Termination Of Employment

A variety of expressions are commonly used to describe situations when employment is ended. These consist of “let go,” “discharged,” “dismissed,” “fired” and “completely laid off.”

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

– dismisses or stops employing a worker, employment including where an employee is no longer used due to the bankruptcy or insolvency of the company;

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

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

In the majority of cases, when a company ends the employment of an employee who has been continually employed for three months, the company must supply the employee with either composed notification of termination, termination pay or a combination (as long as the notice and the number of weeks of termination pay together equivalent the length of notice the employee is entitled to receive).

The ESA does not require a company to offer an employee a factor why their work is being ended. There are, however, some circumstances where an employer can not end a staff member’s employment even if the employer is prepared to give correct written notification or termination pay. For example, a company can not end someone’s work, or penalize them in any other way, if any part of the factor for the termination of work is based upon the worker 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 lack defined in the ESA. Please see the chapter on reprisals.

Qualifying for termination notice or pay in lieu

Certain employees are not entitled to see of termination or termination pay under the ESA. Examples include: workers who are guilty of wilful misbehavior, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer. Other examples include building and construction employees, employees on short-term layoff, employees who refuse an offer of reasonable alternative employment and staff members who have been utilized less than 3 months.

There are a number of other exemptions to the termination of employment provisions of the ESA. See “Exemptions to observe of termination or termination pay.” Please likewise refer to the unique rule tool.

The termination-of-employment guidelines are totally different from any entitlements an employee may have to be paid discontinuance wage under the ESA.

Constructive termination

A constructive termination might occur when a company makes a substantial change to a basic term or condition of a staff member’s employment without the worker’s real or implied approval.

For example, a staff member may be constructively dismissed if the employer makes modifications to the staff member’s terms and conditions of work that result in a considerable decrease in salary or a substantial unfavorable modification in such things as the employee’s work place, hours of work, authority, or position. Constructive dismissal might also include circumstances where an employer harasses or abuses an employee, or a company provides a staff member an ultimatum to “give up or be fired” and the worker resigns in reaction.

The employee would have to resign in action to the modification within a reasonable period of time in order for the company’s actions to be considered a termination of employment for functions of the ESA.

Constructive termination is a complex and challenging subject. For more details on positive dismissal, please get in touch with the Employment Standards Information Centre at 1-800-531-5551.

Temporary layoff

A worker is on short-lived layoff when an employer cuts back or stops the staff member’s work without ending their employment (for instance, laying someone off sometimes when there is not sufficient work to do). The simple fact that the company does not define a recall date when laying the staff member off does not always mean that the lay-off is not temporary. Note, however, that a lay-off, even if intended to be momentary, might result in useful dismissal if it is not allowed by the employment agreement.

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

A week of layoff does not consist of any week in which the staff member did not work for one or more days due to the fact that the employee was unable or available 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 needed under the ESA to supply workers with a composed notice of a short-term layoff, nor do they have to supply a reason for the lay-off. (They may, however, be needed to do these things under a collective contract 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 successive weeks;
or

2. more than 13 weeks in any duration of 20 consecutive weeks, however less than 35 weeks of layoff in any duration of 52 consecutive weeks, where:- the staff member continues to get 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 coverage plan (such as a medical or drug insurance coverage strategy) or a legitimate retirement or pension plan;
or

– the staff member gets extra unemployment benefits;
or

– the worker would be entitled to receive additional welfare but isn’t receiving them since they are used somewhere else;
or

– the company remembers the staff member to work within the time frame authorized by the Director of Employment Standards;
or

– the company remembers 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 employer remembers a worker who is represented by a trade union within the time set out in a contract in between the union and the company.

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

Written notice of termination and termination pay

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

– the employer has actually provided the employee appropriate written notification of termination and the notification duration has actually ended

– the employer pays termination pay to the staff member where no written notification or less notice than is required is provided

Written notification of termination

A worker is entitled to see of termination (or termination pay rather of notice) if they have actually been constantly employed for at least three months. An individual is considered “utilized” not only while they are actively working, but likewise during any time in which they are not working but the work relationship still exists (for example, time in which the staff member is off ill or on leave or on lay-off).

The amount of notice to which a staff member is entitled depends upon their “duration of work”. A worker’s period of work consists of not only perpetuity while the worker is actively working however also 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 short-lived lay-off, the staff member’s work is considered (or thought about) to have been ended on the very first day of the lay-off-any time after that does not count as part of the worker’s period of work, although the staff member may still be employed for functions of the “continually employed for three months” credentials

– if two separate 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 been “constantly used” for three months or more and yet have a duration of work of less than three months. In such circumstances, the worker would be entitled to discover due to the fact that an employee who has actually been constantly used for a minimum of three months is entitled to notice, and the minimum notice entitlement of one week uses to a staff member with a period of work of any length less than one year.

The following chart specifies the amount of notification needed:

Note: Special rules figure out the amount of notification required in the case of mass terminations – where the work of 50 or more workers is terminated at a company’s facility within a four-week duration.

Requirements during the statutory notice duration

During the statutory notice period, an employer should:

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

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

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

Regular rate

This is an employee’s rate of pay for each non-overtime hour of work in the worker’s work week.

Regular earnings

These are wages other than overtime pay, vacation pay, public vacation pay, premium pay, domestic or sexual violence leave pay, termination of assignment pay, termination pay and discontinuance wage and specific legal entitlements.

Regular work week

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

Some workers do not have a regular work week. That is, they do not work the very same number of hours each week or they are paid on a basis aside from time. For these workers, the “routine salaries” for a “regular work week” is the typical amount of the regular salaries made by the employee in the weeks in which the staff member worked during the duration of 12 weeks immediately preceding the date the notification was offered.

An employer is not enabled to set up an employee’s holiday time throughout the statutory notice period unless the employee-after getting written notice of termination of employment-agrees to take their trip time throughout the notice period.

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

How to supply written notice

In a lot of cases, written notification of termination of employment need to be resolved to the worker. It can be provided face to face or by mail, fax or email, as long as shipment can be verified.

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

Because case, the employer needs to publish a notice in the office (where it will be seen by the workers) setting out the names, seniority and employment task classification of those staff members the company means to end and the date of the proposed termination. The publishing of the notification is thought about to be of termination, as of the date of the publishing, to a staff member who is “bumped” by a worker called in the notification. However, this notice of termination need to still meet the length requirements set out in the ESA.

There are likewise special guidelines concerning how notice is provided when there is a mass termination.

Termination pay

A worker who does not get the composed notice required under the ESA should be offered termination pay in lieu of notification. Termination pay is a lump amount payment equal to the regular salaries for a regular work week that a staff member would otherwise have been entitled to during the composed notification period. An employee earns vacation pay on their termination pay. Employers must also continue to make whatever contributions would be required to maintain the benefits the worker would have been entitled to had they continued to be employed through the notification duration.

Example: Regular work week

Sarah has worked for 3 and a half years. Now her job has actually been gotten rid of and her employment has been ended. Sarah was not offered any written notice of termination.

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

Sarah’s regular earnings for a routine work week are calculated:

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

Her termination pay is determined:

$ 800.00 X 3 weeks = $2,400.00

Then her holiday pay on her termination pay is calculated:

4% of $2,400.00 = $96.00

Finally, her vacation 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 also ensure ongoing protection for any advantage or pension plans that applied to her for 3 weeks.

Example: No regular work week

Gerry has operated at a nursing home for four years. He works every week, however his hours differ from week to week. His rate of pay is $25.00 an hour, and he is paid 6 per cent getaway pay.

Gerry’s company removed his position and did not offer Gerry any composed notice of termination. Gerry was ill and off work for 2 of the 12 weeks right away preceding the day his employment was ended. Gerry earned $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 typical earnings weekly are determined:

$ 1,800.00 for 12 weeks/ 10 weeks (Gerry was off ill for two weeks therefore these weeks are not included in the estimation of average profits) = $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 included to his termination pay:

$ 720.00 + $43.20 = $763.20

Result: Gerry is entitled to $763.20. The company must likewise ensure ongoing protection for any benefit or pension strategies that applied to him for 4 weeks.

When to pay termination pay

Termination pay should be paid to a worker either 7 days after the staff member’s employment is ended or on the employee’s next routine pay date, whichever is later on.

Mass termination

Special guidelines for notice of termination may apply in cases of mass termination (when a company is terminating 50 or more staff members at its facility within a four-week period).

Meaning of “facility”

An “facility” is a location at which the employer brings on service. Separate areas can be thought about one establishment if either:

– they are situated within the very same municipality, or

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

Effective October 26, 2023, in cases of mass termination, the term “facility” consists of an employee’s home, but just if the staff member works from home and does not work at any other place where the employer carries on business.

This will require that workers who work specifically remotely be thought about for addition in the count when figuring out whether 50 or more workers have actually been ended.

Note that where an employee performs work both from their home and employment from another place where the employer continues company (for example, a workplace), their home is not consisted of in the definition of “facility”. Instead, the employee is considered to have a connection to the workplace location and, for that reason, for the function of mass termination, the worker is included with regard to that office place.

Example: where several locations are considered one “facility”

ABC Company has an office and a storage facility located in London, ON. Sabrina resides in London and works for ABC Company solely from another location: she carries out work for the company from home and does not operate at the office.

For the purpose of mass termination, the company’s London workplace, London warehouse and Sabrina’s London home are thought about one “establishment.”

Employer obligations in a mass termination

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

– e-mail to [email protected].

– fax to (416) 326-7061.

– personal delivery 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 delivery can be verified.

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

Any notice to the impacted employees is ruled out to have actually been offered until the Form 1 is gotten by the Director; simply put, notification of mass termination is not reliable until the Director receives the Form 1.

In addition to offering staff members with private notifications of termination, the company must, on the very first day of the notification period:

– publish a copy of the Form 1 offered to the Director in the office where it will concern the attention of the affected workers.

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

The quantity of notice staff members should receive in a mass termination is not based upon the staff members’ length of employment, but on the variety of staff members who have been ended. An employer needs to give:

– 8 weeks see if the employment of 50 to 199 employees is to be ended

– 12 weeks see if the work of 200 to 499 employees is to be ended

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

Exception to the mass termination guidelines

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

– the variety of staff members whose work is being ended represents not more than 10 per cent of the employees who have been used for a minimum of 3 months at the facility

– none of the terminations are caused by the long-term discontinuance of all or part of the employer’s company at the establishment

Mass termination: resignation by an employee

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

Temporary work after termination date in notification

A company can supply work to an employee who has actually been provided notice of termination on a short-lived 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 further notice of termination to the worker when the temporary work ends.

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

Recall rights

A “recall right” is the right of an employee on a layoff to be recalled to work by their company under a term or condition of employment. This right is typically discovered in cumulative agreements.

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

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

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

If an employee is entitled to both termination pay and employment severance pay, they need to make the very same option for both.

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

If a staff member chooses to give up their recall rights or if the recall rights expire, the money that is held in trust needs to be sent to the staff member.

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

Exemptions to discover of termination or termination pay

A lot of these exemptions are intricate. Please call the Employment Standards Information Centre, 1-800-531-5551, if you need more info. Please also refer to the special rule tool.

The notification of termination and termination pay requirements of the ESA do not use to a staff member who:

– is guilty of wilful misbehavior, disobedience or wilful disregard of task that is not unimportant and has not been excused by the employer. Note: “wilful” includes when a staff member planned the resulting consequence or acted recklessly if they understood or ought to have known the effects their conduct would have. Poor work conduct that is unexpected or unintended is typically ruled out wilful;

– was employed for a particular length of time or till the completion of a particular job. However, such an employee will be entitled to see of termination or termination pay if:- the employment ends before the term ends or the job is completed; or

– the term ends or the job is not completed more than 12 months after the work started; or

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

See likewise: Employment Standards Self-Service Tool

Wrongful dismissal

Rights higher than ESA notice of termination, termination pay, discontinuance wage

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 higher than the rights to observe of termination (or termination pay) and severance pay under the ESA. A worker may desire to sue their former company in court for “wrongful dismissal”. Employees need to know 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 the same termination or severance of work. An employee must select one or the other. Employees may wish to get legal guidance worrying their rights.