Working Notice of Termination and Severance Pay in Ontario

There often comes a point in an employment relationship when the parties decide it’s time to go their separate ways. If it’s the employer that makes that decision, and it’s not because the employee has done something egregious that warrants a dismissal for cause, then the employer must notify the employee and provide them with working notice of termination (or pay instead of working notice) and possibly severance pay as well. 

If an employer gives you notice of termination or you’re terminated for cause, you must consult an employment lawyer right away to ensure that the termination is proper and that you are being provided with your legal entitlements pertaining to notice and severance pay in Ontario

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How Long is Working Notice and How Much is Severance Pay in Ontario? 

As an employee, working notice of termination is supposed to provide you with a reasonable amount of time to find a new, similar job, while still working and being paid by your current employer. 

Under Ontario’s Employment Standards Act (ESA), employees are entitled to a minimum of one week’s notice for every year of employment they’ve worked with their employer, to a maximum of eight weeks – provided they’ve been there at least 90 days.   This notice can either be paid out to you without you having to attend the workplace for that period of time (pay in lieu) or you can be required to attend the workplace for this timeframe and continue to work (working notice), or you could receive a combination of working notice and pay in lieu.

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The employee is also entitled to severance pay if they’ve been with their employer for at least five years and their employer has at least $2.5 million in total global payroll, or they were laid off with at least 50 other employees in a six-month period because all or part of the business permanently closed. The legally-allowed minimum severance pay is one week of pay per every year of service to a maximum of 26 weeks. 

Employers often choose, however, to end the employment relationship immediately and pay their employee what they would have earned during a working notice of termination period plus any severance and vacation pay the employee is owed, if applicable.

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As you can see, the amount of notice and severance pay you are entitled to in Ontario has a crucial impact on your ability to find new work and cover your bills as you try to do so. The ESA minimums do not apply if you work in a federally-regulated industry such as banking, telecommunications or national/international travel (in which case, your employment rights are covered by the Canada Labour Code). They’re also not applicable if your occupation is exempt from the legal minimums because you work in emergency services, hospitality or another field that has special rules in the ESA.

However, there are also situations where an employee is entitled to more than the legal minimum working notice and severance pay.

When is an Employee Entitled to More Than the Legal Minimum Working Notice and Severance Pay in Ontario?

If your employment contract or union agreement provides for any benefit greater than what’s allowed by the ESA, that benefit is your minimum entitlement; which means that your employer can’t give you less notice or severance pay than what’s in your contract.

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You may also be entitled to a lot more working notice and severance pay than the minimum if you don’t have a written employment contract or your contract doesn’t contain a legally-enforceable termination clause outlining the appropriate working notice/pay in lieu of notice and/or severance pay entitlements.

Speak to an employment lawyer if either of those examples apply to you, to have them review your employment contract, or if you want to negotiate a severance package instead of working during your notice period.

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