Each province in Canada and federal law require statutory minimum notice periods to be given to an employee terminated without cause. Typically the degree of cause required to be shown by the employer to escape this minimum is, as in the case of Ontario’s legislation, a qualitatively higher degree than the common law claims, the standard of just cause being defined by the statute as “wilful misconduct, disobedience or wilful neglect of duty”.

Ontario – The Employment Standards Act

Ontario has two minimums. ( minima just does not sound right !)
The first is described as a notice period or payment in lieu.
The period or payments are as follows:

1.	After 3 months	1 week
2.	After 12 months	2 weeks
3.	After 2 years	2 weeks

This pattern then follows of one additional week per year to a maximum of 8 weeks. All benefits, including disability insurance covers, and vacation pay accruals -two items which most employers forget to continue, must remain in place for this period. Service means only full years and consecutive years of service,  prior to the date of termination.

The second payment which is called “severance pay” is one week per year or part year of service, which includes cumulative service, to a maximum of 26 weeks, provided that:
1. The employer’s payroll or payroll of all related companies in Ontario exceeds $2.5 million annually, and
2. The employee has 5 years of cumulative service.

Most employers make these payments without a hassle on termination. Where that is not the case, the employee needs to be careful as to how he/she tries to enforce the payment, as there are two possible remedies. (There are other picky rules re payroll and mass termination but we are just doing the basics here !)

Remedy #1 Ministry of Labour

The employee can file a complaint with the Ministry to seek recovery of the payments due – usually this is a bad idea because:
1. The maximum recovery under this process is $10,000. ( don’t ask me why !)
2. Once a complaint is filed, the employee will lose the right to sue civilly.

This, in proper circumstances can be a good idea because:
1. The employee’s total claim is likely capped as close to $10,000 if he is using this process – usually a lawyer may be not be required;
2. Should the claim fail, there are no legal costs awarded against the employee, which is not the case in the civil process.

Keep in mind that if the employee does use a lawyer to recover this sum, no costs will be paid in his favour, given success.

Remedy #2 Civil Lawsuit

A civil case is usually the preferred route to recover the statutory payments because:
1. There is no cap on the sum to be recovered;
2. There can also be included other claims for common law wrongful dismissal damages and human rights violations, where appropriate.

More Rules on the statutory payments

The theory of the statute, and actually of any similar remedial legislation, is that the law is setting out a minimum standard to be met by any employer on a no cause termination – which is thus designed to be interpreted liberally. This has other significant consequences, apart from determining the sum to be paid. These are as follows:

1. Any contract which may describe termination obligations must always meet the minimum standard – otherwise it is tossed and we are back to full common law entitlements. (Machtinger v. HOJ Industries Supreme Court of Canada)
2. The employer cannot tie any conditions or qualifiers to receipt of this payment on a not for cause termination – such as asking for a full release giving up all claims on termination, or asking the employee to “re-affirm” or even create for the first time a non-compete or other form of post termination covenant, such as a non- disparagement term or non-solicit covenant.
3. If the employer plays funny with the Employment Standards Act obligations, it can be argued that it is acting in bad faith, entitling the employee to additional damages in a civil case for emotional distress or moral damages. (See for example the counterclaim of Durante in Zesta v. Cloutier, awarding $75,000 as moral damages, due in part to the employer’s refusal to pay the ESA minimum.)

 

Keep in mind that there are no offsets from the statutory payments. Even if new employment is found the day after termination, the full sums must be paid.

The requirement of the employer to continue all benefit plans for the statutory notice period is very important. A disability which commences in that notice period can create a claim against the employer and the disability insurer for short and long term disability benefits for the entire length of the disability.