What Businesses Need to Know – Employment Standards Act – Termination Notice and Pay

Termination Notice and Pay

A number of expressions are commonly used to describe situations when employment is terminated. These include “let go,” “discharged,” “dismissed,” “fired” and “permanently laid off.”

Under the Employment Standards Act, 2000 (ESA) a person’s employment is terminated if the employer:

• dismisses or stops employing an employee, including where an employee is no longer employed due to the bankruptcy or insolvency of the employer;
• “constructively” dismisses an employee and the employee resigns, in response, within a reasonable time;
• lays an employee off for a period that is longer than a “temporary layoff”.

In most cases, when an employer ends the employment of an employee who has been continuously employed for three months, the employer must provide the employee with either written notice of termination, termination pay or a combination (as long as the notice and the number of weeks of termination pay together equal the length of notice the employee is entitled to receive).

The ESA does not require an employer to give an employee a reason why his or her employment is being terminated. There are, however, some situations where an employer cannot terminate an employee’s employment even if the employer is prepared to give proper written notice or termination pay. For example, an employer cannot end someone’s employment, or penalize them in any other way, if any part of the reason for the termination of employment is based on the employee asking questions about the ESA or exercising a right under the ESA, such as refusing to work in excess of the daily or weekly hours of work maximums, or taking a leave of absence specified in the ESA.

Qualifying for Termination Notice or Pay in Lieu

Certain employees are not entitled to notice of termination or termination pay under the ESA. Examples include: employees who are guilty of wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer. Other examples include construction employees, employees on temporary layoff, employees who refuse an offer of reasonable alternative employment and employees who have been employed less than three months.

There are a number of other exemptions to the termination of employment provisions of the ESA. See “Exemptions to Notice of Termination or Termination Pay.” Please also refer to the Special Rule Tool, available at Ontario.ca/ESAtools.

The termination-of-employment rules are entirely separate from any entitlements an employee may have to be paid severance pay under the ESA.