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COVID-19 has had a profound impact on the Canadian labour market. From lay-offs to reduced schedules, to permanent dismissals, employees (and their employers) have been severely impacted since the onset of the pandemic.

The sheer volume and speed of changes have resulted in uncertainty in many cases as to whether an employee’s employment has been permanently terminated, and the related entitlements owing to them.

Accordingly, the following is intended as a review/update on employee rights upon the termination of employment.

Right to Notice/Termination Pay

Employers have the right to terminate an employee’s employment at any point. Specifically, unless an employee is unionized, an employer can fire an employee without reason at any time.

To compensate for this lack of security, employers are required to provide dismissed employees with “reasonable” notice of the termination of their employment (or compensation in lieu). In short, this means that employees have the right to continued employment (or payment equivalent to continued employment) for a period to help them successfully transition to new employment.

The amount of notice to be provided to an employee depends on a range of factors including the employee’s age, the position they held, and their years of service. Generally, the longer an employee has been with an employer, the more notice they are entitled to. Further, in certain circumstances, employees may be entitled to reinstatement to their previous job.

Reasonable Notice Distinct From Employment Standards

It is worth noting that “reasonable” notice is distinct from obligations under the employment standards legislation of the specific jurisdiction. For example, the Ontario Employment Standards Act dictates that employees are entitled to specific notice upon termination depending on their years of service.

In some cases, employers must also provide an employee with severance pay, in addition to notice of termination. Specifically, in Ontario, employees are entitled to severance pay (i.e., a lump sum payment) if they have worked for the employer for at least five (5) years, and if their employer has an annual payroll of at least $2.5 million dollars annually. Severance pay is calculated based on the number of years and months an employee was employed.

Employment standards, however, represent only the minimum amounts that must be provided upon termination.  Specifically, most employees are entitled to significantly more than the minimum standards. Accordingly, employees would be wise to keep this in mind in reviewing any payments they are offered.

Bad Faith Damages

Canadian courts have made it clear that employees have the right to be treated fairly both during employment and in the termination of their employment.

If an employer acts in bad faith while terminating an employee’s employment, then that employee may be entitled to damages (i.e., a financial award) in addition to any termination pay or severance pay owing.

Bad faith can include dismissing an employee in an unprofessional manner, misrepresenting the reason for the departure, attacking the employee’s reputation before, during or following the dismissal, or wrongfully accusing the employee of serious misconduct and dismissing the employee for cause. Bad faith damages can be significant.

How to Manage Wrongful Dismissal

Wrongful dismissal describes any circumstance in which an employee has not been provided with sufficient compensation and/or has been treated in a manner inconsistent with the laws relating to good faith and fair dealings.

Further, and at least in part because entitlements are determined on a case-by-case, many employees do not know how much notice (or pay in lieu of notice) they are legally entitled to and often accept a termination package or severance package that is worth less than the package they should receive.

For this reason, it is often worth employees having their termination packages reviewed with qualified legal counsel to ensure that it is in line with their entitlements and, if not, to determine strategies to have it rectified. This may involve pursuing the matter at court and/or direct negotiation with the employer or former employer.

Securing Counsel

At Sultan Lawyers, we provide legal advice to employees on all matters relating to workplace disputes, including best practices following a termination of employment. We also provide representation where former employees wish to pursue a wrongful dismissal claim. We take pride in our client-focused approach. For any questions or inquiries please contact, Toronto employment lawyers, Sultan Lawyers, at 416-214-5111 or via email to mlahert@sultanlawyers.com for a consultation.


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