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Termination, Severance, and Lay-Offs
Under the Employment Standards Act, the law that contains Ontario's basic rules about working and employing people, both workers and employers have rights and responsibilities with respect to the termination of employment.

(Please note that this article deals primarily with employees in a non-union environment, and does not deal with employees under federal labour jurisdiction i.e. if you work in post offices, banks, railways, radio stations, airlines, television stations etc. As a federal employee your coverage is provided under the Canada Labour Code.)

What is "termination of employment"?


Termination of employment is when you stop working for your employer. Common terminology such as "being let go", "discharged", "dismissed" or "fired" are all ways of saying "You've been terminated".

Can my employment be terminated at any time?

Unfortunately, yes. However, under the Employment Standards Act, an employer must give you proper notice of termination, or termination pay instead ("in lieu") of notice but not both.

How much statutory "written notice" of termination should I get?


If you're receiving written notice of termination, the length of your statutory notice will depend on how long you've been working for your employer, based on the following :
Less than 3 months:0
More than 3 months, but under 1 year:1 week
More than 1 year, but under 3 years:2 weeks
More than 3 years, but under 4 years:3 weeks
More than 4 years, but under 5 years:4 weeks
More than 5 years, but under 6 years:5 weeks
More than 6 years, but under 7 years:6 weeks
More than 7 years, but under 8 years:7 weeks
More than 8 years: 8 weeks

Therefore, if you've worked for six years, youíre entitled to six weeks of written notice.
During this notice period, you are required to continue working for your employer.

If I don't get written notice, how much termination pay should I should get?

Termination pay, sometimes called "pay-in-lieu of notice" or "lieu pay" should be the equivalent to the pay and benefits of the notice period that your employer was supposed to give you. For example, if you've worked four years for your employer, you're entitled to get four (4) weeks' written notice, you're statutorily entitled to four weeks' of pay and benefits.

Do all workers get notice of termination or termination pay?

No, not all workers get notice of termination or termination pay. Your employer does not have to give you notice if you:

are hired for a specific task or job that was going to last for 12 months or less; are fired for wilful misconduct, disobedience or wilful neglect of duty that was not condoned by your employer; are doing construction work on site; have reached retirement age (as established by company practice); have refused reasonable alternative work with your employer; have refused work available through a seniority system; do not come back from a layoff within a reasonable time when asked by your employer; are free to decide when you want to work, and can turn down work when it is offered to you. For example, an "on call" worker who works by assignment; are terminated during, or as the result of, a strike or lockout at your place of work.

Similarly, if an unexpected event - such as a fire or flood - makes it impossible for your employer to keep you employed, your employer doesn't have to give you notice or termination pay.

Am I entitled to anything more than the statutory minimum?


You may be. In the province of Ontario, if youíve been terminated from your employment for no cause, you may be entitled to additional damages for wrongful dismissal. Whether or not you are entitled depends on a multitude of factors, and as such, we recommend that you contact a lawyer to review the possibility of any such entitlement.

What's the difference between severance pay and termination pay?

Size of employer and extent of down-sizing. If you have worked five or more years for your employer; and your employer is in one of the following two groups:

your employer has a payroll in Ontario of at least $2.5 Million a year; or your employer is no longer going to be carrying on all or part of the business, and 50 or more workers will lose their jobs for this reason in any six-month period

you may be entitled to severance pay in addition to termination pay.

How is severance pay calculated?


If you qualify for severance pay, your employer will give you a lump sum payment equal to one week's regular pay for each year you were employed up to a maximum of 26 weeks for 26 years.

You also get credit for full months of employment. For example, if you worked for 10.5 years, your employer would pay you 10.5 weeks' regular pay as your severance pay.

What's the difference between being temporarily laid off versus being terminated?


Permanence. By laying you off, an employer can suspend, cut back or stop your employment without permanently ending or terminating your employment. This typically happens when thereís not enough work for all employees.


For the purposes of the Employment Standards Act, a week of layoff is one when you get less than one half (1/2) of the wages you earn in a regular workweek with no overtime.


A week does not count as layoff if you were:


not able to work; not available for work; under suspension for a reason; or without work because of a strike or lockout.


When laying you off, your employer doesn't have to give you notice or other advance warning if the layoff is short-term or temporary. Similarly, your employer doesn't have to tell you the reason for your lay-off.


I'm the senior employee. Does that mean I'm the last to be laid off?

Seniority may affect layoffs, but typically only if there is a collective agreement in the workplace. Otherwise, the Act doesn't force employers to consider length of service when laying off workers.

When does a lay-off become a termination?

If your lay-off reaches one of the following time frames, you will be considered to have been terminated and therefore entitled to termination pay:
you have been laid off for 13 weeks in any period of 20 consecutive weeks and:

your employer has not continued to pay the employer's share of any benefits you receive (such as medical or drug insurance) or make the employer's contributions to a pension plan if you have one; and

you are not eligible to receive supplementary benefits from the federal Employment Insurance Commission (EI).

OR

you have been laid off for 35 weeks in any period of 52 consecutive weeks and:

your employer has not paid the employer's share of your benefits and if you have a pension, has not paid the employer's share of contributions; or

you are eligible for or are receiving supplementary employment insurance benefits.

Under a lay-off lasting this length of time, you may be entitled to termination pay.

How much termination pay do I get?

Once your lay-off evolves into a termination, you are entitled to the same amount of statutory termination pay as set out above i.e. three years of service equals three weeks.

What about employment insurance benefits - can I apply for them when I'm laid off?

Yes. If you are laid off for a week or longer, your employer is required to give you a Record of Employment. With this Record, you can apply for employment insurance benefits. In addition to termination and severance pay, being laid-off raises a number of other issues such as:

Can I work somewhere else when I'm on layoff? What if I'm called back to work from a layoff? What are my options? What type of recall rights do I have?

 

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