Termination Of Employment
A variety of expressions are commonly used to describe scenarios when employment is ended. These include "release," "discharged," "dismissed," "fired" and "permanently laid off."
Under the Employment Standards Act, 2000 (ESA) an individual's employment is ended if the employer:
- dismisses or employment stops employing a worker, consisting of where a worker is no longer utilized due to the personal bankruptcy or insolvency of the company;
- "constructively" dismisses an employee and the employee resigns, in reaction, within an affordable time;
- lays a worker off for a duration that is longer than a "momentary layoff".
For the most part, when an employer ends the work of an employee who has actually been continuously utilized for three months, the employer should provide the staff member with either written notification of termination, termination pay or a mix (as long as the notice 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 give a staff member a reason their work is being ended. There are, employment nevertheless, some situations where an employer can not end an employee's employment even if the is prepared to give proper written notice or termination pay. For instance, an employer can not end someone's work, or penalize them in any other way, if any part of the reason for the termination of employment is based on the worker asking concerns about the ESA or exercising a right under the ESA, such as declining to work in excess of the day-to-day or weekly hours of work maximums, or taking a leave of absence 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 consist of: employees who are guilty of wilful misconduct, disobedience, or wilful disregard of duty that is not insignificant and has actually not been excused by the company. Other examples consist of construction staff members, employees on temporary layoff, staff members who refuse a deal of reasonable alternative employment and employees who have actually been employed less than three months.
There are a variety of other exemptions to the termination of employment provisions of the ESA. See "Exemptions to see of termination or termination pay." Please likewise describe the special guideline tool.
The termination-of-employment rules are entirely different from any privileges a staff member might need to be paid discontinuance wage under the ESA.
Constructive termination
A useful termination may occur when an employer makes a substantial modification to an essential term or condition of a staff member's employment without the worker's real or implied consent.
For example, an employee may be constructively dismissed if the company makes changes to the worker's terms and conditions of employment that lead to a considerable decrease in salary or a substantial unfavorable modification in such things as the worker's work location, hours of work, authority, or position. Constructive termination might likewise include scenarios where an employer bugs or abuses an employee, or a company provides a worker a warning to "stop or be fired" and the employee resigns in response.
The worker would have to resign in response to the modification within a sensible period of time in order for the employer's actions to be considered a termination of employment for purposes of the ESA.
Constructive termination is a complex and challenging subject. For more details on positive dismissal, please call the Employment Standards Information Centre at 1-800-531-5551.
Temporary layoff
A staff member is on short-lived layoff when an employer cuts back or stops the worker's work without ending their employment (for instance, laying somebody off at times when there is not sufficient work to do). The simple fact that the employer does not specify a recall date when laying the worker off does not always imply that the lay-off is not short-term. Note, however, that a lay-off, even if meant to be short-lived, may result in useful dismissal if it is not allowed by the work contract.
For the functions of the termination provisions of the ESA, a "week of layoff" is a week in which the worker earned less than half of what they would ordinarily make (or makes typically) in a week.
A week of layoff does not consist of any week in which the employee did not work for several days since the staff member was not able or readily available to work, went through disciplinary suspension, or was not offered with work due to the fact that of a strike or lockout at their location of work or elsewhere.
Employers are not needed under the ESA to offer employees with a composed notification of a short-lived layoff, nor do they need to provide a factor for the lay-off. (They may, nevertheless, be needed to do these things under a cumulative agreement or an employment agreement.)
Under the ESA, a "short-term 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, however 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 benefit of the employee under a legitimate group or staff member insurance coverage plan (such as a medical or drug insurance coverage plan) or a genuine retirement or pension;
or
- the employee gets supplementary welfare;
or
- the staff member would be entitled to receive supplemental unemployment advantages however isn't getting them since they are used somewhere else;
or
- the company remembers the worker to work within the time frame authorized 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 recalls a worker who is represented by a trade union within the time set out in an arrangement in between the union and the company.
If a staff member is laid off for a period longer than a short-term layoff as set out above, the employer is considered to have actually ended the employee's work. Generally, the staff member will then be entitled to termination pay.
Written notification of termination and termination pay
Under the ESA, an employer can terminate the employment of an employee who has been employed continuously for three months or more if either:
- the employer has given the employee appropriate written notice of termination and the notification duration has actually expired
- the company pays termination pay to the employee where no written notification or less notice than is required is offered
Written notice of termination
A staff member is entitled to observe of termination (or termination pay rather of notice) if they have been constantly employed for a minimum of three months. A person is thought about "utilized" not only while they are actively working, however also throughout whenever 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 worker is entitled depends on their "duration of work". A staff member's period of employment consists of not just perpetuity while the staff member is actively working however likewise any time that they are not working but the employment relationship still exists, with the following exceptions:
- if a lay-off goes on longer than a momentary lay-off, the staff member's work is deemed (or considered) to have 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 employment, even though the staff member may still be utilized for functions of the "constantly employed for 3 months" qualification
- if 2 different durations of work are separated by more than 13 weeks, only the most current period counts for purposes of notification of termination
It is possible, in some circumstances, for a person to have actually been "constantly used" for 3 months or more and yet have a duration of employment of less than 3 months. In such scenarios, the worker would be entitled to discover because an employee who has been continuously utilized for a minimum of 3 months is entitled to discover, and the minimum notice entitlement of one week applies to a worker with a duration of employment of any length less than one year.
The following chart specifies the quantity of notification required:
Note: Special guidelines identify the amount of notice needed when it comes to mass terminations - where the work of 50 or more workers is terminated at an employer's facility within a four-week period.
Requirements during the statutory notification period
During the statutory notification duration, an employer must:
- not reduce the employee's wage rate or alter any other term or condition of employment;
- continue to make whatever contributions would be required to keep the worker's benefits plans; and
- pay the staff member the incomes they are entitled to, which can not be less than the staff member's routine salaries for a routine work week weekly.
Regular rate
This is a staff member's rate of spend for each non-overtime hour of work in the staff member's work week.
Regular salaries
These are wages other than overtime pay, holiday pay, public holiday pay, premium pay, domestic or sexual violence leave pay, termination of project pay, termination pay and discontinuance wage and specific legal entitlements.
Regular work week
For a staff member who generally works the exact same number of hours weekly, a routine work week is a week of that lots of hours, not including overtime hours.
Some employees do not have a regular work week. That is, they do not work the very same number of hours weekly or they are paid on a basis other than time. For these employees, the "routine wages" for a "routine work week" is the typical amount of the routine salaries earned by the employee in the weeks in which the staff member worked throughout the period of 12 weeks immediately preceding the date the notice was offered.
A company is not allowed to schedule an employee's holiday time during the statutory notification duration unless the employee-after getting written notice of termination of employment-agrees to take their vacation time during the notification duration.
If a company offers longer notification than is needed, the statutory part of the notification duration is the tail end of the period that ends on the date of termination.
How to supply written notification
In many cases, composed notice of termination of employment must be resolved to the worker. It can be supplied face to face or by mail, fax or email, as long as delivery can be verified.
There are special rules for offering notice of termination if a worker has a contract of employment or a cumulative arrangement that offers seniority rights that enable a worker who is to be laid off or whose employment is to be ended to displace (" bump") other staff members.
Because case, the employer must post a notice in the workplace (where it will be seen by the staff members) setting out the names, seniority and job category of those workers the employer plans to terminate and the date of the proposed termination. The posting of the notice is thought about to be notice of termination, as of the date of the posting, to an employee who is "bumped" by a worker named in the notice. However, this notice of termination should still satisfy the length requirements set out in the ESA.
There are likewise special guidelines relating to how notice is provided when there is a mass termination.
Termination pay
A staff member who does not get the written 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 incomes for a routine work week that an employee would otherwise have been entitled to throughout the composed notice duration. A staff member earns vacation pay on their termination pay. Employers should 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 period.
Example: Regular work week
Sarah has actually worked for 3 and a half years. Now her task has been removed and her employment has been terminated. Sarah was not offered any composed notice of termination.
Sarah worked 40 hours a week weekly and was paid $20.00 an hour. She likewise received four per cent holiday pay. Because she worked for more than three years but less than 4 years, she is entitled to 3 weeks' pay in lieu of notification.
Sarah's routine salaries 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 determined:
4% of $2,400.00 = $96.00
Finally, her getaway pay is contributed 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 continued coverage for any advantage or pension strategies that applied to her for three weeks.
Example: No routine work week
Gerry has actually worked at an assisted living home for four years. He works weekly, however his hours vary from week to week. His rate of pay is $25.00 an hour, and he is paid 6 per cent holiday pay.
Gerry's company removed his position and did not provide 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 made $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 each week are calculated:
$ 1,800.00 for 12 weeks/ 10 weeks (Gerry was off sick for two weeks therefore these weeks are not included in the calculation of typical incomes) = $180.00 a week
His termination pay is determined:
$ 180.00 × 4 weeks = $720.00
Then his vacation pay on his termination pay is determined:
6% of $720.00 = $43.20
Finally, his vacation pay is contributed to his termination pay:
$ 720.00 + $43.20 = $763.20
Result: Gerry is entitled to $763.20. The employer must likewise ensure ongoing coverage for any advantage or pension plans that applied to him for four weeks.
When to pay termination pay
Termination pay need to be paid to an employee either seven days after the worker's employment is ended or on the staff member's next regular pay date, whichever is later on.
Mass termination
Special rules for notification of termination may use in cases of mass termination (when an employer is terminating 50 or more staff members at its establishment within a four-week duration).
Meaning of "facility"
An "facility" is a location at which the company brings on organization. Separate locations can be considered one establishment if either:
- they are located within the exact same municipality, or
- a staff member at one location has legal seniority rights that reach the other area, permitting the employee to displace another worker (also called "bumping rights").
Effective October 26, 2023, in cases of mass termination, the term "establishment" consists of an employee's home, but only if the employee works from home and does not work at any other location where the employer continues organization.
This will require that staff members who work specifically remotely be considered for inclusion in the count when identifying whether 50 or more staff members have actually been terminated.
Note that where an employee carries out work both from their home and from another location where the employer brings on service (for instance, a workplace), their home is not consisted of in the meaning of "establishment". Instead, the worker is thought about to have a connection to the workplace location and, for that reason, for the purpose of mass termination, the employee is included with regard to that office location.
Example: where multiple locations are considered one "facility"
ABC Company has an office and a warehouse located in London, ON. Sabrina lives in London and works for ABC Company exclusively from another location: she carries out work for the company from home and does not work at the workplace.
For the function of mass termination, the company's London office, London warehouse and Sabrina's London home are considered one "establishment."
Employer obligations in a mass termination
When a mass termination occurs, the employer must complete and deliver the Form 1 (Notice of termination of employment) to the Director of Employment Standards (Director) by:
- e-mail to [email protected].
- fax to (416) 326-7061.
- personal shipment 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 workplace of the Director of Employment Standards is located on the 9th flooring, 400 University Avenue, Toronto ON M7A 1T7.
Any notification to the impacted workers is not considered to have actually been given until the Form 1 is received by the Director; in other words, notice of mass termination is not efficient up until the Director gets the Form 1.
In addition to offering workers with specific notifications of termination, the employer must, on the very first day of the notice duration:
- publish a copy of the Form 1 offered to the Director in the office where it will pertain to the attention of the impacted staff members.
- offer a copy of the Form 1 to each impacted employee.
The quantity of notification workers should get in a mass termination is not based upon the staff members' length of work, but on the variety of workers who have been ended. A company should give:
- 8 weeks observe if the employment of 50 to 199 staff members is to be terminated
- 12 weeks observe if the employment of 200 to 499 employees is to be terminated
- 16 weeks see if the work of 500 or more workers is to be ended
Exception to the mass termination guidelines
The mass termination guidelines do not apply if these two things use:
- the number of workers whose employment is being terminated represents not more than 10 per cent of the employees who have actually been employed for a minimum of three months at the facility
- none of the terminations are brought on by the irreversible discontinuance of all or part of the company's company at the establishment
Mass termination: resignation by a staff member
An employee who has actually gotten termination notification under the mass termination rules who wishes to resign before the termination date supplied in the company's notice need to offer the employer a minimum of one week's written notice of resignation if the employee has been used for less than 2 years. If the employment period has actually been two years or more, the employee needs to give a minimum of 2 weeks' written notice of resignation. However, the staff member does not need to notify of resignation if the employer constructively dismisses the employee or breaches a term of the agreement.
Temporary work after termination date in notice
A company can offer work to an employee who has been notified of termination on a temporary 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 additional notification of termination to the worker when the short-term work ends.
If a staff member 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 composed notice of termination as if the previous notice had actually never ever been given. The staff member's duration of work will then also consist of the duration of short-lived 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 commonly found in collective arrangements.
A staff member who has recall rights and who is entitled to termination pay since of a layoff of 35 weeks or more may choose to:
- keep their recall rights and not be paid termination pay (or discontinuance wage, if they were entitled to severance pay) at that time;
or
- provide up their recall rights and receive termination pay (and severance pay, if they were entitled to severance pay).
If a worker is entitled to both termination pay and employment severance pay, they must make the same option for both.
If an employee who is not represented by a trade union chooses to keep their recall rights or fails to decide, the employer needs to send the quantity of the termination pay (and discontinuance wage, if any) to the Director of Employment Standards, who holds the money in trust.
If an employee who is represented by a trade union chooses to keep their recall rights or fails to decide, the company and the trade union should attempt 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 an arrangement, and the trade union recommends the employer and the Director of Employment Standards in composing that efforts have actually failed, the employer must send out the termination pay (and discontinuance wage, if any) to the Director of Employment Standards, who holds the cash in trust.
If a worker selects to quit their recall rights or if the recall rights end, the money that is kept in trust must be sent to the staff member.
If the worker accepts a recall back to work, the cash that is kept in trust will be returned to the employer.
Exemptions to notice of termination or termination pay
Much of these exemptions are intricate. Please call the Employment Standards Information Centre, 1-800-531-5551, if you require more details. Please also describe the unique rule tool.
The notification of termination and termination pay requirements of the ESA do not apply to a worker who:
- is guilty of wilful misconduct, disobedience or wilful overlook of task that is not unimportant and has not been excused by the company. Note: "wilful" includes when a worker meant the resulting consequence or acted recklessly if they understood or must have understood the results their conduct would have. Poor work conduct that is accidental or unintended is typically ruled out wilful;
- was employed for a particular length of time or till the conclusion of a specific task. However, such a staff member will be entitled to observe of termination or termination pay if:- the employment ends before the term ends or the task is finished; or
- the term expires or the job is not finished more than 12 months after the employment began; or
- the work continues for 3 months or more after the term ends or the job is finished;
See also: Employment Standards Self-Service Tool
Wrongful dismissal
Rights higher than ESA notice of termination, termination pay, severance pay
The guidelines under the ESA about termination and severance of work are minimum requirements. Some staff members may have rights under the common law that are higher than the rights to discover of termination (or termination pay) and severance pay under the ESA. An employee might want to sue their previous company in court for "wrongful dismissal". Employees must know that they can not sue a company for wrongful termination and submit a claim for termination pay or severance pay with the ministry for the exact same termination or severance of work. A worker should select one or the other. Employees might want to obtain legal recommendations concerning their rights.
