Toronto Employment Lawyer Advising Employers on Employee Terminations

To prevent or mitigate the risk of litigation and reduce claims for wrongful dismissal, employers must meet all legal obligations before and during a termination. Poorly drafted employment contracts, unpaid wages, reasonable notice, and severance pay are common culprits exposing employers to legal and financial risk. In addition to the employer obligations set out in employment legislation, the common law has developed to provide generous damages to employees who have been wrongfully dismissed. Failure to meet legal obligations when terminating an employee leaves employers vulnerable to expensive and time-consuming disputes.

Paulette Haynes and the team at Haynes Law Firm works side-by-side with employers in multiple industries to manage employer risk and reduce liability concerning employee terminations. From designing employment contracts that withstand judicial scrutiny to implementing effective performance management strategies, Haynes Law Firm helps employers limit their exposure to litigation stemming from termination.

Types of Termination in Ontario

When terminating an employee, employers must observe strict guidelines to avoid running afoul of the Employment Standards Act, which governs most employment relationships in the province.

Employee Termination Without Cause and Avoiding Wrongful Dismissal Claims

Employers are permitted to terminate an employee at any time. However, they must treat the employee fairly when doing so. When terminating an employee without cause, employers must provide reasonable notice (sometimes referred to as working notice) or offer compensation or pay in lieu of notice. The notice period provides employees with financial stability and time to secure alternate employment.

Reasonable notice under the Employment Standards Act varies depending on the duration of employment. Under the Employment Standards Act, employers must provide notice, or pay in lieu of notice, as follows:

Duration of Employment Notice Period Under the ESA
Less than one year 1 week
At least 1 year but less than 3 years 2 weeks
At least 3 years but less than 4 years 3 weeks
At least 4 years but less than 5 years 4 weeks
At least 5 years but less than 6 years 5 weeks
At least 6 years but less than 7 years 6 weeks
At least 3 years but less than 4 years 7 weeks
8 years or more 8 weeks

In addition to the statutory obligations above, employers must also consider the common law, which provides additional notice developed over the years through various employment law decisions by provincial and federal courts.

Common law notice periods tend to be more generous than the minimums provided under the legislation. For instance, while the Employment Standards Act mandates approximately one week of notice per year of employment, courts typically award up to one month’s notice per year of service.

Termination Clauses in the Employment Contract

Employers can set out the expectations for notice periods within the termination clause in the employment contract. Proactively reviewing termination protocols and notice entitlements with employees at the beginning of the employment relationship can help avoid future wrongful dismissal claims.

It is important to note that employers cannot contract out of the statutory notice obligations. An employer can provide more notice than is required in the legislation, but not less. Any clause found to be in contravention of the Employment Standards Act may be deemed invalid, rendering the clause itself or even the entire employment agreement unenforceable.

Employee Terminations With Cause

Employers are not obligated to provide notice of termination to an employee who is terminated “for cause.” A for-cause termination is reserved for situations involving willful misconduct or neglect of duty that was serious or grave on the part of an employee. Generally, conduct that may satisfy the onus required to terminate an employee for cause will include transgressions such as:

  • Theft or fraud;
  • Workplace harassment, sexual harassment, or violence;
  • Severe neglect of duties;
  • In some cases, conduct an employee might engage in outside of work that can affect the employer’s reputation.

Incompetence or poor performance typically do not warrant termination for cause. Given the severity of the financial impact of termination for cause, employers must attempt to correct incompetence or other performance issues before resorting to termination. Employers must implement a progressive discipline policy and provide reasonable opportunities for employees to improve before terminating for cause. If an employer doesn’t take steps to help an employee improve their performance, the employee may be successful in bringing a claim for wrongful dismissal.

Severance Pay in Ontario

In addition to providing reasonable notice of termination (or pay in lieu of notice) to an employee terminated without cause, employers must also offer severance pay, to entitled employees, as part of the termination package. The purpose of severance pay is to compensate long-term employees for the loss of seniority following termination and bridge the financial gap until the employee can secure new employment.

Employers are obligated to provide severance pay to employees if the following conditions are met:

  1. The employee was with the employer for at least five years; and
  2. The employer has a global payroll totalling at least $2.5 million; or
  3. The employer has terminated fifty or more employees at the same workplace within six months.

Qualified employees should receive one week of pay per year of employment as part of the overall termination package, capped at 26 weeks’ pay.

For Guidance Managing Employee Terminations, Contact Haynes Law Firm in Toronto

Employers increase the likelihood of litigation by using poorly drafted employment contracts or failing to consult with an employment lawyer when designing a termination package. Haynes Law Firm works with employers across the country to limit their exposure to legal claims stemming from poorly executed terminations. Paulette Haynes has dedicated her career to the practice of employment law, enabling her to provide effective guidance to employers from the initial hire through to termination, to effectively limit the employer’s risk of liability. To discuss how Haynes Law Firm can assist your organization, please contact us online or by phone at 416-593-2731.