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A simple guide to Termination Pay

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Does your employer owe you if you have been terminated?

Termination can be a difficult and stressful experience for any employee. It is often hard to know, what, if anything, your employer owes you, making it difficult to know if what you’re being offered is fair. At Simes Law, we are committed to ensuring you know your rights and know your options. We are happy to provide a basic overview of termination law in Ontario below.

The duration of your employment

If you are an employee who has been continuously employed for three months, under the Employment Standards Act you are entitled to a notice that you are being terminated or a pay in lieu of that notice.

Employment Standards Act (ESA) termination pay is calculated on the basis of how long an employee has worked. For example, if you have worked for over one year but less than three, you are entitled to two weeks of notice or pay. If you worked for over three years, but less than four, you are entitled to three weeks of notice or pay.

As well, during the notice period, your employer must not reduce your wages or change other terms and conditions of your employment; they must allow you to continue using your regular benefits; and they must pay your regular wages which cannot be less than what you received in a regular work week prior to termination

The size of the company

If you are an employee with 5 or more years of service and your employer either (1) has a global payroll of $2.5 million or, (2) terminated more than 50 employees in a six-month period because all or part of the business permanently closed, you are also entitled to severance pay under the ESA. Severance pay is typically calculated as one week of pay, for every year worked up to a maximum of 26 weeks.

It is important to always remember that the entitlements set out above are the minimum amounts your employer must provide you to comply with the ESA. But you are likely entitled to more.

This is why it is always a good idea to contact a lawyer to discuss what you have been offered by your employer. The team at Simes Law has collectively negotiated many termination packages and can identify where opportunities exist for greater compensation.

Other factors that determine compensation

Depending on your employment contract, you may also be entitled to more compensation under what is considered the “common law”. Common law refers to the law that is not set out in legislation, but instead, is created when a judge decides on a particular case. At common law, an assessment is made on how long it could take someone to find new employment, taking into account factors like their age, education, and the industry they work in.

Often, the amount of common law notice owed to someone looks something like one month per year of service, but it always depends on the specific circumstances. Also, additional money can sometimes be owed beyond the amounts for termination because of the employer’s conduct. For example, in one case, a judge decided that an employee was owed additional amounts because the employer failed to follow the ESA during termination. This decision makes up the common law, as do thousands of other judicial decisions.

Lastly, often as part of a termination letter, employers will ask you to sign a release and waive any right to pursue further legal action. Before signing any release we strongly recommend you meet with one of our experienced lawyers who can advise you of your rights and whether or not the offer you are being made is fair. Regardless, it is important to remember that whether or not you sign the release, your employer is still obligated to pay you your minimum entitlements under the ESA.

Here at Simes Law, we will meet with you and really listen to all the facts of your termination so that we can offer you the complete picture of your legal options, and be your advocate to ensure you receive all that you are entitled to.

We know terminations can be hard, but they do not need to be overwhelming. You have rights, and you have an advocate in us.

Please note that the information contained in this article is for informational purposes only and does not constitute legal advice of any kind.

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