Ontario Employee Severance Package Review
What happens when an employee loses their job? Typically, the employer notifies the employee their job has been “terminated” – and may or may not provide a specific reason.
If there is no reason for the termination, it is called a termination of employment “without cause“. This is the most common scenario. In that case, where an employer terminates an employee without cause, the employer’s obligation is to provide reasonable notice or payment in lieu of notice. Why? The general policy intent is to allow them employee reasonable time to begin their search for new employment.
In the leading Supreme Court of Canada case of Wallace v. United Grain Growers Ltd., the court recognized the mutual right of both employers and employees to terminate an employment contract at any time and for any reason.
In the less common scenario, the employer will attempt to terminate an employee’s job “for cause“. What is just cause for termination in Ontario employment law? This is a legal rule which may permit an employer to terminate an employee’s job without providing reasonable notice or payment instead of notice. Some examples of just cause for termination include repeated substandard performance, theft, dishonesty, workplace violence, wilful misconduct, habitual neglect of duty or conflict of interest.
There is no hard and fast rule for determining when an employer has grounds for termination for cause. Rather, each case is unique and must be determined based on its own particular facts.
Termination Without Cause Ontario
In this article, we cover the general scenario where an employee is terminated without cause in Ontario. In those cases, the employer will generally provide a severance package (or termination package), consisting of a termination letter notifying the employee that their job is formally terminated, together with a severance offer (payment) and a legal release for the employee to consider.
What do most employees look for when reviewing a severance package? What is in a typical severance package in Ontario?
In some circumstances, an employee’s terms of employment are governed by a written employment contract he or she previously signed, which will specify how much notice of termination or payment in lieu of notice they will receive upon termination.
However, in many other cases, there is no governing employment contract – or even if there is, the employment contract may be void and unenforceable for violating the Ontario Employment Standards Act, 2000. In those cases, the employee’s terms of employment – especially their entitlements to notice of termination or payment lieu of notice – are governed by common law severance pay rules in Ontario common law.
The general rule the courts apply to calculate the appropriate amount of notice of termination or payment in lieu of notice include, based on each employee’s personal situation:
- character and length of service
- the employee’s age
- years of service
- prospects for future employment
Key Considerations for Employees in Reviewing Severance Package with Employment Lawyer
1. Is there a signed employment contract that limits the employee’s termination of employment entitlements? Is it legally enforceable? Are there grounds to challenge the legality of the employment contract as part of a wrongful dismissal claim?
2. How much notice of termination, or payment in lieu of notice, does the employee’s severance package provide? Is that appropriate or below the employee’s legal entitlements to termination pay and severance pay in Ontario? Are there other important factors that should be considered to increase the employee’s severance compensation under common law? Does common law severance even apply in this employee’s termination?
3. Beyond the important issue of an employee’s notice of termination or pay in lieu of notice, are there other important claim the employee may have against the employer?
- Is there grounds for a discrimination claim under the Ontario Human Rights Code?
- Was the termination of employment an illegal reprisal under the Employment Standards Act, 2000 or the Occupational Health and Safety Act?
- Is there grounds for the employee to seek additional “bad faith” damages for the manner in which the termination of employment was carried out, beyond the simple fact that the employee was terminated itself (e.g., attacking the employee’s reputation by declarations made at the time of dismissal, misrepresentation regarding the reason for the decision, or dismissal meant to deprive the employee of a pension benefit or other right, permanent status for instance).
4. Is it a better option for the employee to consider a wrongful dismissal case against the employer? If so, employee’s are prudent to carefully consider their options before accepting a severance package from an employer, especially in exchange for signing a legal release. This requires conducting a cost-benefit analysis of the employee’s severance package compared with the potential outcomes of a successful legal claim for wrongful dismissal with the help of an experienced employment lawyer.
Contact Us
If you are an employee who has been terminated from your employment and offered a severance package, it is important to seek legal advice as soon as possible as soon as possible. Speaking with an experienced employment lawyer will help you understand and pursue your full employment law rights in Ontario, even if you have a written employment agreement that your employer says limits your entitlement. You may be entitled to more generous severance compensation under common law.
No matter which side you are on, our employment lawyer is ready to assist with your case. Please feel free to reach out to Bune Law at 647-822-5492.
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