Termination of Employment: What are your options when severing ties with employees?

Termination of Employment takes place when an employee is let go, discharged, dismissed, fired, or permanently laid off. Ontario's Employment Standards Act of 2000 (ESA) also considers constructive dismissals and some longer layoffs to be employment terminations including employer bankruptcy or insolvency.

When an employee is asked to leave, an employer has three options:

  1. Provide termination notice with notice period;
  2. Provide payment in lieu of termination notice; or
  3. Provide a combination of advance termination notice and payment in lieu of notice.

Employers cannot terminate employees just for any reason and certain circumstances are protected by law.

Termination notices must be in writing and must be individually address to affected employees.

The ESA requires employers to pay all wages either seven days after termination or on what would have been the employee's next regular pay date, whichever is later.

Termination pay is permitted and is when employers pay employees additional wages instead of providing the minimum notice period. Termination pay must be equal to, or more than, the wages he or she would have earned if allowed to work during the termination period.

Exceptions to termination notice and pay are complex and some circumstances include:

  • Neglect of duty;
  • Unforeseen circumstances such as fire or flood;
  • Construction employment;
  • Retirement;
  • Temporary layoff;
  • Strike/lockout, etc.
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