Termination Pay Ontario

If you have been terminated in Ontario, you have rights and entitlements upon termination. Employers must provide a notice of termination or payment in lieu of notice, commonly known as termination pay. The time between receipt of notice and your effective termination date is commonly referred to as your notice period. 

Your notice period will vary depending on your specific circumstances, the type of employment, and any written agreement between yourself and the company. As a result, it is important to have a lawyer review your termination letter and employment agreement – before you sign anything. For more information, please review Notice of Termination – Know Your Rights.

How to Calculate Termination Pay in Ontario

Termination pay is calculated differently for federally and provincially regulated employees. This post focuses on Provincially regulated employees. For more information on how to calculate termination pay for Federally regulated employees, please review Canada Labour Code Employees.

Ontario’s Employment Standards Act (“ESA”) – sets out an employee’s minimum statutory notice period. However, it is important to note that this is only the first step in determining the amount of notice that you may be owed, and there is a good chance that you may be entitled to greater compensation than what is outlined here. For more information on the ESA, please review Employment Standards Act Ontario – Employment Standards in Ontario.

Your statutory notice period is based exclusively on your years of service. The math works out to approximately 1 week of notice per year of service.

Length of Service ESA Minimums
Less than three months None
3 months to 1 year 1 week
1 to 2 years 2 weeks
3 years 3 weeks
4 years 4 weeks
5 years 5 weeks
6 years 6 weeks
7 years 7 weeks
8 years 8 weeks

During the notice period, your employer cannot alter the terms and conditions of your employment, or compensation. As a result, during the notice period, you are entitled to receive any money, benefits, or bonus that you would have received had notice not been given.

Reasonable Notice at Common Law

If your agreement doesn’t contain a valid and enforceable termination provision limiting your entitlements to your statutory notice period, you are entitled to termination pay under common law.

There is no set formula for determining the length of your reasonable notice period. A court will examine your individual circumstances and consider factors such as your age, length of service, position and seniority, and the availability of comparable work.

The general rule of thumb is that an employee is entitled to receive between three months of notice and up to 24 months’ common law notice or severance depending on several factors as mentioned above. In exceptional circumstances, Courts may award notice periods
above 24 months.

The considerations above also apply to employees who have been constructively dismissed. In Ontario, constructive dismissal is a forced resignation because the employee is pushed out without an official termination letter. In effect, the employee is found to have been deemed in law terminated based not on a termination letter but on the actions of the employer. 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. Constructive dismissal can also occur when your employer creates or allows for the creation of, a hostile or toxic work environment. For more information, please review Constructive Dismissal Ontario.

For more information on common law notice, please review Common Law Notice on Employment Termination and Common Law Notice and Employment Standards Act.

How Much is Termination Pay in Ontario?

How much termination pay is reasonable will vary case-by-case and depends on factors such as an employee’s age, length of service, nature of employment, and the availability of similar employment in the marketplace. It is highly recommended that employees contact a wrongful dismissal lawyer to determine how much notice they are truthfully entitled to. An employee may be owed as much as twenty-four months of notice.

Your employer may opt to provide working notice rather than payment in lieu of notice. An employee who has been placed on a working notice should question whether the amount of notice they’ve been given is adequate. There is a good chance it is not and that such an employee would be owed more even after their working notice period has ended. This is because an employee might be entitled to common law notice, which requires that an employee be given “reasonable” notice. For more information, please review Working Notice Ontario – The Law in Ontario

Monkhouse Law has a Free Calculator that can give you an estimated range of outcomes depending on your specific circumstances. 

What is The Difference Between Termination Pay and Severance Pay?

While most employees are entitled to termination pay, employees are only entitled to severance pay if they meet all of the following criteria: 

  • The employer ended the employment of at least 50 staff members because all or part of the business is permanently closed; or
  • The employee was employed for at least 5 years; and
  • The employer had a global payroll of at least $2.5 million

To get an idea of how much severance you are owed, go to Severance Pay Calculator Ontario. For more information, please review Am I Entitled to Severance Pay? 

Summary

If you are an employee who has been fired from your job, you may be entitled to much more than your employer would lead you to believe. It is important that you speak to an employment lawyer to determine just how much you are owed, the amount could be significant.

If you have been terminated, it is important to consult with an employment lawyer immediately. An experienced employment lawyer can help you maximize your entitlements and protect your rights. 

Monkhouse Law is an employment law firm located in Toronto with a focus on employee issues. Give us a call at 416-907-9249 or fill out this quick form. We offer a free 30-minute phone consultation.

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