Ending an employment relationship is never an easy undertaking, particularly in circumstances where there is no cause to do so. However, when a company experiences financial hardship or undergoes corporate restructuring, it is sometimes necessary to terminate an employee on a without cause basis.

In these circumstances, and in accordance with the Employment Standards Act, 2000, S.O. 200, c. 41, as amended, an employer must provide an employee with notice in advance of termination (Section 54) or the employer must give the employee pay in lieu of notice (Section 61). The amount of notice or pay in lieu thereof depends on the specific employer-employee relationship.

Keep in mind that the Employment Standard Act only provides for minimum amounts upon dismissal. It may be thought of as being similar to the minimum wage for severance – it is the floor, not the ceiling. Employees without written contracts (and even those with them, unless carefully drafted) that govern their entitlement to payment upon dismissal will likely be owed considerably more than that mandated by the Employment Standards Act. To see more on this subject, click here.

Minimum Notice

When termination occurs, the employer must comply with the minimum notice provisions set out in Section 57 of the Employment Standards Act which provides the following notice periods prior to termination:

Pay in Lieu of Notice

Section 61 of the Employment Standards Act permits an employer to terminate the employment of an employee without notice or with less than the prescribed minimum notice period if the employer:

Pays to the employee termination pay in a lump sum which is equal to the amount that the employee would have received had notice been given in accordance with the statutory minimum notice period; and

Continues to make benefit plan contributions to which the employee would have been entitled to receive had the employee continued to be employed during the period of notice.

Severance Pay

In Ontario, an employee may be entitled to severance pay which is intended to acknowledge a lengthy employment period and compensate for loss of benefits and position. Entitlement to severance pay is governed by Section 64 of the Employment Standards Act which states that an employee is eligible for severance pay if the following criteria are met:

Employed for 5 years or more; AND
Severance resulted from a permanent discontinuance of all or part of the employer’s business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a 6-month period as a result; OR
The employer has an annual payroll of $2.5 million or more.

Vey Willetts specializes in matters related to without cause terminations and would be pleased to speak with you regarding an employment claim of this nature.

Employment and Labour Laws are not always straightforward, but whether you are an employee or an employer, understanding your rights and duties will only stand to benefit you. Reach out to an employment lawyer or labour lawyer today if you have any questions and be sure to get what you deserve and safeguard yourself for the future. The lawyers at Vey Willetts LLP have a proven track record and are happy to assist.

Without Cause Termination and Employment Standards

Minimum Notice

Pay in Lieu of Notice

Severance Pay

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