Written Notice of Termination | Termination
Pay | Mass Termination
Termination of Employment Defined
A number of expressions are commonly used to describe
situations when employment is terminated. These include
"let go," "discharged," "dismissed," "fired" and
"permanently laid off."
Under the
Employment Standards Act, 2000 (ESA)
a person's employment is terminated if the employer:
- dismisses or stops employing an employee,
including where an employee is no longer employed
due to the bankruptcy or insolvency of the employer;
- "constructively"
dismisses an employee and the employee resigns,
in response, within a reasonable time;
- lays an employee off for a period that is longer
than a "temporary layoff".
In most cases, when an employer ends the employment
of an employee who has been continuously employed for
three months, the employer must provide the employee
with either written notice of termination,
termination pay or a combination (as long as
the notice and the number of weeks of termination pay
together equal the length of notice the employee is
entitled to receive).
The
ESA does not require an employer to give an
employee a reason why his or her employment is being
terminated. There are, however, some situations where an
employer cannot terminate an employee's
employment even if the employer is prepared to give
proper written notice or termination pay. For example,
an employer cannot end someone's employment, or penalize
them in any other way, if any part of the reason for the
termination of employment is based on the employee
asking questions 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
absence specified in the ESA. Please
see the chapter on
Reprisals.
Qualifying for Termination Notice or Pay in Lieu
Certain employees are not entitled to notice of
termination or termination pay under the
ESA.
Examples include: employees who are guilty of wilful
misconduct, disobedience, or wilful neglect of duty that
is not trivial and has not been condoned by the
employer. Other examples include construction employees,
employees on temporary layoff, employees who refuse an
offer of reasonable alternative employment and employees
who have been employed less than three months.
There are a number of other exemptions to the
termination of employment provisions of the
ESA.
See “Exemptions to Notice of
Termination or Termination Pay.” Please also refer
to the Special Rule Tool, available at
Ontario.ca/ESAtools.
The termination-of-employment rules are entirely
separate from any entitlements an employee may have to
be paid
severance pay under the
ESA.
Constructive Dismissal
A constructive dismissal may occur
when an employer makes a significant change to a
fundamental term or condition of an employee's
employment without the employee's actual or implied
consent.
For example, an employee may be constructively
dismissed if the employer makes changes to the
employee's terms and conditions of employment that
result in a significant reduction in salary or a
significant negative change in such things as the
employee's work location, hours of work, authority, or
position. Constructive dismissal may also include
situations where an employer harasses or abuses an
employee, or an employer gives an employee an ultimatum
to "quit or be fired" and the employee resigns in
response.
The employee would have to resign in response to the
change within a reasonable period of time in order for
the employer's actions to be considered a termination of
employment for purposes of the
ESA.
Constructive dismissal is a complex and difficult
subject. For more information on constructive dismissal
please contact the Employment Standards Information
Centre, 1-800-531-5551.
Temporary Layoff
An employee is on temporary layoff when an employer
cuts back or stops the employee’s work without ending
his or her employment (e.g., laying someone off at times
when there is not enough work to do). The mere fact that
the employer does not specify a recall date when laying
the employee off does not necessarily mean that the
lay-off is not temporary. Note, however, that a lay-off,
even if intended to be temporary, may result in
constructive dismissal if it is not allowed by the
employment contract.
For the purposes of the termination provisions of the
ESA,
a "week of layoff" is a week in which the employee
earned less than half of what he or she would ordinarily
earn (or earns on average) in a week.
A week of layoff does not include any week in which
the employee did not work for one or more days because
the employee was not able or available to work, was
subject to disciplinary suspension, or was not provided
with work because of a strike or lockout at his or her
place of employment or elsewhere.
Employers are not required under the
ESA
to provide employees with a written notice of a
temporary layoff, nor do they have to provide a reason
for the lay-off. (They may, however, be required to do
these things under a collective agreement or an
employment contract.)
Under the
ESA,
a “temporary layoff” can last:
- not more than 13 weeks of layoff in any period
of 20 consecutive weeks;
or
- more than 13 weeks in any period of 20
consecutive weeks, but less than 35 weeks of layoff
in any period of 52 consecutive weeks, where:
- the employee continues to receive
substantial payments from the employer;
or
- the employer continues to make payments for
the benefit of the employee under a legitimate
group or employee insurance plan (such as a
medical or drug insurance plan) or a legitimate
retirement or pension plan;
or
- the employee receives supplementary
unemployment benefits;
or
- the employee would be entitled
to receive supplementary unemployment benefits
but isn't receiving them because he or she is
employed elsewhere;
or
- the employer recalls the employee to work
within the time frame approved by the Director
of Employment Standards;
or
- the employer recalls the employee within the
time frame set out in an agreement with an
employee who is not represented by a trade
union;
or
- a layoff longer than a layoff described in 'B'
where the employer recalls an employee who is
represented by a trade union within the time set out
in an agreement between the union and the employer.
If an employee is laid off for a period longer than a
temporary layoff as set out above, the employer is
considered to have terminated the employee's employment.
Generally, the employee will then be entitled to
termination pay.
Written Notice 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 the employer has given the
employee proper written notice of
termination and the notice period has expired;
or
- an employer can terminate the employment of an
employee without written notice or
with less notice than is required
if the employer pays termination pay
to the employee.
Written Notice of Termination
An employee is entitled to notice of
termination (or termination pay instead of notice) if he
or she has been continuously employed for at least three
months. A person is considered “employed” not only while
he or she is actively working, but also during any time
in which he or she is not working but the employment
relationship still exists (for example, time in which
the employee is off sick or on leave or on lay-off).
The amount of notice to which an employee is entitled
depends on his or her “period of employment”. An
employee’s period of employment includes not only all
time while the employee is actively working but also any
time that he or she is not working but the employment
relationship still exists, with the following
exceptions:
- if a lay-off goes on longer than
a temporary lay-off, the employee’s employment is
deemed to have been terminated on the first day of
the lay-off—any time after that does not count as
part of the employee’s period of employment, even
though the employee might still be employed for
purposes of the “continuously employed for three
months” qualification;
- if two separate periods of employment are
separated by more than 13 weeks, only the most
recent period counts for purposes of notice of
termination. It is possible, in some circumstances,
for a person to have been “continuously employed”
for three months or more and yet have a period of
employment of less than three months. In such
circumstances, the employee would be entitled to
notice because an employee who has been continuously
employed for at least three months is entitled to
notice, and the minimum notice entitlement of one
week applies to an employee with a period of
employment of any length less than one year.
The following chart specifies the amount of notice
required:
Amount of notice required if an employee
has been continuously employed for at least three
months
| Period of Employment |
Notice Required |
| Less than 1 year |
1 week |
| 1 year but less than 3 years |
2 weeks |
| 3 years but less than 4 years |
3 weeks |
| 4 years but less than 5 years |
4 weeks |
| 5 years but less than 6 years |
5 weeks |
| 6 years but less than 7 years |
6 weeks |
| 7 years but less than 8 years |
7 weeks |
| 8 years or more |
8 weeks |
Note: Special rules determine the
amount of notice required in the case of mass
terminations - where the employment of 50 or more
employees is terminated at an employer’s establishment
within a four-week period.
Requirements During the Statutory
Notice Period
During the statutory notice period, 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 maintain the employee's benefits plans;
and
- pay the employee the wages he or she is entitled
to, which cannot be less than the employee's
regular wages for a regular work
week each week.
Regular Rate
This is an employee's rate of pay for each
non-overtime hour of work in the employee's work week.
Regular Wages
These are wages other than overtime pay, vacation
pay, public holiday pay, premium pay, termination pay
and severance pay and certain contractual entitlements.
Regular Work Week
For an employee who usually works the same number of
hours every week, a regular work week is a week of that
many hours, not including overtime hours.
Some employees do not have a regular work week. That
is, they do not work the same number of hours every week
or they are paid on a basis other than time. For these
employees, the “regular wages” for a “regular work week”
is the average amount of the regular wages earned by the
employee in the weeks in which the employee worked
during the period of 12 weeks immediately preceding the
date the notice was given.
An employer is not allowed to schedule an employee’s
vacation time during the statutory notice period unless
the employee—after receiving written
notice of termination of employment—agrees to take his
or her vacation time during the notice period.
If an employer provides longer notice than is
required, the statutory part of the notice period is the
last part of the period that ends on the date of
termination.
How to Provide Written Notice
In most cases, written notice of termination of
employment must be addressed to the employee. It can be
provided in person or by mail, fax or e-mail, as long as
delivery can be verified.
There are special rules for providing notice of
termination if an employee has a contract of employment
or a collective agreement that provides seniority rights
that allow an employee who is to be laid off or whose
employment is to be terminated to displace (“bump”)
other employees.
In that case, the employer must post a notice in the
workplace (where it will be seen by the employees)
setting out the names, seniority and job classification
of those employees the employer intends to terminate and
the date of the proposed termination. The posting of the
notice is considered to be notice of termination, as of
the date of the posting, to an employee who is “bumped”
by an employee named in the notice. However, this notice
of termination must still meet the length requirements
set out in the
ESA.
There are also special rules regarding how notice is
provided when there is a mass
termination.
Termination Pay
An employee who does not receive the written notice
required under the
ESA
must be given termination pay in lieu of notice.
Termination pay is a lump sum payment equal to the
regular wages for a regular
work week that an employee would otherwise have
been entitled to during the written notice period. An
employee earns vacation pay on his or her termination
pay. Employers must also continue to make whatever
contributions would be required to maintain the benefits
the employee would have been entitled to had he or she
continued to be employed through the notice period.
Example: Regular work week
Sarah has worked for three and a half years. Now her
job has been eliminated and her employment has been
terminated. Sarah was not given any written notice of
termination.
Sarah worked 40 hours a week every week and was paid
$14.00 an hour. She also received four per cent vacation
pay. Because she worked for more than three years but
less than four years, she is entitled to three weeks’
pay in lieu of notice.
- Sarah’s regular wages for a
regular work week are calculated:
$14.00 an hour X 40 hours a week = $560.00 a week
- Her termination pay is
calculated:
$560.00 X 3 weeks = $1,680.00
- Then her vacation pay on her
termination pay is calculated:
4% of $1,680.00 = $67.20
- Finally, her vacation pay is added to her
termination pay:
$1,680.00 + $67.20 = $1,747.20
Result: Sarah is entitled to $1,747,20. The employer
must also ensure continued coverage for any benefit or
pension plans that applied to her for three weeks.
Example: No regular work week
Gerry has worked at a nursing home for four years. He
works every week, but his hours vary from week to week.
His rate of pay is $14.00 an hour, and he is paid six
per cent vacation pay.
Gerry's employer eliminated his position and did not
give Gerry any written notice of termination. Gerry was
ill and off work for two of the 12 weeks immediately
preceding the day his employment was terminated. Gerry
earned $1,800.00 in the 12 weeks before the day on which
his employment ended.
Gerry is entitled to four weeks of termination pay.
- Gerry's average earnings per 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 average
earnings) = $180.00 a week
- His termination pay is calculated:
$180.00 × 4
weeks = $720.00
- Then his vacation pay on his termination pay is
calculated:
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 employer
must also ensure continued coverage for any benefit or
pension plans that applied to him for four weeks.
When to Pay Termination Pay
Termination pay must be paid to an employee
either seven days after the employee's
employment is terminated or on the employee's next
regular pay date, whichever is later.
Mass Termination
Special rules for notice of termination may
apply when the employment of 50 or more employees is
terminated at an employer's establishment within a
four-week period. This is often referred to as mass
termination. (Note: an "establishment" can, in some
circumstances, include more than one location.)
When a mass termination occurs, the employer must
submit the Form 1 (Notice of Termination of Employment),
available at
Ontario.ca/ESAforms, to the Director of Employment
Standards. Any notice to the affected employees would
not be considered to have been given until the Form 1
was received by the Director, i.e.
notice of mass termination is not considered to be
effective until the Director of Employment Standards
receives the Form 1.
In addition to providing employees with individual
notices of termination, the employer must post a copy of
the Form 1 provided to the Director of Employment
Standards in the workplace where it will come to the
attention of the employees it affects on the first day
of the notice period.
The amount of notice employees must receive in a mass
termination is not based on the employees' length of
employment, but on the number of employees who have been
terminated. An employer must give:
- Eight weeks' notice if the employment of 50 to
199 employees is to be terminated
- 12 weeks' notice if the employment of 200 to 499
employees is to be terminated
- 16 weeks' notice if the employment of 500 or
more employees is to be terminated
Exception to the Mass-Termination Rules
The mass-termination rules do not apply if:
- The number of employees whose employment is
being terminated represents not more than 10 per
cent of the employees who have been employed for at
least three months at the establishment,
and
- None of the terminations are caused by the
permanent discontinuance of all or part of the
employer's business at the establishment.
Mass Termination: Resignation by an Employee
An employee who has received termination notice under
the mass termination rules who wants to resign before
the termination date provided in the employer’s notice
must give the employer at least one week’s written
notice of resignation if the employee has been employed
for less than two years. If the employment period has
been two years or more, the employee must give at least
two weeks’ written notice of resignation. However, the
employee does not have to give notice of resignation if
the employer constructively dismisses the employee or
breaches a term of the contract.
Temporary Work After Termination Date in Notice
An employer can provide work to an employee who has
been given notice of termination on a temporary basis in
the 13-week period after the
termination date set out in the notice without affecting
the original date of the termination and without being
required to provide any further notice of termination to
the employee when the temporary work ends.
If an employee works beyond the
13-week period after the termination date and then has
his or her employment terminated, the employee will be
entitled to a new written notice of termination as if
the previous notice had never been given. The employee’s
period of employment will then also include the period
of temporary work
Recall Rights
A "recall right" is the right of an employee on a
layoff to be called back to work by his or her employer
under a term or condition of employment. This right is
commonly found in collective agreements.
An employee who has recall rights and who is entitled
to termination pay because of a layoff of 35 weeks or
more may choose to:
- keep his or her recall rights and not be paid
termination pay (or severance pay, if he or she was
entitled to severance pay) at that time; or
- give up his or her recall rights and receive
termination pay (and severance pay, if he or she was
entitled to severance pay).
If an employee is entitled to both termination pay
and severance pay, he or she must make the same choice
for both.
If an employee who is not
represented by a trade union elects to keep his or her
recall rights or fails to make a choice, the employer
must send the amount of the termination pay (and
severance pay, if any) to the Director of Employment
Standards, who holds the money in trust.
If an employee who is represented by
a trade union elects to keep his or her recall rights or
fails to make a choice, the employer and the trade union
must try to come to an arrangement to hold the
termination pay (and severance pay, if any) in trust for
the employee. If they cannot come to an arrangement, and
the trade union advises the employer and the Director of
Employment Standards in writing that efforts have
failed, the employer must send the termination pay (and
severance pay, if any) to the Director of Employment
Standards, who holds the money in trust.
If an employee chooses to give up his or her recall
rights or if the recall rights expire, the money that is
held in trust must be sent to the employee.
If the employee accepts a recall back to work, the
money that is held in trust will be returned to the
employer.
Exemptions to Notice of Termination
or Termination Pay
Many of these exemptions are complex. Please contact
the Employment Standards Information Centre,
1-800-531-5551, if you need more information. Please
also refer to the Special Rule Tool, available at
Ontario.ca/ESAtools.
The notice of termination and termination pay
requirements of the
ESA
do not apply to an employee who:
- is guilty of wilful misconduct,
disobedience or wilful neglect of duty that is not
trivial and has not been condoned by the employer.
Note: “wilful” includes when an employee intended
the resulting consequence or acted recklessly if he
or she knew or should have known the effects his or
her conduct would have. Poor work conduct that is
accidental or unintentional is generally not
considered wilful;
- was hired for a specific length of time or until
the completion of a specific task. However, such an
employee will be entitled to notice of termination
or termination pay if:
- the employment ends before the term expires
or the task is completed; or
- the term expires or the task is not
completed more than 12 months after the
employment started; or
- the employment continues for three months or
more after the term expires or the task is
completed.
- is employed in construction. This
includes employees who are doing off-site work in
whole or in part who are commonly associated in work
or collective bargaining with employees who work at
the construction site;
- builds, alters or repairs certain
types of ships
- has his or her employment
terminated when he or she reaches the age of
retirement in accordance with the employer's
established practice, but only if the termination
would not contravene the
Human Rights Code.
- has refused an offer of
reasonable alternative employment with the employer;
- has refused to exercise his or
her right to another position that is available
under a seniority system.
- is on a temporary lay-off
- does not return to work within a
reasonable time after being recalled to work from a
temporary layoff;
- is terminated during or as a
result of a strike or lockout at the workplace;
- has lost his or her employment because the
contract of employment is impossible to perform or
has been frustrated by an unexpected or unforeseen
event or circumstance, such as a fire or flood, that
makes it impossible for the employer to keep the
employee working. (This does not include bankruptcy
or insolvency or when the contract is frustrated or
impossible to perform as the result of an injury or
illness suffered by an employee.)
See also:
Termination Tool
Wrongful Dismissal
Rights Greater than
ESA
Notice of Termination, Termination Pay, Severance Pay
The rules under the
ESA
about termination and severance of employment are
minimum requirements. Some employees may have rights
under the common law or other legislation that give them
greater rights than notice of termination (or
termination pay) and severance pay under the
ESA;
because such rights generally cannot be enforced under
the ESA,
some employees may want to sue their former employer in
court for “wrongful dismissal” or pursue other options.
Employees should be aware that they cannot sue an
employer for wrongful dismissal and file a claim for
termination pay or severance pay with the ministry for
the same termination or severance of employment, an
employee must choose one or the other. Employees may
wish to obtain legal advice concerning their rights.
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