Notice Entitlements – Severance or Termination?
[Note: this is a transcript of a video that originally appeared on our website in July 2013]
A question that we are often asked by our clients is: what am I entitled to receive from my employer after being terminated?
Most employees in Canada are entitled to receive notice of termination, unless they are being let go for just cause. To determine the amount of notice, we look at:
- Minimum standard entitlements
- The offer letter or employment contract that you signed with your employer
- Possible common law entitlements.
How do we determine your statutory notice entitlements? We start by working out whether your employer is federally or provincially regulated. In Ontario, most employers in the private sector are regulated by the provincial Employment Standards Act. This statute sets out the minimum employment standards, including notice entitlements. In Ontario, minimum statutory notice entitlements range from one week (after three months of employment) to a maximum of eight weeks (if your employer has a payroll of over 2.5 million dollars and you have worked for them for more than five years). You are also entitled to severance pay: this can be up to 26 weeks of your regular wages. It’s important to note that you may be entitled to more than these statutory minimums, depending on your common law entitlements or your employment contract.
What is common law reasonable notice? This is a period meant to give an employee notice that his or her job is coming to an end. The idea is to provide a financial cushion while the employee looks for comparable employment to replace their previous job.
How is that notice period determined? Common law reasonable notice periods tend to be longer than the statutory notice period. It’s determined by looking at relevant factors in an employee’s circumstances. The most relevant factors are generally the employee’s age, length of service, compensation, and the character of employment. For example, was it supervisory? What was the level of the employee’s responsibility? There is no exhaustive list of factors. At the end of the day, the court will consider any factor or issue that is relevant to determining how long it will take you to find comparable employment.
What if you have a contract? It has become increasingly common for employment contracts to set out notice entitlements. What’s important about that is that a common law notice period can be expressly limited by an employment contract. As long as that contract meets the minimum requirements of the Employment Standards Act, and is contained in an enforceable agreement, your entitlements can be limited to the amount specified. It’s important for employees to carefully review and understand any offer of employment before signing it. Otherwise, you may be agreeing to limit your notice entitlements to the statutory minimum.
In terms of notice entitlements, generally speaking, the employee will either work until the end of the notice period, or they will cease working and be compensated with pay in lieu of notice, equivalent to the value of the salary and benefits that otherwise would have been provided. Generally, the goal is to place the employee in the same financial position as if they had been allowed to continue working until the end of the notice period.
At Nelligan O’Brien Payne, we can assist you with assessing your notice period and ensuring that you receive appropriate compensation.