Advising Employees on Termination Packages

Even if you are immediately re-hired, you  maintain your severance pay, albeit the terms vary. Make sure you thoroughly review the details of your package. Speak with an employment lawyer for customized counsel on your particular circumstances.

Not necessarily.

Employees should not assume that their employer can lay them off as there are several decisions from the courts that state layoffs should not be used by employers unless it can be demonstrated that an employee has contracted for this with the employer (either directly or indirectly). Specifically, unilateral and fundamental changes to the terms of employment are generally illegal without an employment agreement, and usually, this in and of itself is insufficient without adequate compensation and/or notice.

Having said this, many employers initially relied on the “layoff” during the COVID-19 era. In proceeding this way, many employers likely decided to lay off employees in the hope that either the employees will agree with (and they can then argue that there was no dispute about the legality) or alternatively, a court will sympathize with employers because of the unforeseen nature of COVID-19 and its dramatic impact on the economy.

The reality is that employees can equally (and reasonably) argue that they should not be the ones to suffer as a result of the downturn and that this is a critical time for employees to receive termination pay to support their families through this extraordinarily difficult time. This is particularly the case since there is no telling how long it will take for an employee to find comparable employment in the COVID-19 era and termination pay is specifically intended to help employees during difficult transitionary periods (and to provide greater support when comparable employment is not plentiful).

The bottom line is that an employee should not assume that an employer has an unrestricted right to lay off employees and, in fact, being laid off may be viewed as an unjust removal of employees’ rights to economic support.

It is important to note, however, that on May 29, 2020, the Government of Ontario introduced Ontario Regulation 228/20 – Infectious Disease Emergency Leave. This Regulation automatically converted temporary layoffs occurring from March 1, 2020, onwards to a job-protected leave.

During the leave, the timelines for temporary layoffs as set out under the Employment Standards Act, 2000 do not apply as employees are considered to be on a job-protected leave and not a temporary layoff. This leave applies during the duration of the COVID-19 Period, which is expected to end on January 1, 2022. Beginning on January 2, 2022, treatment of legislation in relation to temporary layoffs and constructive dismissals will resume as previously applied before COVID-19.

Finally, and assuming a layoff is deemed to be legal, if an employer does not return the employee to work within the timeframe allowed for under the law in the relevant province (and comply with any other conditions relating to the layoff) then the employer automatically becomes liable for termination pay.

The answer depends on the type of application that was made and the work permit that was issued.

Specifically, terminations must be reported if a foreign worker is issued a Labour Market Impact Assessment (“LMIA”) based work permit under the Temporary Foreign Worker Program (“TFWP”) or was nominated under the Provincial Nominee Program (“PNP”).

Any changes in the employment status of foreign workers issued an LMIA-based work permit under the TFWP, including terminations, layoffs and resignations, must be reported to Employment and Social Development Canada (“ESDC”). Similarly, under the PNP, changes in employment status must be reported to the relevant provincial PNP office.

Employers are not, however, under a strict statutory requirement to report terminations of employment for foreign workers who are working without the requirement for an LMIA.  This is most commonly the case when individuals are working under the International Mobility Program (“IMP”).

Setting this aside, if an employer has reasonable grounds to believe that an employee is working illegally, it is advisable for the employer to report the change of employment status for that individual with either Immigration, Refugees and Citizenship Canada (“IRCC”) or Canada Border Services Agency (“CBSA”).

Generally speaking, in Ontario, there are no legal parameters around the method of resignation. Employees should refer to their employment agreements to determine if the agreement defines any particular method of resignation. It may be prudent to have a conversation with your boss prior to resigning, in order to let them know personally and thank them for your time with the Company.

Employers in Canada do not have an unlimited right to lay off their employees.

The biggest reason for this is Canadian courts believe employees should be provided with income support to find another job. Layoffs do not provide this. Rather, layoffs allow employers to suspend an employee’s work without any income support.

Instead, the law has consistently stated that layoffs should only be used in limited circumstances, such as where an employee’s employment contract has specifically addressed this possibility.

By contrast, termination of employment triggers a wide range of employer obligations, including pay relating to employment standards and, potentially, common law notice payments (which could be months of financial support), intended to financially support the employee until they find other employment.

For this reason, where it is unclear whether an employee has agreed to be laid off (for example, where an employment contract does not address layoffs) and the employer proceeds to layoff the employee, the employee may have a claim for constructive dismissal on the basis that he or she was laid off without an agreement in his or her contract allowing for this.

If an employer violates a term of an employee’s contract, the employee may be successful in claiming that they have been constructively dismissed (and therefore that they should be provided with all the payments associated with termination).

Specifically, constructive dismissal occurs when the unilateral action(s) of an employer fundamentally alters an essential term of an employee’s contract such that a reasonable person would conclude that the employer no longer intends to be bound by the terms of the contract. Constructive dismissal does not, however, occur where the employee accepts the change(s) or does not make it known to the employer that he or she does not agree with the change.

Employees who are successful in making a constructive dismissal claim would be entitled to damages as if their employment was terminated.

It is important to note, however, that on May 29, 2020, the Government of Ontario introduced Ontario Regulation 228/20 – Infectious Disease Emergency Leave. This Regulation automatically converts a temporary layoff to a job-protected leave.

During the leave, the timelines for temporary layoffs as set out under the Employment Standards Act, 2000 do not apply as you are considered to be on a job-protected leave and not a temporary layoff. This leave applies during the duration of the COVID-19 Period, which is expected to end on January 1, 2022. Beginning on January 2, 2022, treatment of legislation in relation to temporary layoffs and constructive dismissals will resume as previously applied before COVID-19.

A temporary layoff occurs when an employer cuts back or stops an employee’s work without ending their employment relationship, including, for example, laying off an employee when there is a shortage of work. In Ontario, the Employment Standards Act, 2000 (“ESA”) sets out that a temporary layoff can last:

• Not more than 13 weeks of layoff in any period of 20 consecutive weeks; or
• More than 13 weeks in any period of 20 consecutive weeks, but less than 35 weeks of layoff in any period of 52 consecutive weeks (with additional obligations from the employer).

It is important to keep in mind that not every employer is able to rely on temporarily laying off their employees as layoffs are, generally speaking, aimed at businesses that are cyclical in nature and where an employee and employer are found to have agreed to layoffs as a condition of employment.

The ESA defines a termination as the following:

• An employee is terminated if an employer dismisses or stops employing the employee, including where the employee is no longer employed due to the bankruptcy or insolvency of the employer.

Generally, when an employer terminates the employment of an employee, they must accordingly provide the employee with either written notice of termination, termination pay, or a combination of both, as well as severance pay (if applicable). Employers often need to provide significantly more payment than what is prescribed under the ESA as they are often subject to common law reasonable notice requirements.

It is important to note that on May 29, 2020, the Government of Ontario introduced Ontario Regulation 228/20 – Infectious Disease Emergency Leave. This Regulation permits a temporary layoff to be converted to a leave. During the leave, the timelines for layoffs as set out under the ESA do not apply as you are considered to on a job-protected leave instead of laid off. This leave applies during the duration of the COVID-19 Period, which is expected to end on January 1, 2022. Beginning on January 2, 2022, treatment of the legislation in relation to temporary layoffs and constructive dismissals will resume as previously applied before COVID-19.

Reasonable notice describes what employees are entitled to at the time of the termination of their employment. The law states that, unless an employee has agreed in an employment contract to something else (and that contract is enforceable), employees whose employment is terminated without cause are entitled to a be provided with “reasonable notice” of the termination of their employment.  Reasonable notice is essentially enough support for the employee to find alternative comparable employment.

While there is no fixed/specific number, it is not unreasonable to expect that an employee could receive between 3 and 5 weeks per year of service (with more for short service), up to a maximum of twenty-four months.

In most cases, the most influential factors in determining reasonable notice include the employee’s age, length of service, position (and related responsibilities), and the availability of similar employment.

Wrongful dismissal, constructive dismissal, and unjust dismissal are distinct legal concepts in Canadian employment law, each applying in different situations.

Wrongful dismissal occurs when an employer terminates an employee without providing the required legal entitlements, such as reasonable notice, pay in lieu of notice, or severance (where applicable). It can also involve bad faith conduct during termination, including failing to pay wages, providing insufficient notice, or mistreating the employee during the dismissal process.

Constructive dismissal happens when an employer does not formally fire the employee but instead makes significant, unilateral changes to the job that effectively force the employee to resign. This could include major pay cuts, drastic changes in job duties, or allowing a toxic or hostile work environment to persist. If proven, the law treats this as if the employee was terminated, entitling them to compensation.

Unjust dismissal is a specific legal remedy under the Canada Labour Code that applies only to employees in federally regulated industries (such as banking, telecommunications, and transportation) who have completed at least 12 months of continuous service. Eligible employees can challenge a dismissal they believe is unfair and may be entitled to remedies such as reinstatement or back pay. To qualify, the employee must typically file a complaint within 90 days, must not be a manager, and must not be covered by a union or collective agreement.

In summary:

• Wrongful dismissal focuses on lack of proper notice or compensation
• Constructive dismissal involves being forced to quit due to major workplace changes
• Unjust dismissal is a statutory protection for certain federal employees against unfair termination

Because each type of dismissal has different legal tests, rights, and remedies, it is important to seek professional legal advice to determine which applies to your situation.

In Ontario, employers generally don’t have access to details regarding whether you were fired from a job unless you voluntarily provide that information or if it is publicly known (for instance due to a legal dispute).

However, it’s important to keep in mind that potential employers may reach out to your employers for reference checks. During these checks they could inquire about your job performance reasons for leaving and whether you would be eligible for rehire. While previous employers are typically limited in what they can disclose due to privacy and defamation laws they can still share information about your employment history. For example, they may disclose whether you left voluntarily or were terminated.

Furthermore, if you were terminated with cause and this information is included in your employment records or if legal action was taken related to your termination there is a chance that future employers may come across this during background checks or through records.

In short, yes.

In Ontario, employment law generally adheres to the concept of “at will employment.” This means that an employer has the ability to terminate an employee’s position without providing a reason as long as it is not discriminatory or in breach of any employment contracts, collective agreements or statutory protections.

However, it’s important to note that there are instances where terminating an employee without notice or warning may not be permissible under Ontario’s employment standards legislation or common law principles.

According to the Employment Standards Act, 2000 (“ESA”) employees are entitled to receive notice of termination or payment in lieu of notice unless there is a reason for termination. The specific amount of notice or payment will vary based on factors including the duration of employment. Additionally depending on the circumstances surrounding the termination employers may also be required to provide notice or severance pay based on law principles.

Yes, foreign workers are entitled to the same rights as a Canadian or permanent resident in relation to termination of employment. This includes all rights under the Employment Standards Act, 2000 in relation to termination and severance pay, and entitlement to Employment Insurance (assuming basic eligibility is met).

Yes, you can receive Employment Insurance (EI) benefits if you are fired, however, it depends on the circumstances surrounding your termination. While anyone can submit an EI application, eligibility for benefits relies on meeting specific criteria. Individuals who have left their employment voluntarily or have been terminated with just cause may not meet the requirements for EI benefits.

NOTE: Employment Insurance (EI) is a financial protection program administered by the Government of Canada that provides temporary financial assistance to eligible individuals who are unemployed. EI benefits include regular benefits for those who have lost their job through no fault of their own, such as due to layoffs or shortage of work, and are actively looking for employment. Additionally, EI provides special benefits such as sickness benefits, parental leave benefits, maternity benefits, compassionate care benefits, and benefits for caring for critically ill children or adults. The program is funded by premiums paid by employees and employers in Canada.

Yes, you are allowed to remain in Canada so long as you continue to have a valid work permit, but you are not allowed to work for any other employer until you have secured a new work permit with different conditions.

Keep in mind that while you can travel outside the country during this time, there is a chance that an Immigration Officer may require you to surrender your work permit and may change your status to visitor if they determine that you are no longer employed.

The simple answer is no.

In Ontario, employers do not have an obligation to give a reason for terminating an employment relationship, however, an employer is obligated to provide the employee with reasonable notice, as per Ontario’s Employment Standards Act.  This notice can be provided either through the provision of working notice or pay in lieu of working notice. Despite this, employees can always ask the employer what the reason for termination is. It is important to note that while no reason for termination is legally required by an employer, there are particular circumstances in which a termination could be deemed unlawful, such as:

1. For reasons that appear to be retaliatory in nature following your insistence on enforcing your entitlement under the Employment Standards Act;
2. For a reason that is considered discriminatory based on one of the protected grounds under the Ontario Human Rights Code; and
3. For inquiring about a health and safety issue or refusing to do unsafe work as protected by the Occupational Health and Safety Act

In short, it can depend on various factors. These variables include the nature of the employment, the terms any employment contract(s), whether other employment negatively impacts the primary employment, and company policies. In some cases, employees are required to disclose other employment positions to their primary employer to ensure transparency and prevent a conflict of interest.

If an employee fails to disclose a position that leads to a conflict of interest, it could result in disciplinary action, including termination of employment. 

Considering the specifics of each situation is crucial. It’s advisable to review employment contracts, company policies, and seek legal advice before making decisions.

No.

At law, employers are not obligated to provide employees, including dismissed employees, with a reference letter.

However, the courts have found that where an employer refuses to provide a former employee with a reference letter and this results in harm to the employee (i.e., they are unable to mitigate their damages by securing new employment), the employee may be entitled to aggravated or punitive damages as a result of the employer’s bad-faith conduct.

In Ontario, if an employee’s employment has been terminated without cause then they are entitled to, at minimum, sufficient notice of the termination of their employment. The Employment Standards Act (“ESA”) sets out the minimum amount of notice that an employee is entitled to.

The ESA also imposes severance pay obligations on certain employers. Under the ESA, employees could be entitled to up to 26 weeks of severance pay. It is important to keep in mind that the ESA sets out only the minimum entitlements and depending on factors including the nature of an employee’s employment contract (if any), an employee may be entitled to significantly more than the minimum entitlements under the ESA.

If your employment has been terminated by your employer and you are unhappy with the termination package being offered, do not sign any contracts, agreements, or packages without first consulting with an employment lawyer. In fact, it is wise to always consult with an employment lawyer before signing any documents provided by your employer.  An employment lawyer can help determine if the termination package offered by your employer is unreasonable and can help negotiate a better package should you be entitled to more than is being offered

Employers in Ontario are permitted to terminate the employment of their employees as long as that termination is completed in a lawful manner. Employees in Ontario are entitled to notice and/or pay in lieu of notice of the termination of their employment. If a temporary foreign worker feels that the notice and/or pay in lieu of notice that they received upon the termination of their employment was inadequate, they should contact an employment lawyer to review their potential entitlements.

If a temporary foreign worker thinks that their employment was terminated for discriminatory reasons, then they should contact an employment lawyer to have the circumstances of their employment reviewed in relation to the relevant human rights legislation in Canada.

Foreign workers are entitled to termination pay and severance pay, where applicable, as outlined under the Employment Standards Act, 2000. Further, subject to what may be stated in a written employment contract, a foreign worker may be entitled to reasonable notice as prescribed by the common law.

Foreign workers, particularly workers with status that is tied to a specific employer, may be entitled to a notice period that is longer than what would have been owed if the employee was not a foreign worker.

Foreign workers may also be able to pursue punitive or aggravated damages based on their employment experience and the behaviour of the former employer.

Seek legal advice first.

When terminating an employee’s employment, it is common for an employer to request that the employee sign a release of some kind. This will generally be presented to the employee at the time of termination after the employer has reviewed the terms of the termination. It is important that employees understand that they are not required to sign any documentation at that moment. They are permitted to take the time to review the terms being offered and sign the release at a later time. From the employee’s perspective, taking this time is encouraged.

However, if you have already signed a release, all hope is not lost. An experienced employment lawyer can review your circumstances and make you aware of your options. If you are presented with a termination package and a release, it is strongly advised that you have an experienced employment lawyer thoroughly review all documentation and advise on how you should proceed. Signing the release means that you are giving up certain rights (such as the ability to bring a lawsuit against your employer) in exchange for certain benefits (such as termination pay or an extended benefits period). Before signing any documentation, it is important to be sure that you are receiving everything to which you are entitled.

There are several situations where reasonable notice or compensation in lieu of notice is not required, including where:

• The employee resigns or retires;
• The employee is dismissed for just cause;
• Termination rights and obligations are already provided in an employment contract; or
• The employee is employed for a fixed term and the employee works until the end of the term.