- An employer can end most employment relationships without cause. What it cannot do is end them without notice or pay in lieu.
- Two separate entitlements are in play: the statutory minimum, and common law reasonable notice.
- Common law notice is usually substantially larger than the statutory minimum.
- A valid termination clause in a contract can limit an employee to the statutory minimum, if it is drafted correctly, which many are not.
Two systems, not one
This is the part that causes the most confusion. Ontario employees potentially have two different entitlements on dismissal, and they are not added together.
The Employment Standards Act sets minimums: notice of termination based on length of service, and in some cases severance pay, which is a separate entitlement with its own qualifying conditions. These are floors. They cannot be contracted out of.
The common law implies a term into most employment contracts requiring reasonable notice of dismissal. It is generally far more generous than the statutory floor, and it is assessed rather than calculated.
An employee is entitled to common law notice unless their contract validly limits them to less.
How reasonable notice is assessed
There is no formula. Courts assess reasonable notice by reference to a set of factors that have been applied for decades, commonly known as the Bardal factors:
- The character of the employment, broadly, the seniority and specialisation of the role.
- The length of service.
- The age of the employee.
- The availability of similar employment, having regard to the employee’s experience, training and qualifications.
Age and length of service tend to do the heaviest lifting. An older, long-serving employee in a specialised role faces a harder re-employment market, and the notice period reflects that.
Other circumstances can matter: inducement away from secure employment, a very short tenure after recruitment, or an unusually narrow labour market for the role.
What the notice period is worth
Notice is not only salary. Damages for failure to give reasonable notice are meant to put the employee in the position they would have been in had proper notice been given.
That generally covers regular compensation through the notice period, and often bonus, commission, pension contributions, and the value of benefits. Whether a particular bonus is included turns on the plan wording and how it operated in practice.
Benefits deserve attention. An employee whose coverage ends at termination may have a claim for the value of the lost coverage, and where a disability arises during what should have been the notice period, the consequences can be significant.
Termination clauses
Employers routinely include clauses limiting an employee to the statutory minimum. When enforceable, such a clause is decisive: it displaces the common law entirely.
Whether these clauses hold up has been litigated extensively, and a great many have failed. Courts scrutinise them closely, and the consequence of a drafting defect is usually that the whole clause falls, leaving the employee with full common law notice.
Recurring problems include clauses that could permit less than the statutory minimum in some circumstance, clauses that fail to continue benefits through the statutory notice period, and defective “just cause” language elsewhere in the contract that has been held to taint the termination provisions as a whole.
For an employee, this means the clause in the contract is a starting point for analysis, not the end of the matter. For an employer, it means a contract drafted years ago may no longer do what it was intended to do.
Mitigation
A dismissed employee is generally required to take reasonable steps to find comparable work. Earnings from new employment during the notice period usually reduce what the former employer owes.
The obligation is to make reasonable efforts, not to take the first available job or to accept a substantially inferior position. The burden of showing a failure to mitigate rests on the employer, and it is not an easy one.
Statutory entitlements are treated differently, they are owed regardless of mitigation.
Releases
Severance offers almost always require a signed release, and they usually come with a deadline.
The deadline is a negotiating device, not a legal requirement. An employee generally has time to obtain advice, and the statutory entitlements are owed whether or not a release is signed.
Signing is the moment the claim ends. It is worth understanding what is being given up before that point rather than after.
Common questions
Can I be fired for no reason?
Generally yes, provided proper notice or pay in lieu is given and the reason is not a prohibited one such as discrimination or reprisal.
Is there a maximum notice period?
Courts treat roughly twenty-four months as an informal ceiling in the absence of exceptional circumstances, though it is not a statutory cap.
Does signing a release stop me from claiming?
That is what it is designed to do. Advice before signing is the point at which the position can still change.
How long do I have to bring a claim?
Wrongful dismissal claims are subject to a limitation period, and complaints under the Employment Standards Act have their own separate and shorter deadlines. Both matter, and they run from different points.
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