Termination of employment in Ontario
As an employer in Ontario, it’s unfortunate when you are forced to terminate an employee. However, when doing so, it’s essential that you remain compliant with Ontario’s Employment Standards Act (ESA) to stay compliant and protected from Wrongful Dismissal claims, as well as potential fines. In order to do so, it’s essential you provide the terminated employee with the entitlements they are owed in accordance with the ESA.
Terminations For Cause & Without Cause
In Ontario, there are two forms of terminations:
- Terminations for cause
- Terminations without cause
Terminations without cause are the most common form of terminations in Ontario. According to the ESA, employers are not required to provide a reason for letting an employee go. However, in these cases, employees are entitled to either a termination notice or pay in lieu of notice.
While terminations for cause occur when an employer has just-cause for firing an employee.
Reasons for a termination for cause include:
- Wilful misconduct
- Wilful neglect of duty
- Causing harm to the company
However, terminations for cause are much more rare than terminations without cause. This is because the burden of proof for these terminations is high.
What is Termination Notice?
An employee is entitled to written, reasonable notice of termination if they have been working for a company for more than three months. The amount of notice the employee is entitled to is based on their length of employment.
The chart below should provide guidance on how much notice an employee would be owed based on their length of employment.
|Length of employment
|More than three months, but less than a year
|One year or more, but less than three years
|Three years or more, but less than four years
|Four years or more, but less than five years
|Five years or more, but less than six years
|Six years or more, but less than seven years
|Seven years or more, but less than eight years
|Eight years or more
What is Termination Pay?
An employer can opt to provide termination pay In lieu of notice. This option is ideal for those who do not want the employee working through the notice period and would prefer to sever ties. When providing Termination Pay, there are certain requirements that employers must adhere to.
- Termination Pay must be provided as a lump sum equal to the employee’s regular wages for a regular work week.
- The employee must earn vacation pay on top of their Termination Pay.
- The employer must maintain benefits and continue contributions they would have made through the notice period.
- Termination Pay must be provided either seven days after employment is terminated or on the employee’s next regular pay date, whichever comes later.
On the other hand, Severance Pay is a benefit offered to employees who have been terminated without cause based on their years of service. Severance pay offers employees whose employment has been severed support to make up for the wages and/or benefits they will likely miss out on.
In Ontario, an employee may qualify for Severance Pay if they:
- Are laid off.
- Are terminated without cause.
- Resign due to Constructive Dismissal.
- Have worked for you for five or more years.
- The company they work for has a global payroll which exceeds $2.5 million (now based on the global payroll).
- You’re severing the employment of 50 or more workers within six months.
Still need help?
If you need help understanding Terminations in Ontario, Employer Line is here to help. Call today at 1-833-247-3650 and an expert will be happy to walk you through it.