Frequently Asked Questions – Ontario Employment Law

Frequently Asked Employment Law Questions

In this employment law blog article, we discuss and provide general information regarding a few frequently asked questions various topics.

Termination of Employment

Question: What is Termination of Employment “With Cause”?

• Answer: If an employer proves an employee engaged in serious misconduct that undermined the root (or essence) of the employment relationship, it can terminate the employee “with cause” by not providing any prior notice or a financial severance package. A few examples of termination with cause include:

• • Dishonesty
  • Theft or fraud
  • Workplace Harassment
  • Neglect of duties
  • Insubordination and insolence
  • Poor performance/Incompetence

Question: What is Termination of Employment “Without Cause”?

• Answer: If an employer does not have valid grounds to terminate the employee “with cause,” it can do so “without cause” by providing the employee with at least the minimum amounts of termination pay, benefits continuance and severance pay required under the Ontario Employment Standards Act, 2000. In such cases, the employer can terminate the employee’s job for any reason (or no reason at all), except for discrimination or reprisal.

Severance Packages

Question: What is a “Severance Package”?

• Answer: A financial Severance Package is a combination of money and benefits (severance pay) that a former employer pays for terminating an employee’s job. The amount of severance pay and benefits in a severance package (or settlement agreement) is usually determined by a enforceable termination clause in Employment Contract. Otherwise, an employee’s severance package is determined under common law by considering an employee’s age, years of service, position and the availability of similar employment. Once agreed upon, an employee’s financial severance package often contains several different components, such as outstanding wages and vacation, base salary, payment of accrued bonus pay (incentive compensation), pension plan and health benefits.

Question: What is a Settlement Agreement?

• Answer: A settlement agreement is a written contract that establishes the terms and conditions of an employee’s departure and separation of employment. Among other things, it will usually include a “Full and Final Release” of all legal claims the employee may have against the former employer, in exchange for payment of money (i.e., severance pay) to the employee. However, beyond severance pay, there are also other key provisions usually contained in a separation agreement, including:

(1) Paying the employee all outstanding wages and vacation pay;

(2) Agreeing to continue the employee’s health benefits and pension plan for the notice period;

(3) A “Full and Final Release” (legal waiver) of all claims the employee may have against the employer. This means the employee agrees to give up any potential (and ongoing) legal claims or lawsuits against the employer, such as a claims of wrongful dismissal or discrimination).

(4) A confidentiality requirement for the employee to not disclose the terms (or the very fact) of the separation (settlement) agreement;

(5) An agreement by the employee to honour its legal obligation to not disclose confidential or proprietary company information;

(6) A non-disparagement clause, in which the employee agrees to not make any critical, defamatory or disparaging comments about the company;

(7) A neutral “reference letter,” in which the employer agrees to only confirm to prospective employers the dates of employment and job title, and to not release any other information about the employee’s employment or circumstances of termination.

2026 Updates to Ontario Employment Standards Act, 2000 

Question: Is salary disclosure mandatory in Ontario job postings as of 2026? (Hiring Transparency)

• Answer: Yes. Effective January 1, 2026, most Ontario employers with 25 or more employees must include a compensation range in all public job postings. The pay range cannot exceed a spread of $50,000.  

• Importantly, these new requirements do not apply to internal job postings, or general recruitment campaigns or “help wanted” signs that do not advertise a specific position.

Question: Is it legal for an employer to ask for ‘Canadian Experience’ in Ontario?

• Answer: No. As of January 2026, the Employment Standards Act, 2000 prohibits employers from requiring “Canadian experience” in job postings or applications, though they can still require specific professional licenses.

Question: Do employers have to disclose if they use AI to screen resumes in Ontario? (AI in the Workplace)

• Answer: Yes. New 2026 regulations require employers to state clearly in their job postings if artificial intelligence (AI) is used to screen, assess, or select applicants.

Question: How long does an employer have to notify me after an interview? (Post-Interview Feedback – Hiring Ghosting)

• Answer: Under the new 2026 rules, employers of public job postings are now required to notify interviewed candidates of the final hiring decision within 45 days of their interview. This communication can be delivered in-person, in writing, or by technology (e.g., email).

Constructive Dismissal

Question: What is Constructive Dismissal

Question: Can I claim constructive dismissal in Ontario for a toxic work environment without being fired?

Is a temporary layoff considered constructive dismissal in Ontario if my contract doesn’t mention it?

Can my employer force me back to the office if my contract says remote?

Answer: If your employment contract states you are a remote employee, your employer generally cannot unilaterally change your geographic work location. For many 2026 workers (especially in tech and professional services) “remote” is an essential term of the agreement, not a perk. Forcing a return to the office may be a fundamental workplace change and can amount to constructive dismissal.

Severance Pay in Ontario

How to Calculate Severance Pay

Answer: Severance pay often provided by an employer upon termination in a severance package depends on three things: the ESA minimums, your employment contract, and common law. The ESA provides a floor (up to 26 weeks for eligible employees). If your contract has a valid termination clause, that may cap severance pay. If not, common law applies and often results in much higher severance pay based on age, role, length of service, and re-employment prospects.

Can I sue for wrongful dismissal if I was given working notice?

Yes – Working notice does not prevent an employee from bringing a wrongful dismissal claim. If the notice period or total compensation (severance package) offered by the employer was insufficient, the employee may be permitted under common law to sue the employer.

What is “Job-Seeking Leave” during a mass termination in Ontario?

Answer: During a mass termination, Ontario law requires extended notice and protections that allow employees time to seek new employment as part of the ESA mass termination framework.

Do I have to provide a sick note to my employer?

Answer: Not automatically. Employers can request a doctor’s note only if it is reasonable and consistent with policy. They cannot demand unnecessary medical details (as that would violate an employee’s privacy rights and may constitute discrimination.

Where is the Toronto Small Claims Court for employment disputes?

Answer: Toronto Small Claims Court is at 47 Sheppard Avenue East. It handles employment claims up to $50,000, including unpaid wages, wrongful dismissal, constructive dismissal, severance packages, and discrimination claims.

How long does a wrongful dismissal case take in the Ontario Superior Court of Justice?

Answer: Most cases take 18–24 months if they go the distance (sometimes longer). Many resolve earlier through settlement. The Superior Court handles larger claims exceeding the Small Claims limit.

How much severance is fair for an employee with 10+ years in Ontario?

Answer: Under common law, employees with 10+ years of service often receive 8–12 months or more of total compensation (severance package), depending on whether they signed an employment contract that limits their compensation, or otherwise based on their age, position, job market conditions, and other relevant factors.

Am I entitled to my annual bonus if I’m terminated before payout?

Answer: Usually yes, if the bonus was earned or forms part of your regular compensation, unless there is a signed employment contract or some other governing document exists that clearly removes that right.

How does Ontario law treat unpaid commissions after termination?

Answer: The same as any other form of compensation: commissions earned before termination must be paid, as with wages, vacation pay or expense reimbursement.

Do I lose my right to receive severance package if I start a new job right away?

No. You must mitigate your losses, but finding new work does not cancel your severance package entitlement, but it may reduce the amount (this is called the “duty to mitigate“).

When can an employer demand a doctor’s note for a 3-day sick leave?

Answer: Only when reasonable and necessary. Employers must respect medical privacy and cannot demand detailed diagnoses.

Is a Performance Improvement Plan (PIP) the first step toward termination?

Answer: In our experience as an employment lawyer, the answer is often: Yes. A PIP is commonly used to document performance issues to substantiate a termination of employment. While it is not always legally required before termination, employers use it to justify a termination for cause, or otherwise to create a pretext for termination.

What is workplace harassment under Ontario law?

Answer: Under the Occupational Health and Safety Act, workplace harassment is a pattern of unwelcome conduct or offensive comments or conduct that create a hostile or intimidating work environment, such as bullying, verbal abuse (insults, rumours, threats), social exclusion (ignoring or isolating), or undermining an employee’s work or performance (unfair criticism).

Should I file with the Ontario Ministry of Labour or hire an employment lawyer?

Answer: Generally, employees opt to use the Ministry of Labour for ESA minimums, but an experienced employment lawyer if they are seeking full their full entitlements to a severance package under common law (or other related issues).

Employment Discrimination

Question: What is Discrimination?    

• Answer: Under the Ontario Human Rights Code, an employer is prohibited from discriminating against an employee in any way. The term “discrimination” refers to unfair and unequal treatment of one employee when compared to others (even if it is unintentional) because of an employee’s human characteristics (such as their gender, ethnicity, race, age or disability).  
• Among other things, an employer has a “Duty to Accommodate” an employee’s personal characteristics by taking all reasonable steps to allow the employee to balance: (a) their personal life circumstances (e.g., disability or family responsibilities) and (b) work life and job responsibilities. This is a legal standard requiring an employer to prove that providing any more workplace accommodations is too expensive, or creates serious health and safety problems.

Employment Contracts

Question: What is an Employment Contract? 

• Answer: An Employment Contract (or “Employment Agreement”) sets out the legal rights and responsibilities in an employee’s relationship with their employer (the company they work for). Typically, the reason an employer requires an employee to sign an employment contract is reduce the amount of future severance pay the employer must provide if it terminates the employee’s job. This is why a review with an employment contract lawyer is essential.

Question: What to Look for in an Employment Contract?

• Answer: When considering whether to sign a new employment contract, some of most common provision to review include:

Termination Clause

• • this section of an employment contract determines the rights, obligations and circumstances under which either the employer or employee can terminate (end) the employment relationship. For example, it can state what notice of termination (or severance pay) an employer must provide to the employee if it terminates their employment “without cause.” In these cases, the employer must provide at least the minimum amount of “notice” (or termination pay) required by the Ontario Employment Standards Act, 2000, which is one week per year of service (up to 8 weeks).

Compensation Clause

• • this provision in an employment contract typically describes what the employee will be paid for doing their job, including base salary, health and medical benefits, life or disability insurance, bonuses or incentive compensation and car allowance.

Non-Competition and Non-Solicitation Agreements

• • A Non-Competition Agreement prohibits an employee from “competing” with the employer by working in similar jobs in the same industry for a specific period of time after their employment ends. A Non-Solicitation Agreement prohibits the employee from soliciting customers, clients, suppliers or employees. In either case, these restrictions on an employee’s post-termination activities are very important to review, especially from an employee’s perspective.
    

Contact Employment Lawyer

If you are an employee or an employer looking for an employment lawyer to help with an employment law or workplace issue, please contact Bune Law today.

Understanding a termination letter or severance package often requires understanding the impact on your employee pension plan. If you think that your employer is not compensating you fairly for your pension in your termination package, please call Bune Law to discuss your rights and options. To speak with an experienced employment lawyer, please contact 647-822-5492.

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