Area of Law: Employment Law
Answer # 603
Notice or termination pay instead of noticeRegion: Ontario Answer # 603
Notice or Termination Pay
Most employees are entitled to receive notice if they are being fired without a good legal reason (called ‘just cause’). Notice refers to the time-period beginning when the employee was told they were being fired to the employee’s last day of employment.
The Employment Standards Act (ESA) guarantees that most employees in Ontario who work for three months or longer for the same company are entitled to notice or pay instead of notice (called termination pay). The ESA also sets out the minimum notice requirements. How much notice is required is also determined by the amounts set by the courts, and whether the employee worked for a provincially or federally regulated company.
If your employer wants you to leave right away and does not want to give you notice, you have the right to receive termination pay instead of notice. An employer may also give the employee a combination of both notice and pay instead of notice.
If you are to receive termination pay instead of notice, at a minimum, your employer is required to pay the amount set out in the ESA within seven days after your employment was terminated or on your next regular pay day, whichever is later. Your employer is also required to pay all wages and vacation pay owed to you within seven days of termination.
Difference between termination pay and severance pay
Termination pay is not the same as severance pay. Termination pay is pay given instead of required notice, while severance pay is given to an employee to recognize their services and compensate them for “ loss of seniority and the value of firm-specific skills”.
Not everyone is entitled to severance pay. In many cases, severance payment requirements are established in employment agreements.
Notice requirements under the Employment Standards Act
Under the ESA, notice requirements are based on the length of time an employee worked for the company.
If you work:
- between three months to less than one year, you usually have the right to at least one weeks’ notice or pay instead of notice.
- one year or more and fewer than three years, you usually have the right to at least two weeks’ notice or pay instead of notice.
- three years or more and fewer than fours years, you usually have the right to at least three weeks’ notice or pay instead of notice.
- four years and more and fewer than five years, you usually have the right to at least four weeks’ notice or pay instead of notice.
- five years and more and fewer than six years, you usually have the right to at least five weeks’ notice or pay instead of notice.
- six years or more and fewer than seven years, you usually have the right to at least six weeks’ notice or pay instead of notice.
- seven years and more and fewer than eight years, you usually have the right to at least seven weeks’ notice or pay instead of notice.
- eight years and more, you usually have the right to at least eights weeks’ notice or pay instead of notice.
Notice requirements set by the courts and by employment agreements
Although the ESA sets out minimum notice requirements, court cases have established that almost all employees are entitled to longer notice periods. To determine if an employee is entitled to longer notice time, the courts will consider many factors, including:
- If there was an employment contract that gave the employee more rights,
- The importance and value of the job,
- The number of years the employee worked with the company, and
- The employee’s age and the likelihood of the employee finding similar work in the future.
Requirements during notice period
During the notice period, the employer must:
- pay employees their regular wages,
- continue to make whatever contributions would be required to maintain the employee’s benefits plans.
Most provinces, such as British Columbia, Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario, Quebec, and Saskatchewan have created provisions creating payouts and special notice requirements for group layoffs and terminations involving a large number of people within a short period of time, usually four weeks.
In Ontario, the minimum notice period is not based on the workers’ length of employment, but on the number of employees terminated. Specifically:
- 8 weeks’ notice for the termination of 50 to 199 employees
- 12 weeks’ notice for the termination of 200 to 499 employees
- 16 weeks’ notice for the termination of 500 or more employees
Temporary Help Agency employees
A temporary help agency is a business that recruits and assigns people to perform work on a temporary basis for clients of the agency. The length of the work assignment can range from a day to years.
Under recent amendments to the ESA if an assignment originally estimated to last three months or longer ends early, the temporary help agency is required to give the employee at least one week’s written notice or pay in lieu of notice.
If the agency gives less than one week’s notice, they must pay the employee the wages they would have been entitled to receive had one week’s notice been given. The agency does not have to give notice or pay in lieu of notice if the employee is offered another assignment that was reasonable and lasted at least one week.
Agencies will not have to provide notice or pay in lieu of notice under the following circumstances:
- There is willful misconduct by the assignment employee,
- An unforeseeable event occurs that makes it impossible to perform the assignment, or
- The assignment is terminated because of a strike or lock-out at the location of the assignment.
Claims for wrongful dismissal can involve substantial amounts of money. If you think you are entitled to additional pay because you were not given enough notice, you should consult a lawyer.
For additional information about notice or pay instead of notice, contact the Employment Standards office at the Ministry of Labour.
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