Under the Employment Standards Act (ESA), employers are required to provide employees minimum entitlements upon the termination of employment, which includes but are not limited to the following:
-Up to a maximum of 8 weeks of termination pay, calculated as one-week of termination pay per year worked; and
-If the employer has a payroll over $2.5 million and the employee worked for the company for 5 or more years, they would be entitled to severance pay equivalent to one week per year worked plus the fraction of the year worked prior to termination.
When you are terminated from your employment, the employer is obligated to provide these minimum ESA payments by your next scheduled pay date. Employees’ entitlements to severance pay are greater than the requirements of the ESA, which only sets out the minimum standards. In fact, the common law, or judge-made law in Ontario, which reflect a series of cases in the employment law realm is what governs employees entitlements on termination. According to this judge-made law, employees can be entitled to one-month per year worked, or more, termination pay, depending on the circumstances.
The Court will take into consideration a variety of factors in determining the quantum of termination pay required in the circumstances. The factors include (a) age of employee; (b) likelihood and ease of re-employability; (c) duration of employment; (d) circumstances around the dismissal; and (e) specialization of the position and level of seniority at the company. All of these factors are relevant to the analysis into the appropriate termination pay in the circumstances.
It is important to note that, when an employee is terminated, they may be offered the minimum requirements under the ESA, and asked to sign off on a Full and Final Release, preventing you from bringing any future employment-related claim whatsoever in exchange for accepting the initial offer. Based on our discussion, the ESA entitlements are a minimum, and the employee should be discouraged from signing the Release absent a consultation with experienced employment counsel. If you do, in fact, retain an employment lawyer to negotiate an enhanced severance package, the employer will still be required to pay your minimum entitlements owing under the ESA, irrespective of a signed Release, while the negotiation is ongoing.
If you have any questions or concerns about your severance package, please do not signed the settlement documents at first instance before consulting with an experienced employment lawyer regarding your rights and obligations.