As many people experience, losing a job is never easy. We are called by employees’ on a weekly basis that are terminated from their employment without cause. Many people believe that they have been ‘wrongfully dismissed’ from their employment, without understanding what actually constitutes a wrongful dismissal in Ontario. Under the Employment Standards Act (ESA) in Ontario, an employee that is terminated without cause is entitled to certain minimum obligations, including the right to advanced notice of termination of payment in lieu thereof.
Advanced notice of termination, otherwise referred to as working notice, occurs when an employer advises an employee that their employment will terminate at a specific point in time in the future. During a working notice period, the employee has the obligation to continue working until the notice period expires. It is often a challenge for an employee to stay motivated to work for a company that has terminated them but forced to continue working.
Why Would an Employer Give Working Notice Rather than Payment in lieu Thereof?
For employers, it can make financial sense to provide advanced notice of termination instead of payment in lieu thereof, subject to the employee actually completing their work and assisting the company during the working notice period. Given that the working notice period counts towards an employees severance entitlements when the period expires, the employer may have no more severance obligation to the terminated employee. Accordingly, the employee’s employment will end with no actual cash outlay required by the employer.
Conversely, when payment in lieu of notice is provided by an employer, a large lump sum or salary continuance payment is typically required, which typically can be expensive for the employer, and in exchange for which the employee’s employment will terminate immediately, and no additional value will be provided to the company. Employers typically try to balance the uncomfortable nature of working notice with the financial constraint associated with paying severance by way of payment in lieu of notice.
What is a Wrongful Dismissal?
A wrongful dismissal does not relate to the fact the employee was terminated from their employment (unless the employee was wrongfully terminated for cause without a justifiable reason). In fact, an employer can terminate your employment at any time, for any reason, so long as it is not a discriminatory ground protected by the Ontario Human Rights Code (i.e., disability, pregnancy, age, gender, sexual discrimination, etc.). Rather, a wrongful dismissal occurs when an employer does not satisfy its severance obligations to a terminated employee. An employer must provide advanced notice of termination or payment in lieu thereof in accordance with the ESA and the common law in Ontario (in certain cases); otherwise, the termination will be deemed a wrongful dismissal.
With respect to ESA entitlements, an employee is entitled to, among other things, termination pay equivalent to one-week per year worked, up to a maximum of 8 weeks termination pay. In addition, if the employee has worked for a period of 5 or more years for an employer with a payroll over $2.5 million, they will also be entitled to severance pay under the ESA, which is calculated at approximately one-week per year worked.
For example, an employee with 10 years of service for a company that is eligible for both termination pay and severance pay under the ESA, would be entitled to a minimum advanced notice of termination or payout in lieu thereof 18 weeks pay (8 weeks of termination pay and 10 weeks of severance pay). If the minimum entitlements under the ESA are not offered to an employee that has been terminated without cause, then the termination would be deemed a wrongful dismissal.
Employment Standards Act (ESA) Entitlements Are Minimum Obligations
Terminated employees in Ontario are often entitled to common law or reasonable notice in Ontario, which exceeds those entitlements as designated in the ESA. By default, an employee is entitled to reasonable notice of termination or payment in lieu thereof, unless an enforceable termination clause is contained in a duly executed employment contract that limits the amount of severance to the statutory (ESA) minimum. If no such enforceable termination clause is contained in the employment contract, the terminated employee would be entitled to reasonable notice of termination, which can often vastly exceed the minimum obligations under the ESA.
If you have been terminated without cause from your employment in Ontario, it is important that you have received your minimum entitlements. In addition, you ought to consult with an employment lawyer in Ontario to determine whether you are also entitled to reasonable notice of termination or payment in lieu thereof and whether the employer has sufficiently accounted for your rights to a severance package.
If you believe that your former employer has violated your rights, you may have been wrongfully dismissed from your employment. Goldstein Law will be able to analyze your case, including the severance package, employment contract, and other relevant documents, to determine whether you have a case for wrongful dismissal. Call 647-838-6740 to speak to a lawyer to discuss a potential wrongful dismissal suit.