Ontario Termination of Employment Guide
Losing a job can happen unexpectedly, and employees may have many questions immediately after receiving a termination letter. They may wonder how much notice they should receive, whether their employer can terminate them immediately, what happens to their benefits and vacation pay, and whether they should accept a severance package.
Ontario has employment standards that establish minimum requirements for many terminations. Employees may also have additional rights under their employment contract or the common law. Understanding the different rules can help employees make more informed decisions after their employment ends.
What Does Termination of Employment Mean
Termination of employment occurs when an employer ends an employee’s employment. Common terms include being fired, dismissed, let go or discharged.
Under Ontario’s Employment Standards Act, 2000 (ESA), employment can also be considered terminated in certain other circumstances, including some situations involving constructive dismissal or extended layoffs.
An employer does not generally have to provide a reason for a termination without cause under the ESA. However, there are circumstances in which an employer cannot legally terminate an employee, including certain situations involving prohibited reprisals or other unlawful reasons.
The fact that an employer does not provide a reason therefore does not automatically mean that the termination is unlawful, nor does it mean that the employee has no right to compensation.
Can an Employer Terminate You Without Notice
In many situations, an Ontario employer can end an employee’s employment without requiring the employee to work through a notice period.
However, an employer generally must either provide the required written notice or provide termination pay instead of notice when the ESA termination provisions apply. For employees who have been continuously employed for at least three months, the statutory notice requirement generally ranges from one to eight weeks depending on the employee’s period of employment.
An employment contract may also affect the employee’s entitlement. Some contracts contain termination provisions that attempt to establish what an employee will receive when employment ends.
Employees should therefore distinguish between being told to leave immediately and receiving no compensation. An employer may terminate employment immediately while providing termination pay instead of working notice.
How Much Notice Is Required in Ontario
Under the ESA, employees who have been continuously employed for at least three months are generally entitled to the following minimum notice periods:
| Period of employment | ESA notice |
|---|---|
| Less than 1 year | 1 week |
| 1 year to less than 3 years | 2 weeks |
| 3 years to less than 4 years | 3 weeks |
| 4 years to less than 5 years | 4 weeks |
| 5 years to less than 6 years | 5 weeks |
| 6 years to less than 7 years | 6 weeks |
| 7 years to less than 8 years | 7 weeks |
| 8 years or more | 8 weeks |
These are minimum ESA notice periods and do not necessarily determine an employee’s complete entitlement following termination. The employee’s contract and common-law rights can also be relevant.
Special rules can apply in situations involving mass terminations, and certain employees are exempt from the ESA notice and termination-pay provisions.
What Is Termination Pay
Termination pay is money paid to an employee instead of providing the required period of working notice.
For example, if an employee is entitled to four weeks of statutory notice and the employer ends the employment immediately without providing working notice, the employer may be required to provide termination pay corresponding to the applicable notice period.
Under the ESA, termination pay is generally based on the wages the employee would have received during the applicable notice period. Vacation pay is earned on termination pay, and employers must generally continue required benefit-plan contributions during the applicable statutory notice period.
Termination pay is different from statutory severance pay. An employee can potentially qualify for both, depending on the circumstances.
When Must Termination Pay Be Paid
Under Ontario’s ESA, termination pay must generally be paid no later than seven days after employment ends or the employee’s next regular payday, whichever is later.
Other amounts may be owed separately depending on the circumstances, including outstanding wages, vacation pay or other compensation.
Employees should review their final pay carefully rather than assuming that every amount owed will necessarily appear as one single payment.
What Happens to Your Benefits
Benefits can be an important part of an employee’s overall compensation.
During a statutory notice period, an employer generally must continue making the benefit-plan contributions that would be required to maintain the employee’s benefits.
Employees should ask questions about the continuation or termination of health, dental, disability, life insurance and other benefits after employment ends.
The treatment of benefits after termination can also become relevant when assessing a broader termination or severance package, particularly where an employee has significant employer-provided benefits.
What Happens to Vacation Pay
Employees can be entitled to vacation pay that has accrued but has not yet been paid when their employment ends.
Vacation pay can also be relevant when calculating termination-related payments. For example, Ontario’s ESA provides that employees earn vacation pay on termination pay.
The calculation can become more complicated for employees who receive commissions, bonuses or other forms of compensation.
Employees should review their final pay information to determine whether outstanding vacation pay has been properly accounted for.
What Happens to Your Employment Contract
An employment contract does not automatically stop being relevant when an employee is terminated.
The contract may contain provisions addressing termination, notice, compensation, bonuses, commissions, benefits and other matters.
A termination clause can be particularly important because it may attempt to limit the employee’s entitlement when employment ends. Whether a particular clause is enforceable can depend on its wording and the applicable law.
Employees should keep their original employment contract and any amendments or subsequent agreements. These documents can be important when assessing termination rights.
What Is the Difference Between Termination Pay and Severance Pay
Termination pay and severance pay are separate concepts under Ontario employment standards legislation.
Termination pay generally compensates an employee when the employer does not provide the required statutory notice.
Statutory severance pay is a separate entitlement that applies only to employees who meet specific eligibility requirements. Among other requirements, an employee generally needs at least five years of employment and must satisfy additional requirements relating to the employer’s payroll or certain permanent business closures.
Not every employee who receives termination pay qualifies for statutory severance pay.
An employee may also have contractual or common-law rights that differ from the ESA minimums.
Can an Employer Fire You for Cause
An employer may terminate an employee for alleged misconduct or other serious wrongdoing.
When an employer claims that an employee was terminated for cause, the employer is generally taking the position that the employee’s conduct justified termination without the notice or compensation that might otherwise be required.
The existence of a “for cause” statement in a termination letter does not automatically resolve whether the employer’s position is legally correct. The circumstances surrounding the alleged misconduct and the employee’s employment history can be relevant.
Employees who disagree with a termination for cause may wish to obtain legal advice before signing a release or accepting the employer’s characterization of the termination.
What If You Are Terminated Without Cause
A termination without cause means the employer is ending the employment relationship without alleging that the employee engaged in misconduct serious enough to justify dismissal for cause.
This does not necessarily mean that the employee is entitled to no compensation.
Depending on the circumstances, an employee may be entitled to statutory termination pay, statutory severance pay, contractual compensation or common-law reasonable notice.
The employee’s employment contract can be particularly important when determining whether common-law notice applies or whether a termination provision limits the employee’s entitlement.
What Should You Do Immediately After Being Terminated
The first few days after a termination can be overwhelming, but there are several practical steps employees can take.
Keep Your Employment Documents
Save copies of your employment contract, amendments, pay statements, benefits information, bonus or commission records, performance reviews and relevant correspondence.
You should also keep the termination letter and any severance or settlement documents provided by the employer.
Review the Termination Package
Read the termination letter carefully and identify what the employer is offering.
Look at the proposed payments, benefits, vacation pay, deadlines and any release or settlement agreement.
Do not assume that the amount offered is necessarily the full amount you may be entitled to receive.
Be Careful Before Signing a Release
Employers may ask terminated employees to sign a release confirming that they will not pursue additional claims.
A release can have significant legal consequences. Before signing, employees should understand what rights they may be giving up and whether the compensation offered is appropriate in light of their circumstances.
Avoid Making Important Decisions Too Quickly
A termination can be an emotional experience, particularly when it happens unexpectedly.
Employees should consider obtaining appropriate advice before making decisions that could affect their legal rights, particularly if they have been offered a settlement or asked to sign documents within a specified period.
Can You Negotiate a Termination Package
An employer’s initial termination package may not necessarily be the final amount that an employee receives.
Depending on the circumstances, employees may have grounds to negotiate different terms. Factors that can affect the analysis include the employment contract, length of service, age, position, compensation and availability of comparable employment.
Negotiations can involve more than the amount of a lump-sum payment. The parties may also discuss benefits, bonuses, commissions, references, the timing of payments and other terms.
An employee should understand their potential rights before deciding whether to accept or negotiate an offer.
What If You Are Asked to Resign
An employee who is being asked to resign should understand the implications before agreeing.
Resigning voluntarily can affect an employee’s legal position and may also affect eligibility for certain forms of compensation or government benefits.
The circumstances surrounding the request can matter. An employee who is being pressured to resign or who believes their employer has made a significant change to their employment should consider obtaining legal advice before submitting a resignation.
What If Your Employer Temporarily Lays You Off
A temporary layoff is not necessarily the same as a permanent termination.
Ontario’s ESA contains specific rules concerning temporary layoffs, including circumstances in which an extended layoff can result in employment being considered terminated.
The distinction can be complicated because an employee may remain technically employed during certain periods without actively working.
Employees who have been laid off and are uncertain about their employment status should review the circumstances carefully before assuming that the employment relationship has ended or that they have been permanently terminated.
What Happens During a Mass Termination
Ontario has special rules for mass terminations involving 50 or more employees at an employer’s establishment within a four-week period.
The notice requirements in these circumstances can differ from the standard notice periods based on individual length of service. Depending on the number of affected employees, the statutory notice period can be 8, 12 or 16 weeks.
Employees affected by a mass termination may also have additional rights and information available to them.
When Should You Speak With an Employment Lawyer
Not every termination requires legal assistance, but there are circumstances in which obtaining advice can be particularly useful.
Consider speaking with an employment lawyer if:
You have received a severance or termination package.
You have been asked to sign a release.
Your employer says you were terminated for cause.
You believe your termination violated your employment contract.
You believe the compensation offered is inadequate.
You have significant bonuses, commissions or other compensation.
Your employer has made a major change to your employment and you are considering resigning.
You believe your termination may have been discriminatory or retaliatory.
You are uncertain about your rights following a layoff.
Employment law is highly dependent on the circumstances of each case. An assessment of the employment contract and the facts surrounding the termination may be necessary to determine what rights an employee has.
Frequently Asked Questions About Termination of Employment in Ontario
Can my employer terminate me immediately?
An employer may be able to end employment immediately, but that does not necessarily mean the employee is entitled to nothing. Where the ESA termination provisions apply, an employer generally must provide the required notice or termination pay instead of notice. Contractual and common-law rights may also be relevant.
How much termination pay am I entitled to in Ontario?
The ESA provides minimum termination notice periods ranging from one to eight weeks for many employees who have been continuously employed for at least three months. The applicable period depends on length of employment.
An employee’s total entitlement may be different depending on their employment contract and common-law rights.
Can my employer fire me without giving a reason?
The ESA generally does not require an employer to provide a reason for a termination without cause. However, employers cannot terminate employees for certain prohibited reasons, and other legal obligations may apply.
Is termination pay the same as severance?
No. Termination pay and statutory severance pay are separate ESA concepts. Some employees may qualify for both, while others may qualify for termination pay but not statutory severance.
Should I accept my employer’s termination package?
Employees should carefully review a termination package before accepting it, particularly if it includes a release. The appropriate decision depends on the employee’s circumstances and potential legal entitlements.
Can I negotiate my termination package?
A termination package may be negotiable depending on the circumstances. Before negotiating, it can be helpful to understand the potential legal entitlement and what rights may be released by accepting the employer’s offer.
What if I was terminated for cause?
If an employer says that an employee was terminated for cause, the circumstances surrounding the alleged misconduct should be considered carefully. Employees who disagree with the allegation may wish to obtain legal advice before accepting the employer’s position or signing a release.
What should I do if I think I was wrongfully dismissed?
Keep your employment documents, review the termination package carefully and avoid signing a release before understanding its implications. If you believe your employer did not provide the compensation or notice required, consider speaking with an employment lawyer about your circumstances.
Get Advice About Your Termination
The end of employment can raise important questions about notice, termination pay, severance, benefits, vacation pay and contractual rights. Understanding these issues can help employees make informed decisions about their next steps.
EmploymentLawyerToronto.ca provides employment law information and legal services for employees dealing with workplace issues in Ontario. If you have been terminated and have questions about your rights or the terms of your termination package, consider speaking with an employment lawyer about your circumstances.
This page provides general information about Ontario employment law and is not legal advice. Employment law can depend on the specific facts of each situation.