ESA vs. Common Law Notice in Ontario: What Employees Need to Know

If you were terminated without cause in Ontario, your employer may owe you more than the minimum notice required under the Employment Standards Act, 2000 (ESA).

Many employees are surprised to learn that ESA minimum notice is not necessarily their full entitlement. In many cases, employees may also be entitled to significantly more compensation under Ontario common law.

Understanding the difference between ESA minimum notice and common law reasonable notice is important before signing a severance package or release agreement.

For a broader overview of termination notice rights in Ontario, see our guide to notice of termination in Ontario.

ESA Minimum Notice vs. Common Law Notice in Ontario

The ESA sets out the minimum termination notice or termination pay that many Ontario employees must receive. These are minimum standards only. An employee may be entitled to more under common law unless there is a valid employment contract that limits their entitlement.

ESA Minimum Notice	Common Law Reasonable Notice
Based on minimum standards under Ontario employment law	Based on court decisions and the employee’s individual circumstances
Usually calculated mainly by length of service	Considers length of service, age, position, compensation, experience, and job market conditions
Termination pay is generally capped at 8 weeks	Can be much higher, sometimes several months of compensation
Minimum legal entitlement	May represent the employee’s full legal entitlement

The ESA is the floor, not always the ceiling. Section 8 of the ESA states that the Act does not affect an employee’s civil remedies against their employer. This means that, in many cases, employees can pursue common law notice in addition to their ESA minimums.

What Is Common Law Notice?

Common law notice, also called reasonable notice, is the amount of notice or pay in lieu of notice that an employee may be entitled to under court decisions.

Unlike ESA minimum notice, there is no exact formula for calculating common law notice. Courts consider several factors, including:

the employee’s length of service;
the employee’s age;
the employee’s position and level of responsibility;
the employee’s compensation;
the availability of similar employment; and
the employee’s experience, training, and qualifications.

This is why two employees with the same length of service may still receive different notice periods.

Why Common Law Notice Is Often Much Higher Than ESA Minimums

The ESA provides only minimum standards. Ontario courts frequently award significantly more compensation under common law.

For example, an employee with 10 years of service may receive only 8 weeks of termination pay under the ESA, while common law notice may potentially amount to many months of compensation depending on the employee’s circumstances.

This difference is one of the main reasons employees should not assume the first severance offer is fair.

Can an Employment Contract Limit Common Law Notice?

An employment contract may limit an employee’s entitlement to ESA minimums only if the termination clause is valid and enforceable.

To limit an employee to ESA minimums, an employer generally needs:

a written employment contract; and
a valid termination clause that complies with the ESA.

If the termination clause is missing, unclear, or legally unenforceable, the employee may be entitled to common law reasonable notice instead.

Just because an employment contract refers to the ESA does not automatically mean the clause is valid. Employees should have their contract and termination package reviewed before accepting an offer.

Why Employees Should Be Careful Before Signing a Release

Employers often ask terminated employees to sign a release agreement in exchange for a severance package.

A release usually prevents the employee from making future legal claims against the employer. Once signed, it may be very difficult to challenge the package later.

Employees should not assume that the first offer is the full amount they are owed. A termination package may provide only ESA minimums, even when the employee may have a much larger common law entitlement.

Before signing anything, speak with an employment lawyer.

How Much Notice Could an Employee Be Owed?

There is no automatic calculation for common law notice. However, common law notice is often significantly higher than ESA minimum notice.

Research by Arbitrator and Mediator Barry B. Fisher has shown that average reasonable notice periods can increase substantially based on length of service. While every case is different, the following chart provides a general comparison between average common law notice periods and ESA minimum entitlements.

Years of Service	Cases in Database	Service Average	Months Per Year of Service	Notice Average	ESA Entitlements
0.6 to 2.5 years	147	1.5	2.6	3.94 months	1–2 weeks
2.6 to 5 years	130	4	1.4	5.43 months	2–5 weeks
6 to 10 years	182	8	1.1	8.56 months	6–8 weeks
11 to 15 years	132	13	0.9	11.82 months	8 weeks
16 to 20 years	116	18	0.8	14.48 months	8 weeks
21 to 25 years	80	23	0.7	15.52 months	8 weeks
26 to 30 years	42	28	0.6	16.72 months	8 weeks

This chart is not a guarantee of what any one employee will receive. It is a general illustration of how common law notice can be much greater than ESA minimum notice.

Example: ESA Notice vs. Common Law Notice

An employee earning $50,000 per year with 3 years of service may receive only 3 weeks of ESA termination pay if the employer offers the minimum amount. However, under common law, the employee may be entitled to several months of compensation depending on the circumstances.

An employee with 10 years of service may receive 8 weeks of ESA termination pay, but their common law entitlement could potentially be much higher.

This difference can be substantial, which is why terminated employees should not rely only on the ESA minimums when reviewing a severance package.

What About Severance Pay?

Termination pay and severance pay are not the same thing.

Termination pay is based on the amount of notice the employer must provide. Severance pay is a separate ESA entitlement that may apply to employees with at least 5 years of service if the employer has a payroll of $2.5 million or more, or if other ESA conditions are met.

Some employees may be entitled to:

termination pay under the ESA;
severance pay under the ESA; and
additional common law notice.

Because these entitlements can overlap and interact, employees should have their termination package reviewed before signing.

What Is Pay in Lieu of Notice?

Pay in lieu of notice means the employer pays the employee instead of requiring them to work through the notice period.

For example, if an employee is entitled to 12 weeks of notice, the employer may provide 12 weeks of pay instead of asking the employee to keep working for 12 weeks.

Pay in lieu of notice may include more than base salary. Depending on the circumstances, it may also include benefits, bonuses, commissions, pension contributions, or other compensation the employee would have received during the notice period.

Can You Be Terminated Without Notice?

In some limited situations, an employer may claim that an employee was terminated for cause and is not entitled to notice or termination pay. However, just cause is a high standard.

Many employees who are told they were fired “for cause” may still have legal rights. If your employer says you are not entitled to notice, termination pay, or severance, you should speak with an employment lawyer before accepting that position.

Speak With a Toronto Employment Lawyer

If you were terminated without cause, offered a severance package, or asked to sign a release, you may be entitled to more than your employer has offered.

Monkhouse Law Employment Lawyers helps non-unionized employees understand their rights after termination. Contact us for a free 30-minute phone consultation before signing your termination documents.