Termination Of Employment
A variety of expressions are commonly utilized to explain circumstances when employment is ended. These consist of “release,” “released,” “dismissed,” “fired” and “permanently laid off.”
Under the Employment Standards Act, 2000 (ESA) an individual’s work is ended if the company:
– dismisses or stops employing a worker, including where a staff member is no longer used due to the personal bankruptcy or insolvency of the company;
– “constructively” dismisses an employee and the employee resigns, in reaction, within a sensible time;
– lays a worker off for a period that is longer than a “short-term layoff”.
In many cases, when an employer ends the employment of a staff member who has been continually employed for three months, the employer needs to offer the employee with either written notice of termination, termination pay or a combination (as long as the notification and the number of weeks of termination pay together equivalent the length of notice the worker is entitled to receive).
The ESA does not require an employer to offer a staff member a reason that their employment is being ended. There are, nevertheless, employment some circumstances where an employer can not end a worker’s work even if the company is prepared to provide correct written notice 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 employment is based upon the employee asking concerns about the ESA or working out a right under the ESA, such as refusing to work in excess of the everyday or weekly hours of work optimums, 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 observe 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 minor and has actually not been condoned by the employer. Other examples include construction employees, workers on short-term layoff, employees who decline an offer of sensible alternative work and workers who have actually been employed less than 3 months.
There are a number of other exemptions to the termination of employment arrangements of the ESA. See “Exemptions to see of termination or termination pay.” Please also refer to the special rule tool.
The termination-of-employment rules are entirely different from any privileges a staff member might need to be paid severance pay under the ESA.
Constructive termination
A constructive dismissal might happen when an employer makes a considerable modification to a basic term or condition of a worker’s employment without the staff member’s real or implied approval.
For example, a staff member might be constructively dismissed if the employer makes modifications to the employee’s conditions of employment that lead to a significant decrease in wage or a substantial unfavorable modification in such things as the worker’s work place, hours of work, authority, or position. Constructive termination may likewise include situations where an employer bugs or abuses an employee, or an employer provides a staff member an ultimatum to “stop or be fired” and the staff member resigns in response.
The employee would have to resign in action to the modification within a reasonable time period in order for the employer’s actions to be considered a termination of work for functions of the ESA.
Constructive termination is a complex and challenging topic. For more info on useful dismissal, please get in touch with the Employment Standards Information Centre at 1-800-531-5551.
Temporary layoff
A worker is on temporary layoff when a company cuts back or stops the employee’s work without ending their work (for example, laying someone off sometimes when there is inadequate work to do). The simple reality that the company does not define a recall date when laying the worker off does not necessarily indicate that the lay-off is not short-lived. Note, nevertheless, that a lay-off, even if planned to be temporary, may result in positive termination if it is not enabled by the employment agreement.
For the functions of the termination arrangements of the ESA, a “week of layoff” is a week in which the worker earned less than half of what they would generally earn (or makes typically) in a week.
A week of layoff does not include any week in which the worker did not work for one or more days because the staff member was unable or readily available to work, underwent disciplinary suspension, or was not provided with work since of a strike or lockout at their location of employment or in other places.
Employers are not needed under the ESA to offer employees with a composed notice of a short-term layoff, nor do they have to supply a factor for the lay-off. (They may, nevertheless, be needed to do these things under a cumulative 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 period of 20 successive weeks, but less than 35 weeks of layoff in any period of 52 consecutive weeks, where:- the staff member continues to get considerable payments from the company;
or
– the employer continues to pay for the advantage of the worker under a genuine group or employee insurance coverage strategy (such as a medical or drug insurance coverage plan) or a legitimate retirement or pension;
or
– the worker receives supplementary welfare;
or
– the staff member would be entitled to get extra unemployment advantages however isn’t getting them due to the fact that they are used in other places;
or
– the employer remembers the worker to work within the time frame authorized by the Director of Employment Standards;
or
– the employer recalls the employee 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 explained in ‘B’ where the employer recalls a worker who is represented by a trade union within the time set out in an agreement between the union and the company.
If a worker is laid off for a period longer than a short-term layoff as set out above, the employer is thought about to have terminated the employee’s employment. Generally, the employee will then be entitled to termination pay.
Written notification of termination and termination pay
Under the ESA, a company can terminate the work of a worker who has actually been utilized continually for 3 months or more if either:
– the employer has given the staff member appropriate composed notification of termination and the notice duration has ended
– the company pays termination pay to the staff member where no composed notice or less notice than is needed is offered
Written notice of termination
An employee is entitled to observe of termination (or termination pay rather of notification) if they have actually been constantly employed for a minimum of 3 months. An individual is thought about “utilized” not only while they are actively working, however also during any time in which they are not working however the work relationship still exists (for instance, time in which the staff member is off ill or on leave or on lay-off).
The amount of notice to which a worker is entitled depends on their “duration of work”. A staff member’s period of work consists of not only all time while the worker is actively working but also whenever that they are not working however the work relationship still exists, with the following exceptions:
– if a lay-off goes on longer than a short-term lay-off, the worker’s work is considered (or considered) to have actually been terminated on the first day of the lay-off-any time after that does not count as part of the staff member’s duration of work, although the staff member may still be utilized for purposes of the “constantly used for three months” qualification
– if two different periods of employment are separated by more than 13 weeks, only the most current period counts for functions of notice of termination
It is possible, in some scenarios, for an individual to have actually been “continuously utilized” for three months or more and yet have a duration of work of less than three months. In such scenarios, the worker would be entitled to discover because a worker who has been continually employed for a minimum of 3 months is entitled to observe, and the minimum notice entitlement of one week applies to a worker with a duration of work of any length less than one year.
The following chart specifies the quantity of notice required:
Note: Special rules determine the quantity of notification required when it comes to – where the employment of 50 or more employees is terminated at an employer’s establishment within a four-week duration.
Requirements throughout the statutory notice period
During the statutory notification duration, an employer needs to:
– not reduce the worker’s wage rate or modify any other term or condition of work;
– continue to make whatever contributions would be required to maintain the staff member’s benefits plans; and
– pay the staff member the salaries they are entitled to, which can not be less than the worker’s regular salaries for a routine work week each week.
Regular rate
This is a staff member’s rate of spend for each non-overtime hour of operate in the employee’s work week.
Regular earnings
These are salaries aside from overtime pay, trip pay, public holiday pay, premium pay, domestic or sexual violence leave pay, termination of task pay, termination pay and severance pay and specific contractual privileges.
Regular work week
For a staff member who generally works the same variety of hours each week, a routine work week is a week of that many hours, not consisting of overtime hours.
Some staff members do not have a regular work week. That is, they do not work the same variety of hours each week or they are paid on a basis other than time. For these workers, the “routine wages” for a “routine work week” is the average amount of the routine salaries earned by the staff member in the weeks in which the worker worked during the duration of 12 weeks immediately preceding the date the notification was provided.
A company is not allowed to arrange a worker’s getaway time during the statutory notification period unless the employee-after getting written notification of termination of employment-agrees to take their vacation time during the notice period.
If an employer supplies longer notification than is required, the statutory part of the notice duration is the last part of the duration that ends on the date of termination.
How to offer written notification
In many cases, composed notice of termination of employment must be resolved to the employee. It can be supplied personally or by mail, fax or e-mail, as long as shipment can be validated.
There are unique guidelines for offering notice of termination if a worker has an agreement of work or a cumulative arrangement that offers seniority rights that allow 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 office (where it will be seen by the staff members) setting out the names, seniority and task classification of those staff members the employer intends to terminate and the date of the proposed termination. The posting of the notification is considered to be notification of termination, since the date of the posting, to a worker who is “bumped” by a staff member named in the notification. However, this notification of termination should still fulfill the length requirements set out in the ESA.
There are likewise unique guidelines concerning how notification is offered when there is a mass termination.
Termination pay
A worker who does not get the written notification required under the ESA needs to be given termination pay in lieu of notice. Termination pay is a swelling amount payment equal to the routine incomes for a regular work week that a worker would otherwise have been entitled to during the written notification period. An employee earns trip pay on their termination pay. Employers need to likewise continue to make whatever contributions would be needed to maintain the advantages the employee would have been entitled to had they continued to be utilized through the notice period.
Example: Regular work week
Sarah has worked for three and a half years. Now her job has actually been removed and her work has been terminated. Sarah was not offered any composed notice of termination.
Sarah worked 40 hours a week every week and was paid $20.00 an hour. She also got four per cent vacation pay. Because she worked for more than 3 years but less than four years, she is entitled to three weeks’ pay in lieu of notification.
Sarah’s regular earnings for a routine 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 getaway pay on her termination pay is computed:
4% of $2,400.00 = $96.00
Finally, her holiday pay is included to her termination pay:
$ 2400.00 + $96.00 = $2,496.00
Result: Sarah is entitled to $2,496.00. The employer must likewise ensure continued protection for any advantage or pension that applied to her for 3 weeks.
Example: No regular work week
Gerry has worked at a retirement home for 4 years. He works every week, but his hours vary from week to week. His rate of pay is $25.00 an hour, and he is paid 6 percent vacation pay.
Gerry’s company eliminated his position and did not provide Gerry any composed notification of termination. Gerry was ill and off work for 2 of the 12 weeks instantly 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 average incomes per week are determined:
$ 1,800.00 for 12 weeks/ 10 weeks (Gerry was off sick for 2 weeks therefore these weeks are not consisted of in the calculation of typical profits) = $180.00 a week
His termination pay is computed:
$ 180.00 Ă— 4 weeks = $720.00
Then his holiday pay on his termination pay is determined:
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 must likewise ensure ongoing coverage for any benefit or pension plans that used to him for 4 weeks.
When to pay termination pay
Termination pay must be paid to an employee either 7 days after the worker’s employment is ended or on the employee’s next regular pay date, whichever is later on.
Mass termination
Special rules for notice of termination might 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 “establishment”
An “establishment” is a location at which the company continues service. Separate areas can be considered one facility if either:
– they are located within the same town, or
– a worker at one location has contractual seniority rights that reach the other place, enabling the worker to displace another employee (also called “bumping rights”).
Effective October 26, employment 2023, in cases of mass termination, the term “facility” consists of an employee’s home, however just if the staff member works from home and does not work at any other location where the employer carries on service.
This will need that employees who work specifically from another location be thought about for addition in the count when determining whether 50 or more workers have been terminated.
Note that where an employee performs work both from their home and from another area where the company carries on organization (for instance, a workplace), their home is not consisted of in the definition of “facility”. Instead, the employee is thought about to have a connection to the office area and, for that reason, for the function of mass termination, employment the employee is included with regard to that workplace location.
Example: where several locations are thought about one “establishment”
ABC Company has a workplace and a storage facility situated in London, ON. Sabrina resides in London and works for ABC Company specifically remotely: she carries out work for the company from home and does not operate at the workplace.
For the function of mass termination, employment the company’s London office, 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 should finish and deliver the Form 1 (Notice of termination of employment) to the Director of Employment Standards (Director) by:
– email to esa_form1_notice@ontario.ca.
– fax to (416) 326-7061.
– personal delivery to the Director’s workplace on a day and at a time when it is open.
– mail shipment to the Director’s workplace, if the shipment can be confirmed.
The office of the Director of Employment Standards is located on the 9th flooring, 400 University Avenue, Toronto ON M7A 1T7.
Any notification to the affected staff members is not considered to have been given until the Form 1 is gotten by the Director; in other words, notice of mass termination is not efficient till the Director receives the Form 1.
In addition to supplying staff members with private notices 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 work environment where it will pertain to the attention of the impacted employees.
– supply a copy of the Form 1 to each impacted worker.
The amount of notice employees must receive in a mass termination is not based on the workers’ length of work, but on the variety of workers who have been terminated. An employer needs to give:
– 8 weeks discover if the employment of 50 to 199 staff members is to be terminated
– 12 weeks discover if the employment of 200 to 499 employees is to be terminated
– 16 weeks discover if the employment of 500 or more employees is to be terminated
Exception to the mass termination guidelines
The mass termination guidelines do not apply if these 2 things apply:
– the variety of employees whose employment is being terminated represents not more than 10 per cent of the staff members who have been employed for at least 3 months at the establishment
– none of the terminations are brought on by the irreversible discontinuance of all or part of the company’s organization at the establishment
Mass termination: resignation by a staff member
An employee who has actually received termination notice under the mass termination guidelines who desires to resign before the termination date provided in the company’s notification should give the employer a minimum of one week’s composed notice of resignation if the employee has been utilized for less than 2 years. If the employment duration has been two years or more, the worker needs to provide a minimum of two weeks’ composed notice of resignation. However, the employee does not need to provide notification of resignation if the company constructively dismisses the worker or breaches a regard to the contract.
Temporary work after termination date in notification
An employer can offer work to a worker who has been notified of termination on a momentary 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 needed to provide any more notification of termination to the employee when the temporary work ends.
If an employee works beyond the 13-week duration after the termination date and then has their employment ended, the employee will be entitled to a new written notice of termination as if the previous notification had never ever been provided. The staff member’s period of employment will then also consist of the duration of temporary work.
Recall rights
A “recall right” is the right of an employee on a layoff to be recalled to work by their employer under a term or condition of work. This right is commonly found in collective arrangements.
A worker who has recall rights and who is entitled to termination pay because of a layoff of 35 weeks or more may select 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
– give up their recall rights and get termination pay (and discontinuance wage, if they were entitled to discontinuance wage).
If a worker is entitled to both termination pay and discontinuance wage, they should make the very same choice for both.
If an employee who is not represented by a trade union chooses to keep their recall rights or fails to make an option, the company should send out the quantity of the termination pay (and severance pay, if any) to the Director of Employment Standards, who holds the cash in trust.
If an employee who is represented by a trade union elects to keep their recall rights or stops working to make an option, the company and the trade union need to attempt to come to an arrangement to hold the termination pay (and discontinuance wage, if any) in trust for the worker. 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 actually failed, the company needs to send the termination pay (and severance pay, if any) to the Director of Employment Standards, who holds the cash in trust.
If an employee picks to give up their recall rights or if the recall rights expire, the cash that is held in trust should be sent to the worker.
If the employee accepts a recall back to work, the cash that is kept in trust will be gone back to the company.
Exemptions to discover of termination or termination pay
Much of these exemptions are complex. Please get in touch with the Employment Standards Information Centre, 1-800-531-5551, if you need more details. Please likewise refer to the unique guideline tool.
The notice of termination and termination pay requirements of the ESA do not use to an employee who:
– is guilty of wilful misbehavior, disobedience or wilful disregard of duty that is not trivial and has not been excused by the company. Note: “wilful” includes when a staff member meant the resulting consequence or acted recklessly if they knew or need to have known the effects their conduct would have. Poor work conduct that is accidental or unintentional is typically ruled out wilful;
– was worked with for a specific length of time or up until the completion of a particular job. However, such a worker will be entitled to observe of termination or termination pay if:- the employment ends before the term expires or the task is finished; or
– the term ends or the task is not finished more than 12 months after the employment began; or
– the employment continues for 3 months or more after the term ends or the task is finished;
See likewise: Employment Standards Self-Service Tool
Wrongful dismissal
Rights greater than ESA notification of termination, termination pay, severance pay
The rules under the ESA about termination and severance of work are minimum requirements. Some employees might have rights under the common law that are higher than the rights to notice of termination (or termination pay) and severance pay under the ESA. A worker may want to sue their former employer in court for “wrongful termination”. Employees must be aware that they can not take legal action against an employer for wrongful dismissal and sue for termination pay or severance pay with the ministry for the very same termination or severance of employment. A worker must choose one or the other. Employees may wish to obtain legal guidance concerning their rights.