An employee who has been continuously employed for three months or more in an indefinite employment contract is statutorily entitled to a minimum amount of notice should the employer decide to end the employment contract. Employees in fixed term contracts are not statutorily entitled to notice.
The notice period begins on the day that an employer gives notice of the termination to the employee. The only exception is when an employee is terminated for cause and is therefore not entitled to any notice or pay in lieu of notice. Failing to provide an employee with reasonable notice constitutes wrongful dismissal and could make an employer liable for damages.
How is Termination Notice Paid?
The purpose of providing notice to an employee is to give the employee sufficient time to find comparable employment. The employee either works until the end of the notice period provided, or ceases work and is compensated with pay in lieu of notice equivalent to the value of salary and benefits that would have otherwise been provided until the end of the notice period. This places the employee in the same financial position as if the employee had been allowed to continue working until the end of the notice period.
If notice is provided by way of pay in lieu of, then the remuneration must be paid no later than seven days after the termination date or on what would have been the employee’s next regular pay day, whichever is later.
What is the Minimum Notice Period?
In Ontario, the Employment Standards Act, 2000 (“ESA, 2000″) outlines minimum standards for notice, termination pay and severance. However, if the company is a federal enterprise or a federally incorporated company, legislation under the Canada Labour Code (“CLC“) applies regardless of where an employee physically works. There are significant differences between the two with respect to minimum notice and severance. Special rules also apply in the case of “mass terminations” in which 50 or more employees are terminated at an employer’s establishment within a four-week period. The following is a table outlining the statutory minimums under Ontario’s ESA, 2000.
|Length of Employment||Minimum Notice Required|
|Under 3 months||None|
|3 months to under 1 year||1 week|
|1 year to under 3 years||2 weeks|
|3 years to under 4 years||3 weeks|
|4 years to under 5 years||4 weeks|
|5 years to under 6 years||5 weeks|
|6 years to under 7 years||6 weeks|
|7 years to under 8 years||7 weeks|
|8 years or more||8 weeks|
It is important to note that employment standards legislation provides the minimum amount of notice that must be given to employees. In most cases, an employee is entitled to more notice than the statutory minimum, regardless of whether the employee has worked for the employer for a very long or very short period of time. A common misconception is that the statutory minimums fully satisfy the employers’ obligation and the employees’ entitlement. In most cases they do not.
Common law notice usually supplements an employee’s statutory notice entitlement. Common law notice is based on a number of factors, including an employee’s position, age and length of service. Common law notice is determined by analyzing previous judges’ decisions.
Cautions When Contesting the Notice Period
Because statutory minimums do not usually satisfy the definition of reasonable notice, the amount of notice could form the basis for a wrongful dismissal claim. Employers need to ensure that the notice they provide to their employees is suitable for each particular case, and employees need to be aware of their entitlements under both statutory and the common law.
Before contesting the notice period, certain restrictions apply. Employees must note that when making a complaint to the Ministry of Labour for statutory notice, certain limitation periods exist. Further, an employee cannot file a complaint for notice with the Ministry of Labour and also pursue a claim for notice in the courts.
If the employee does not withdraw the complaint within two weeks from the day it was filed, the employee will thereafter not be permitted to pursue a civil action in court for common law notice and would have then waived their entire entitlement, which is usually substantial. Limitation periods, or strict deadlines, also apply regarding how much time may pass after termination and before a complaint can be made to the Ministry of Labour.
Is Severance the Same as Termination Pay?
Severance is technically distinct from pay in lieu of notice, also known as “termination pay”. In certain circumstances, it may be due in addition to termination pay depending on how long the employee worked for the company.
For related case studies and more information on Notice Periods and what Employees are Statutorily Entitled to, search our blog.
More Concepts on Employment Terminations
- Bad Faith, Unfair Dealing and Conduct of Dismissal
- Constructive Dismissal—When Resigning May Actually be Wrongful Dismissal
- Lay-Off — a Strictly Regulated Area of Employment
- Mitigation – the Duty of Every Wrongfully Dismissed Employee
- Reasonable Notice—What Constitutes “Reasonable”?
- Severance Pay: Not the Same as Termination Pay
- Terminations – Almost Always an Employer’s Right
- Termination for Cause—Hard to Prove
- Wrongful Dismissal—What Makes them Wrong?