A number of expressions are commonly utilized to describe circumstances when employment is terminated. These include "release," "discharged," "dismissed," "fired" and "permanently laid off."
Under the Employment Standards Act, 2000 (ESA) an individual's work is terminated if the employer:
- dismisses or stops utilizing a worker, including where a staff member is no longer used due to the bankruptcy or insolvency of the employer;
- "constructively" dismisses a staff member and employment the staff member resigns, in action, within an affordable time;
- lays a worker off for a period that is longer than a "short-term layoff".
In a lot of cases, when an employer ends the employment of an employee who has actually been constantly employed for 3 months, the company should provide the worker with either written notice of termination, termination pay or a combination (as long as the notice and the variety of weeks of termination pay together equivalent the length of notice the employee is entitled to get).
The ESA does not require an employer to give an employee a reason that their work is being terminated. There are, however, some scenarios where a company can not end a worker's employment even if the company is prepared to give proper composed notification or termination pay. For instance, an employer can not end someone's employment, or penalize them in any other method, if any part of the factor for the termination of employment is based on the employee asking concerns about the ESA or working out a right under the ESA, such as declining to work in excess of the day-to-day or weekly hours of work optimums, or taking a leave of lack defined in the ESA. Please see the chapter on reprisals.
Receiving termination notice or pay in lieu
Certain employees are not entitled to see of termination or termination pay under the ESA. Examples include: employees who are guilty of wilful misconduct, disobedience, or wilful disregard of responsibility that is not unimportant and has not been excused by the company. Other examples include construction employees, staff members on short-term layoff, staff members who refuse a deal of affordable alternative employment and staff members who have been utilized less than 3 months.
There are a number of other exemptions to the termination of work provisions of the ESA. See "Exemptions to notice of termination or termination pay." Please likewise refer to the special rule tool.
The termination-of-employment guidelines are totally different from any privileges a worker may need to be paid discontinuance wage under the ESA.
Constructive dismissal
A useful termination may happen when a company makes a significant change to a fundamental term or condition of a worker's employment without the employee's real or implied permission.
For example, a worker might be constructively dismissed if the company makes changes to the staff member's conditions of employment that result in a substantial reduction in wage or a substantial negative change in such things as the staff member's work place, hours of work, authority, or position. Constructive dismissal may likewise include circumstances where a company bugs or abuses a worker, or a company provides a staff member an ultimatum to "stop or be fired" and the staff member resigns in response.
The staff member would need to resign in action to the change within a sensible time period in order for the employer's actions to be considered a termination of work for functions of the ESA.
Constructive dismissal is a complex and hard subject. To learn more on constructive termination, please get in touch with the Employment Standards Information Centre at 1-800-531-5551.
Temporary layoff
An employee is on momentary layoff when an employer cuts down or stops the worker's work without ending their work (for example, laying somebody off sometimes when there is insufficient work to do). The simple reality that the employer does not specify a recall date when laying the worker off does not necessarily indicate that the lay-off is not momentary. Note, however, that a lay-off, even if intended to be short-term, may result in constructive termination if it is not allowed by the work contract.
For the functions of the termination provisions of the ESA, a "week of layoff" is a week in which the employee made less than half of what they would generally make (or earns usually) in a week.
A week of layoff does not include any week in which the staff member did not work for several days because the staff member was not able or available to work, went through disciplinary suspension, or was not provided with work because of a strike or lockout at their place of employment or somewhere else.
Employers are not required under the ESA to supply employees with a composed notification of a temporary layoff, nor do they have to offer a factor for the lay-off. (They may, however, be needed to do these things under a collective arrangement or an employment contract.)
Under the ESA, a "short-term layoff" can last:
1. not more than 13 weeks of layoff in any duration of 20 successive weeks;
or
2. more than 13 weeks in any duration of 20 consecutive weeks, but less than 35 weeks of layoff in any duration of 52 consecutive weeks, where:- the worker continues to get considerable payments from the employer;
or
- the employer continues to pay for the benefit of the employee under a legitimate group or worker insurance coverage strategy (such as a medical or drug insurance strategy) or a genuine retirement or pension plan;
or
- the staff member gets supplementary welfare;
or
- the staff member would be entitled to get additional unemployment benefits however isn't receiving them due to the fact that they are utilized in other places;
or
- the employer remembers the staff member to work within the time frame authorized by the Director of Employment Standards;
or
- the company remembers the staff member within the time frame set out in a contract with an employee who is not represented by a trade union;
or
3. a layoff longer than a layoff described in 'B' where the company remembers an employee who is represented by a trade union within the time set out in an arrangement between the union and the employer.
If a worker is laid off for a duration longer than a momentary layoff as set out above, the employer is considered to have ended the worker's work. Generally, the employee will then be entitled to termination pay.
Written notice of termination and termination pay
Under the ESA, a company can terminate the employment of a staff member who has actually been employed constantly for 3 months or more if either:
- the employer has offered the worker proper composed notice of termination and the notification period has actually expired
- the company pays termination pay to the staff member where no composed notification or less notice than is required is offered
Written notification of termination
A worker is entitled to notice of termination (or termination pay rather of notification) if they have actually been constantly employed for at least three months. An individual is considered "used" not just while they are actively working, however likewise throughout any time in which they are not working however the employment relationship still exists (for example, time in which the staff member is off ill or on leave or on lay-off).
The quantity of notification to which an employee is entitled depends upon their "duration of work". An employee's period of employment includes not only perpetuity while the worker is actively working however also whenever that they are not working but the employment relationship still exists, with the following exceptions:
- if a lay-off goes on longer than a short-term lay-off, the staff member's employment is considered (or considered) to have actually been ended on the very first day of the lay-off-any time after that does not count as part of the worker's duration of work, despite the fact that the employee may still be employed for purposes of the "constantly employed for three months" qualification
- if two different durations of work are separated by more than 13 weeks, just the most recent duration counts for functions of notification of termination
It is possible, in some situations, for a person to have actually been "continually used" for 3 months or more and yet have a period of work of less than three months. In such circumstances, the employee would be entitled to observe since a worker who has actually been constantly utilized for at least 3 months is entitled to observe, and the minimum notice privilege of one week uses to a staff member with a period of work of any length less than one year.
The following chart specifies the amount of notification needed:
Note: Special rules determine the quantity of notification needed in the case of mass terminations - where the employment of 50 or more staff members is terminated at a company's establishment within a four-week period.
Requirements throughout the statutory notice duration
During the statutory notification period, an employer must:
- not decrease the worker's wage rate or modify any other term or condition of employment;
- continue to make whatever contributions would be needed to preserve the staff member's benefits strategies; and
- pay the staff member the earnings they are entitled to, which can not be less than the worker's routine wages for a regular work week each week.
Regular rate
This is a worker's rate of pay for each non-overtime hour of work in the worker's work week.
Regular earnings
These are salaries aside from overtime pay, getaway pay, public holiday pay, premium pay, domestic or sexual violence leave pay, termination of task pay, termination pay and discontinuance wage and specific contractual entitlements.
Regular work week
For a worker who normally works the very same variety of hours every week, a regular work week is a week of that numerous hours, not consisting of overtime hours.
Some workers do not have a regular work week. That is, they do not work the exact same number of hours each week or they are paid on a basis besides time. For these employees, the "routine incomes" for a "regular work week" is the average amount of the regular wages made by the worker in the weeks in which the employee worked throughout the duration of 12 weeks right away preceding the date the notice was provided.
An employer is not permitted to arrange a staff member's trip time throughout the statutory notification period unless the employee-after receiving composed notification of termination of employment-agrees to take their getaway time during the notice period.
If an employer provides longer notification than is needed, the statutory part of the notification duration is the last part of the period that ends on the date of termination.
How to provide written notification
In most cases, written notification of termination of employment should be addressed to the employee. It can be provided personally or by mail, fax or email, as long as delivery can be confirmed.
There are unique rules for offering notification of termination if a worker has an agreement of employment or a cumulative contract that provides seniority rights that enable an employee who is to be laid off or whose employment is to be terminated to displace (" bump") other staff members.
In that case, the company needs to publish a notice in the office (where it will be seen by the staff members) setting out the names, seniority and job category of those staff members the employer plans to end and the date of the proposed termination. The publishing of the notification is thought about to be notice of termination, since the date of the posting, to a staff member who is "bumped" by an employee named in the notice. However, this notification of termination must still fulfill the length requirements set out in the ESA.
There are also special rules concerning how notice is offered when there is a mass termination.
Termination pay
An employee who does not get the composed notice needed under the ESA needs to be given termination pay in lieu of notification. Termination pay is a swelling amount payment equivalent to the regular earnings for a regular work week that a staff member would otherwise have been entitled to throughout the written notice duration. A staff member makes vacation pay on their termination pay. Employers should also continue to make whatever contributions would be required to preserve the benefits the employee would have been entitled to had they continued to be utilized through the notification period.
Example: Regular work week
Sarah has actually worked for 3 and a half years. Now her job has actually been eliminated and her employment has been terminated. Sarah was not offered any written notification of termination.
Sarah worked 40 hours a week each week and was paid $20.00 an hour. She also got 4 percent vacation pay. Because she worked for more than 3 years but less than 4 years, she is entitled to 3 weeks' pay in lieu of notice.
Sarah's routine incomes for a routine work week are computed:
$ 20.00 an hour X 40 hours a week = $800.00 a week
Her termination pay is computed:
$ 800.00 X 3 weeks = $2,400.00
Then her getaway pay on her termination pay is calculated:
4% of $2,400.00 = $96.00
Finally, her trip pay is contributed to her termination pay:
$ 2400.00 + $96.00 = $2,496.00
Result: Sarah is entitled to $2,496.00. The employer must likewise make sure ongoing protection for any advantage or pension plans that used to her for 3 weeks.
Example: No routine work week
Gerry has worked at a nursing home for 4 years. He works weekly, however his hours differ from week to week. His rate of pay is $25.00 an hour, and he is paid 6 per cent getaway pay.
Gerry's employer removed his position and did not provide Gerry any written notice of termination. Gerry was ill and off work for 2 of the 12 weeks right away preceding the day his employment was ended. Gerry earned $1,800.00 in the 12 weeks before the day on which his employment ended.
Gerry is entitled to 4 weeks of termination pay.
Gerry's typical revenues each week are calculated:
$ 1,800.00 for 12 weeks/ 10 weeks (Gerry was off sick for 2 weeks therefore these weeks are not included in the calculation of typical profits) = $180.00 a week
His termination pay is computed:
$ 180.00 × 4 weeks = $720.00
Then his trip pay on his termination pay is calculated:
6% of $720.00 = $43.20
Finally, his trip pay is contributed to his termination pay:
$ 720.00 + $43.20 = $763.20
Result: Gerry is entitled to $763.20. The employer should likewise guarantee ongoing coverage for any benefit or pension that applied to him for four weeks.
When to pay termination pay
Termination pay must be paid to a staff member either 7 days after the staff member's work is terminated or on the staff member's next regular pay date, whichever is later on.
Mass termination
Special rules for notification of termination may use in cases of mass termination (when a company is terminating 50 or more staff members at its establishment within a four-week period).
Meaning of "establishment"
An "establishment" is a place at which the employer carries on organization. Separate locations can be considered one facility if either:
- they lie within the same municipality, or
- an employee at one location has contractual seniority rights that encompass the other location, permitting the staff member to displace another staff member (likewise called "bumping rights").
Effective October 26, 2023, in cases of mass termination, the term "facility" consists of an employee's home, however just if the worker works from home and does not operate at any other place where the employer brings on service.
This will require that workers who work specifically remotely be thought about for addition in the count when identifying whether 50 or more staff members have been ended.
Note that where an employee performs work both from their home and from another location where the employer continues service (for instance, a workplace), their home is not consisted of in the meaning of "facility". Instead, the staff member is thought about to have a connection to the office area and, for that reason, for the function of mass termination, the worker is consisted of with regard to that workplace area.
Example: where several areas are considered one "establishment"
ABC Company has a workplace and a storage facility situated in London, ON. Sabrina resides in London and works for ABC Company specifically remotely: she performs work for the business from home and does not work at the office.
For the function of mass termination, the business's London workplace, London storage facility and Sabrina's London home are thought about one "establishment."
Employer responsibilities in a mass termination
When a mass termination occurs, the employer should complete and provide the Form 1 (Notice of termination of work) to the Director of Employment Standards (Director) by:
- email to [email protected].
- fax to (416) 326-7061.
- individual shipment to the Director's workplace on a day and at a time when it is open.
- mail shipment to the Director's office, if the delivery can be validated.
The workplace of the Director of Employment Standards is located on the 9th floor, 400 University Avenue, Toronto ON M7A 1T7.
Any notification to the impacted workers is ruled out to have been given till the Form 1 is received by the Director; simply put, notification of mass termination is not effective until the Director receives the Form 1.
In addition to offering staff members with private notices of termination, the employer must, on the first day of the notice duration:
- post a copy of the Form 1 supplied to the Director in the workplace where it will come to the attention of the impacted employees.
- offer a copy of the Form 1 to each impacted worker.
The amount of notice employees must receive in a mass termination is not based upon the staff members' length of employment, however on the variety of staff members who have been ended. A company must give:
- 8 weeks observe if the employment of 50 to 199 employees is to be ended
- 12 weeks discover if the work of 200 to 499 staff members is to be terminated
- 16 weeks notice if the work of 500 or more staff members is to be terminated
Exception to the mass termination guidelines
The mass termination guidelines do not apply if these two things use:
- the variety of workers whose work is being terminated represents not more than 10 per cent of the staff members who have been used for at least 3 months at the facility
- none of the terminations are brought on by the permanent discontinuance of all or part of the company's service at the facility
Mass termination: resignation by a worker
A worker who has actually received termination notification under the mass termination rules who wishes to resign before the termination date offered in the employer's notification should provide the company a minimum of one week's composed notification of resignation if the employee has actually been utilized for less than two years. If the work period has actually been 2 years or more, the employee needs to provide at least 2 weeks' composed notice of resignation. However, the worker does not have to notify of resignation if the employer constructively dismisses the worker or breaches a regard to the agreement.
Temporary work after termination date in notification
An employer can offer work to a staff member who has been notified of termination on a temporary basis in the 13-week duration after the termination date set out in the notice without impacting the initial date of the termination and without being required to supply any more notification of termination to the employee when the momentary work ends.
If an employee works beyond the 13-week duration after the termination date and then has their employment ended, the staff member will be entitled to a brand-new composed notice of termination as if the previous notification had never ever been offered. The employee's duration of work will then also include the duration of short-term work.
Recall rights
A "recall right" is the right of a worker on a layoff to be recalled to work by their company under a term or condition of employment. This right is commonly found in cumulative agreements.
A worker who has recall rights and who is entitled to termination pay because of a layoff of 35 weeks or more might pick to:
- keep their recall rights and not be paid termination pay (or severance pay, if they were entitled to discontinuance wage) at that time;
or
- give up their recall rights and get termination pay (and discontinuance wage, if they were entitled to discontinuance wage).
If an employee is entitled to both termination pay and severance pay, they should make the very same choice for both.
If an employee who is not represented by a trade union elects to keep their recall rights or stops working to choose, the company should send out the amount of the termination pay (and discontinuance wage, if any) to the Director of Employment Standards, who holds the cash in trust.
If a staff member who is represented by a trade union chooses to keep their recall rights or fails to choose, the employer and the trade union need to try to come to an arrangement to hold the termination pay (and severance pay, if any) in trust for the staff member. If they can not pertain to an arrangement, and the trade union recommends the company and the Director of Employment Standards in writing that efforts have actually failed, the company should send out the termination pay (and severance pay, if any) to the Director of Employment Standards, who holds the money in trust.
If an employee selects to quit their recall rights or if the recall rights end, the money that is held in trust must be sent to the employee.
If the staff member accepts a recall back to work, the cash that is kept in trust will be returned to the employer.
Exemptions to see of termination or termination pay
A lot of these exemptions are complicated. Please contact the Employment Standards Information Centre, 1-800-531-5551, if you require more information. Please also refer to the special guideline tool.
The notification of termination and termination pay requirements of the ESA do not use to an employee who:
- is guilty of wilful misconduct, disobedience or wilful disregard of task that is not insignificant and has actually not been excused by the company. Note: "wilful" consists of when a staff member planned the resulting consequence or acted recklessly if they knew or ought to have understood the effects their conduct would have. Poor work conduct that is unintentional or unintentional is generally not considered wilful;
- was worked with for a specific length of time or up until the completion of a specific job. However, such a staff member will be entitled to discover of termination or termination pay if:- the employment ends before the term expires or the job is completed; or
- the term expires or the task is not finished more than 12 months after the employment started; or
- the work continues for three months or more after the term ends or the task is finished;
See also: Employment Standards Self-Service Tool
Wrongful dismissal
Rights higher than ESA notification of termination, termination pay, severance pay
The guidelines under the ESA about termination and severance of employment are minimum requirements. Some employees might have rights under the common law that are greater than the rights to discover of termination (or termination pay) and discontinuance wage under the ESA. A worker may desire to sue their previous company in court for "wrongful dismissal". Employees need to understand that they can not take legal action against an employer for wrongful termination and sue for termination pay or severance pay with the ministry for the same termination or severance of work. A worker needs to choose one or the other. Employees may want to obtain legal recommendations concerning their rights.
