Form 1 is received by the Director; to put it simply, notice of mass termination is ineffective up until the Director gets the Form 1.

In addition to offering staff members with individual notifications of termination, the employer must, on the first day of the notice duration:

– publish 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 affected staff member.

The quantity of notice staff members need to receive in a mass termination is not based upon the workers’ length of employment, but on the variety of staff members who have been terminated. A company must give:

– 8 weeks observe if the employment of 50 to 199 employees is to be terminated

– 12 weeks discover if the work of 200 to 499 staff members is to be terminated

– 16 weeks notice if the work of 500 or more employees is to be terminated

Exception to the mass termination rules

The mass termination guidelines do not apply if these 2 things apply:

– the number of staff members whose employment is being ended represents not more than 10 per cent of the staff members who have been used for a minimum of 3 months at the establishment

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

Mass termination: resignation by an employee

An employee who has actually gotten termination notification under the mass termination rules who desires to resign before the termination date provided in the company’s notice must provide the company at least one week’s written notification of resignation if the worker has actually been employed for less than two years. If the work duration has been two years or more, the staff member needs to offer a minimum of 2 weeks’ written notification of resignation. However, the worker does not have to provide notice of resignation if the employer constructively dismisses the staff member or breaches a regard to the agreement.

Temporary work after termination date in notice

An employer can supply work to a staff member who has been notified of termination on a temporary basis in the 13-week period after the termination date set out in the notification without impacting the original date of the termination and without being required to provide any more notice of termination to the worker when the momentary work ends.

If a worker works beyond the 13-week period after the termination date and after that has their work terminated, the staff member will be entitled to a new written notification of termination as if the previous notification had never been offered. The staff member’s duration of work will then also consist of the period of temporary work.

Recall rights

A “recall right” is the right of a worker on a layoff to be called back to work by their employer under a term or condition of work. This right is commonly discovered in cumulative agreements.

A staff member who has recall rights and who is entitled to termination pay because of a layoff of 35 weeks or more might pick to:

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

– quit their recall rights and employment get termination pay (and severance pay, if they were entitled to discontinuance wage).

If a staff member is entitled to both termination pay and severance pay, they should make the same option for both.

If a staff member who is not represented by a trade union elects to keep their recall rights or fails to decide, the employer needs to send the amount of the termination pay (and discontinuance wage, if any) to the Director of Employment Standards, who holds the cash in trust.

If a staff member who is represented by a trade union chooses to keep their recall rights or fails to make an option, the employer and the trade union should attempt to come to an arrangement to hold the termination pay (and discontinuance wage, if any) in trust for the employee. If they can not come to an arrangement, and the trade union encourages the company and the Director of Employment Standards in writing that efforts have failed, the employer needs to send out the termination pay (and severance pay, if any) to the Director of Employment Standards, who holds the money in trust.

If a staff member picks to quit their recall rights or if the recall rights end, the cash that is held in trust must be sent out to the worker.

If the worker accepts a recall back to work, the cash that is held in trust will be returned to the employer.

Exemptions to observe of termination or termination pay

Much of these exemptions are complex. Please contact the Employment Standards Information Centre, 1-800-531-5551, if you require more info. Please likewise 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 misconduct, disobedience or wilful neglect of responsibility that is not unimportant and has actually not been excused by the company. Note: “wilful” includes when a staff member meant the resulting consequence or acted recklessly if they understood or need to have understood the results their conduct would have. Poor work conduct that is unexpected or unintended is normally ruled out wilful;

– was hired for a particular length of time or until the conclusion of a specific task. However, such a staff member will be entitled to see of termination or termination pay if:- the work ends before the term ends or the task is finished; or

– the term expires or the job is not finished more than 12 months after the work started; or

– the work continues for 3 months or more after the term expires or the task is completed;

See likewise: Employment Standards Self-Service Tool

Wrongful dismissal

Rights greater than ESA notice of termination, termination pay, severance pay

The rules under the ESA about termination and severance of employment are minimum requirements. Some staff members might have rights under the typical law that are greater than the rights to discover of termination (or termination pay) and severance pay under the ESA. An employee might wish to sue their former company in court for “wrongful dismissal”. Employees ought to understand that they can not take legal action against a company for wrongful termination and sue for termination pay or severance pay with the ministry for the exact same termination or severance of employment. An employee should pick one or the other. Employees may want to get legal suggestions worrying their rights.