Termination Of Employment

A variety of expressions are commonly utilized to explain situations when employment is terminated. These of “release,” “released,” “dismissed,” “fired” and “permanently laid off.”

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

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

– “constructively” dismisses an employee and the employee resigns, in action, within an affordable time;

– lays an employee off for a duration that is longer than a “momentary layoff”.

For the most part, when an employer ends the employment of a staff member who has actually been constantly used for 3 months, the employer needs to supply the employee with either written notice of termination, termination pay or a combination (as long as the notification and the variety of weeks of termination pay together equivalent the length of notice the employee is entitled to get).

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

Receiving termination notification or pay in lieu

Certain workers are not entitled to discover of termination or termination pay under the ESA. Examples consist of: staff members who are guilty of wilful misconduct, disobedience, or wilful overlook of task that is not insignificant and has actually not been excused by the employer. Other examples consist of building and construction staff members, staff members on short-lived layoff, workers who decline an offer of affordable alternative work and staff members who have been used less than three months.

There are a number of other exemptions to the termination of work arrangements of the ESA. See “Exemptions to observe of termination or termination pay.” Please also refer to the unique guideline tool.

The termination-of-employment rules are totally separate from any entitlements a worker may have to be paid severance pay under the ESA.

Constructive dismissal

A constructive termination may happen when an employer makes a significant change to a basic term or condition of a worker’s employment without the worker’s real or implied authorization.

For instance, a worker may be constructively dismissed if the employer makes changes to the worker’s terms of work that lead to a considerable decrease in wage or a substantial unfavorable modification in such things as the staff member’s work place, hours of work, authority, or position. Constructive termination may also consist of scenarios where an employer bothers or abuses an employee, or a company offers a staff member a final notice to “give up or be fired” and the worker resigns in action.

The staff member would have to resign in action to the change within a reasonable time period in order for the company’s actions to be considered a termination of employment for purposes of the ESA.

Constructive termination is a complex and tough subject. For additional information on positive termination, please contact the Employment Standards Information Centre at 1-800-531-5551.

Temporary layoff

An employee is on short-term layoff when a company cuts back or stops the worker’s work without ending their employment (for example, laying someone off sometimes when there is not enough work to do). The mere reality that the company does not define a recall date when laying the staff member off does not always imply that the lay-off is not short-lived. Note, however, that a lay-off, employment even if planned to be temporary, might result in positive 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 made less than half of what they would generally earn (or makes typically) in a week.

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

Employers are not required under the ESA to offer employees with a written notice of a short-lived layoff, nor do they have to offer a reason for the lay-off. (They may, nevertheless, be required to do these things under a cumulative arrangement or an employment agreement.)

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

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

2. more than 13 weeks in any duration of 20 successive weeks, however less than 35 weeks of layoff in any duration of 52 successive weeks, where:- the employee continues to get significant payments from the company;
or

– the company continues to make payments for the advantage of the employee under a genuine group or employee insurance coverage strategy (such as a medical or drug insurance strategy) or a genuine retirement or pension;
or

– the employee gets supplemental welfare;
or

– the worker would be entitled to receive additional welfare however isn’t getting them due to the fact that they are employed in other places;
or

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

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

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

If a staff member is laid off for a duration longer than a temporary layoff as set out above, the company is thought about to have ended the employee’s work. Generally, the worker will then be entitled to termination pay.

Written notification of termination and termination pay

Under the ESA, a company can end the employment of an employee who has been utilized constantly for 3 months or more if either:

– the employer has actually given the staff member appropriate written notice of termination and the notification duration has actually ended

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

Written notification of termination

A staff member is entitled to observe of termination (or termination pay instead of notice) if they have actually been continually employed for a minimum of 3 months. A person is thought about “employed” not only while they are actively working, but also during any time in which they are not working however the work relationship still exists (for instance, time in which the worker is off sick or on leave or on lay-off).

The quantity of notification to which a staff member is entitled depends upon their “period of employment”. An employee’s period of work consists of not only all time while the employee is actively working but also at any time that they are not working but the work relationship still exists, with the following exceptions:

– if a lay-off goes on longer than a short-lived lay-off, the employee’s employment is deemed (or thought about) to have actually been terminated on the very first day of the lay-off-any time after that does not count as part of the worker’s duration of work, despite the fact that the worker might still be employed for purposes of the “continuously utilized for 3 months” credentials

– if two different durations of employment are separated by more than 13 weeks, only the most recent period counts for functions of notification of termination

It is possible, in some situations, for a person to have actually been “continuously used” for 3 months or more and yet have a period of work of less than three months. In such circumstances, the worker would be entitled to observe since a worker who has actually been continuously employed for a minimum of three months is entitled to discover, and the minimum notification privilege of one week applies to an employee with a duration of employment of any length less than one year.

The following chart specifies the amount of notification required:

Note: Special guidelines identify the amount of notice needed in the case of mass terminations – where the work of 50 or more employees is ended at an employer’s establishment within a four-week duration.

Requirements during the statutory notice period

During the statutory notification period, a company should:

– not minimize the worker’s wage rate or change any other term or condition of employment;

– continue to make whatever contributions would be required to keep the staff member’s advantages strategies; and

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

Regular rate

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

Regular earnings

These are wages besides overtime pay, trip pay, public vacation pay, premium pay, domestic or sexual violence leave pay, termination of assignment pay, termination pay and severance pay and specific contractual entitlements.

Regular work week

For an employee who typically works the same number of hours each week, a routine work week is a week of that numerous hours, not consisting of overtime hours.

Some workers do not have a routine work week. That is, they do not work the very same number of hours each week or they are paid on a basis other than time. For these staff members, the “regular incomes” for a “regular work week” is the typical amount of the regular wages made by the employee in the weeks in which the staff member worked throughout the period of 12 weeks instantly preceding the date the notification was given.

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

If a company offers longer notification than is needed, the statutory part of the notification period is the last part of the period that ends on the date of termination.

How to provide written notification

For the most part, composed notice of termination of work need to be dealt with to the worker. It can be offered face to face or by mail, fax or e-mail, as long as delivery can be verified.

There are unique rules for providing notice of termination if an employee has a contract of employment or a cumulative agreement that supplies 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.

In that case, the employer must post a notification in the work environment (where it will be seen by the staff members) setting out the names, seniority and task category of those workers the employer intends to end and the date of the proposed termination. The posting of the notification is thought about to be notice of termination, as of the date of the posting, to a worker who is “bumped” by a staff member called in the notice. However, this notice of termination need to still meet the length requirements set out in the ESA.

There are also special guidelines relating to how notification is supplied when there is a mass termination.

Termination pay

An employee who does not get the written notice needed under the ESA should be provided termination pay in lieu of notice. Termination pay is a swelling sum payment equal to the regular incomes for a routine work week that a staff member would otherwise have been entitled to during the composed notification period. A staff member makes getaway pay on their termination pay. Employers need to also continue to make whatever contributions would be needed to keep the advantages the worker would have been entitled to had they continued to be utilized through the notice duration.

Example: Regular work week

Sarah has actually worked for 3 and a half years. Now her job has actually been gotten rid of and her work has been terminated. Sarah was not provided any written notification of termination.

Sarah worked 40 hours a week each week and was paid $20.00 an hour. She also got 4 percent vacation pay. Because she worked for more than three years however less than 4 years, she is entitled to 3 weeks’ pay in lieu of notice.

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

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

Her termination pay is computed:

$ 800.00 X 3 weeks = $2,400.00

Then her trip pay on her termination pay is determined:

4% of $2,400.00 = $96.00

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

$ 2400.00 + $96.00 = $2,496.00

Result: Sarah is entitled to $2,496.00. The company must likewise make sure continued protection for any advantage or pension that applied to her for 3 weeks.

Example: No regular work week

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

Gerry’s employer eliminated his position and did not give Gerry any composed notice of termination. Gerry was ill and off work for two of the 12 weeks immediately preceding the day his work was ended. Gerry earned $1,800.00 in the 12 weeks before the day on which his work ended.

Gerry is entitled to four weeks of termination pay.

Gerry’s typical earnings weekly are computed:

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

His termination pay is determined:

$ 180.00 × 4 weeks = $720.00

Then his trip 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 employer must also make sure continued protection for any advantage or pension that applied to him for employment four weeks.

When to pay termination pay

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

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 period).

Meaning of “establishment”

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

– they are located within the exact same municipality, or

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

Effective October 26, 2023, in cases of mass termination, the term “facility” includes a staff member’s home, but only if the staff member works from home and does not operate at any other location where the company continues business.

This will require that employees who work exclusively from another location be thought about for addition in the count when identifying whether 50 or more workers have actually been terminated.

Note that where an employee carries out work both from their home and from another location where the employer carries on organization (for example, a workplace), their home is not included in the meaning of “establishment”. Instead, the worker is thought about to have a connection to the workplace area and, therefore, for the function of mass termination, the staff member is included with respect to that office location.

Example: where several areas are thought about one “establishment”

ABC Company has an office 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 operate at the office.

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

Employer obligations in a mass termination

When a mass termination happens, the employer should complete and deliver the Form 1 (Notice of termination of employment) to the Director of Employment Standards (Director) by:

– e-mail to esa_form1_notice@ontario.ca.

– fax to (416) 326-7061.

– personal 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 verified.

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

Any notice to the affected workers is ruled out to have actually been given till the Form 1 is received by the Director; simply put, notice of mass termination is not efficient until the Director gets the Form 1.

In addition to supplying staff members with individual notices of termination, the employer must, on the very first day of the notification period:

– post a copy of the Form 1 supplied to the Director in the office where it will come to the attention of the impacted employees.

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

The amount of notification employees must get in a mass termination is not based upon the employees’ length of work, but on the number of workers who have been ended. A company needs to offer:

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

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

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

Exception to the mass termination guidelines

The mass termination guidelines do not apply if these two things use:

– the number of staff members whose employment is being ended represents not more than 10 per cent of the staff members who have been utilized for at least three months at the establishment

– none of the terminations are brought on by the permanent discontinuance of all or part of the company’s business at the establishment

Mass termination: resignation by an employee

A staff member who has actually received termination notice under the mass termination rules who desires to resign before the termination date offered in the employer’s notice must give the company a minimum of one week’s written notification of resignation if the worker has been employed for less than two years. If the work period has been two years or more, the employee must offer a minimum of 2 weeks’ composed notice of resignation. However, the staff member does not have to give notification of resignation if the company constructively dismisses the staff member or breaches a regard to the contract.

Temporary work after termination date in notice

A company can provide work to an employee who has actually been provided notification of termination on a temporary basis in the 13-week duration after the termination date set out in the notification without impacting the initial date of the termination and without being needed to supply any additional notification of termination to the employee when the momentary 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 written notification of termination as if the previous notification had actually never been provided. The employee’s duration of employment will then also include the period of short-term work.

Recall rights

A “recall right” is the right of an employee on a layoff to be called back to work by their employer under a term or condition of work. This right is frequently found in collective contracts.

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

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

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

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

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

If a staff member picks to quit their recall rights or if the recall rights expire, the cash that is kept in trust should be sent out to the employee.

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

Exemptions to discover of termination or termination pay

Many of these exemptions are intricate. Please get in touch with the Employment Standards Information Centre, 1-800-531-5551, if you require more info. Please also refer to the special guideline tool.

The notification 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 condoned by the employer. Note: “wilful” includes when an employee planned the resulting repercussion or acted recklessly if they understood or ought to have understood the results their conduct would have. Poor employment work conduct that is unintentional or unintentional is normally not considered wilful;

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

– the term ends or the task is not completed more than 12 months after the employment started; or

– the work 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, severance pay

The guidelines under the ESA about termination and severance of work are minimum requirements. Some employees may have rights under the typical law that are higher than the rights to observe of termination (or termination pay) and discontinuance wage under the ESA. A worker may wish to sue their former company in court for “wrongful dismissal”. Employees ought to be mindful that they can not take legal action against an employer for wrongful termination and sue for termination pay or severance pay with the ministry for employment the very same termination or severance of work. A staff member must select one or the other. Employees may wish to obtain legal guidance worrying their rights.