Q:
How much notice is required to terminate an employee?
A: For provincially regulated employers in Ontario,
the amount of notice required to terminate an employee usually depends on a
consideration of (a) the Employment Standards Act, 2000, which sets out an
employee's minimum notice entitlements; and (b) the common law, which
establishes an entitlement to "reasonable" notice of termination. For federally
regulated employers, and for certain specialized classes of employees and
occupations, different considerations may apply. The Employment Standards Act,
2000 sets out a schedule of notice periods that vary depending on the employee's
length of service - employees with less than three (3) months of service are not
entitled to notice and employees with eight (8) or more years of service are
entitled to a maximum of 8 weeks notice. However, different considerations may
apply where a larger number of employees are being terminated within a specific
period of time - in a so-called "mass termination" scenario, the minimum notice
required, even for a short-service employee, can range from 8 weeks to 16 weeks,
depending on the number of employees affected.
Q: What is "reasonable" notice?
A: Under the common law, it is generally accepted that the purpose of giving
notice is to allow the employee an opportunity to find another job. Therefore,
what is "reasonable" notice will vary, depending on a consideration of factors
such as the employee's age, years of service, character of employment, and so on
- that is, factors that can be thought of as impacting on the length of time
that a particular employee will require in order to find comparable alternative
employment. Although there is a temptation to base an estimation of what is
"reasonable" on length of service alone, or some other simple formula, the
courts generally discourage that approach because it places undue emphasis on a
single factor. Other considerations may influence the amount of notice that will
be considered reasonable. For example, a short-service employee who was actively
lured away from employment elsewhere may be entitled to more notice than an
employee with the same length of service who approached the employer on his or
her own initiative, e.g., in response to a newspaper ad. Given the aging
baby-boomer population, age is a factor that may have a significant influence on
any determination as to what is "reasonable" notice of termination.
Q: Is there a difference between "termination pay" and "severance
pay"
A: Yes. "Termination pay" is the term used under the Employment Standards Act,
2000, to refer to what is essentially "pay in lieu of notice". The requirement
under the legislation is to provide working notice but, where the employer fails
to comply with that requirement, it may be permissible to provide "termination
pay" in an amount that is equal to the wages or salary that the employee would
have otherwise earned had he or she actually been given the opportunity to work
through the notice period. "Severance pay", on the other hand, is a different
and distinct entitlement under the Employment Standards Act, 2000. Severance pay
may be payable in addition to the requirement to provide notice (or termination
pay). In the case of individual terminations, the requirement to provide
severance pay only applies where (a) the employee has five (5) or more years of
service; and (b) the employer has an annual Ontario payroll of $2.5 million or
more. There may also be a requirement to provide severance pay in larger-scale
terminations, regardless of payroll size. Although severance pay is often
thought of as one week per year of service, there is a requirement to take
partial years worked into account, i.e., by adding up the number of completed
months of service and dividing by 12. For example, an employee with 12.5 years
of service is entitled to a severance payment equal to 12.5 weeks of pay. There
is a ceiling placed on the amount of severance pay required; there is no
obligation to provide a severance payment in excess of 26 weeks pay. |
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Q: Is an employer always required
to provide notice of termination?
A: No. Whether under the Employment Standards Act, 2000 or under the common law,
there are a number of situations that give rise to an exception to the
requirement to provide notice. Under the Employment Standards Act, 2000, there
are a variety of possible exceptions to the requirement to give notice,
including those situations where the employee is guilty of "wilful misconduct,
disobedience or wilful neglect of duty that is not trivial and has not been
condoned by the employer". Under the common law, different standards apply. For
example, there is no requirement to provide reasonable notice where the employer
has "just cause" for immediate dismissal. In this context, "just cause" often
refers to some manner of provable misconduct that is clearly at odds with the
person's fundamental obligations as an employee. For example, untrustworthy
behaviour on the part of someone employed in a position of trust. In certain
instances, a single incident may give rise to "just cause" for dismissal.
However, more usually (and especially in the case of performance difficulties),
the point of "just cause" may only be reached after the employer has made some
attempt at taking corrective action. In this latter instance, "just cause" is
often a matter of having sufficient documentation to prove that an employee's
performance difficulties have persisted despite a reasonable - and documented -
attempt at corrective action.
Q: Isn't "just cause" the same thing as "wilful misconduct"?
A: Not necessarily. Due to the use of the term "wilful", the statutory standard
of "wilful misconduct" has been interpreted as being a higher standard than the
"just cause" standard employed under the common law.
Q: Do the same considerations apply when terminating unionized
employees?
A: No. "Just cause" may have a distinct meaning for unionized employees covered
by a collective agreement, if only because the meaning given to "just cause" in
that context is not the meaning ascribed by the courts but instead by grievance
arbitrators who are empowered to adjudicate disputes, including dismissals,
arising under a collective agreement. Because this is a different body of "case
law" than that which applies to non-union employees, the meaning given to the
term "just cause" for dismissal under a collective agreement may be different
than the meaning given the term under the common law. While it may be true that
unionized employees are entitled to the benefits of the Employment Standards
Act, 2000, including the entitlement to notice of termination as set out in that
legislation, it can also be the case that a particular collective agreement
provides a better, or different, right or entitlement. Also, under most
collective agreements, employers have less latitude when it comes to terminating
employees - for example, most unionized employers are prevented, under the terms
of the collective agreement, from terminating without cause, i.e., by merely
providing notice of termination. While unionized employers may be able to "lay
off" an employee due to lack of work (for example), most are prohibited from
simply terminating without cause.
Q: Can we be ordered to reinstate a terminated employee?
A: Yes, whether a unionized employer or not, it is possible for a terminated
employee to be reinstated, for example, by order of a tribunal or board of
adjudication. It is more commonplace to face reinstatement under a collective
agreement, i.e., in unionized workplaces, but even for a non-union employee,
reinstatement may be possible under certain statutes and depending on the
circumstances. For example, an employee who is terminated after legitimately
exercising his or her right to refuse unsafe work may, under the authority of
the Occupational Health and Safety Act, be reinstated by order of the Ontario
Labour Relations Board in the event of a successful complaint. |
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