There are three potential sources of an employee’s termination entitlements.
The first are statutory, in accordance with the Employment Standards Act. These entitlements, discussed below, are mandatory.
The second potential source is contractual. The letter of hire or employment agreement may specify how the employment can be terminated.
The third potential source is common law. The common law applies when the parties have not agreed upon termination obligations in an enforceable employment contract.
In Ontario, the Employment Standards Act (ESA) declares that individuals employed longer than three months are entitled to either written notice of termination, termination pay, or a combination of both. Termination of employment may arise for or without cause. For instance, a termination “without cause” refers to situations where an employee is let go due to reasons unrelated to misconduct, such as business restructuring or downsizing. In contrast, termination “for cause” occurs when an employee is dismissed due to serious misconduct such as theft or harassment. In these cases, employers are not typically required to provide notice or pay in lieu of notice, but they must be able to prove the misconduct that led to the firing.
The ESA Notice Period
Under the ESA, an employee with an employment period between 3 months and 1 year is entitled to one week’s notice. Between 1 to 3 years of service, the employee is entitled to two weeks’ notice, followed by an additional week of notice for every year of employment thereafter to a maximum of 8 weeks. Termination clauses that purport to provide less generous entitlements than those provided by the ESA are deemed void and unenforceable in Ontario. (See: Government of Ontario).
The ESA also provides that some employees are entitled to severance pay upon termination. Severance pay is owed to employees who have worked for their employer for at least five years and either:
- were terminated by the employer along with 50 or more employees within a six-month period as part of a permanent discontinuance of all the employer’s business, or
- the terminating employer had an annual payroll of $2.5 million or more.
The ESA notice and severance entitlements are not subject to mitigation, meaning that if you find another job during your notice period, you are still entitled to receive these payments from your old employer.
Notice at Comon Law
An employer is generally required to give common law notice to employees if they are terminated without cause and do not have an enforceable termination clause in their employment contract. If you have a letter of hire or employment contract, it should be carefully reviewed with a lawyer to determine if it is enforceable.
If there is no enforceable employment agreement, “reasonably notice” is a term implied at common law. To determine the appropriate notice period, judges have determined a set of factors they rely on to estimate the number of months an individual will likely need to find their next comparable position. The three primary factors considered are:
- Age of employee,
- Length of service, and
The character and specialization of employment (i.e. the position). This serves as a non-exhaustive list as calculating a reasonable notice period under common law is defined on a case-by-case basis and is at a judge’s discretion. Notice at common law can be as high as 24 months, sometimes more. However, it is important to note that unlike ESA minimums, the common law notice period obligates former employees to a “duty to mitigate”. This implies that employees must seek comparable employment in efforts to mitigate their financial losses as doing so will reduce the employer’s damages accordingly. It is recommended that terminated employees keep a record of their efforts to job search during the notice period granted to them to ensure a comprehensive calculation of damages.
Blackburn Lawyers is made up of a team of dedicated lawyers who are pleased to provide support and guidance with your employment matters. If you have questions about notice periods following the termination of employment, contact our lawyers today.
Disclaimer: This blog sets out a variety of information relating to the law that is to be used for educational purposes and is not legal advice for your particular situation. The author of this blog does not intend for this blog to be a source of legal advice.
Written by Adriana Totera
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
