Termination of employment
Termination of employment defined
A number of expressions are commonly used to describe situations when employment is terminated. These include "let go," "discharged," "dismissed," "fired" and "permanently laid off."
Under the Employment Standards Act, 2000 (ESA) a person’s employment is terminated if the employer:
- dismisses or stops employing an employee, including where an employee is no longer employed due to the bankruptcy or insolvency of the employer;
- "constructively" dismisses an employee and the employee resigns, in response, within a reasonable time;
- lays an employee off for a period that is longer than a "temporary layoff".
In most cases, when an employer ends the employment of an employee who has been continuously employed for three months, the employer must provide the employee with either written notice of termination, termination pay or a combination (as long as the notice and the number of weeks of termination pay together equal the length of notice the employee is entitled to receive).
The ESA does not require an employer to give an employee a reason why his or her employment is being terminated. There are, however, some situations where an employer cannot terminate an employee’s employment even if the employer is prepared to give proper written notice or termination pay. For example, an employer cannot end someone’s employment, or penalize them in any other way, if any part of the reason for the termination of employment is based on the employee asking questions about the ESA or exercising a right under the ESA, such as refusing to work in excess of the daily or weekly hours of work maximums, or taking a leave of absence specified in the ESA. Please see the chapter on reprisals.
Qualifying for termination notice or pay in lieu
Certain employees are not entitled to notice of termination or termination pay under the ESA. Examples include: employees who are guilty of wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the employer. Other examples include construction employees, employees on temporary layoff, employees who refuse an offer of reasonable alternative employment and employees who have been employed less than three months.
There are a number of other exemptions to the termination of employment provisions of the ESA. See “Exemptions to notice of termination or termination pay.” Please also refer to the special rule tool.
The termination-of-employment rules are entirely separate from any entitlements an employee may have to be paid severance pay under the ESA.
A constructive dismissal may occur when an employer makes a significant change to a fundamental term or condition of an employee’s employment without the employee’s actual or implied consent.
For example, an employee may be constructively dismissed if the employer makes changes to the employee’s terms and conditions of employment that result in a significant reduction in salary or a significant negative change in such things as the employee’s work location, hours of work, authority, or position. Constructive dismissal may also include situations where an employer harasses or abuses an employee, or an employer gives an employee an ultimatum to "quit or be fired" and the employee resigns in response.
The employee would have to resign in response to the change within a reasonable period of time in order for the employer’s actions to be considered a termination of employment for purposes of the ESA.
Constructive dismissal is a complex and difficult subject. For more information on constructive dismissal please contact the Employment Standards Information Centre,
An employee is on temporary layoff when an employer cuts back or stops the employee’s work without ending his or her employment (e.g., laying someone off at times when there is not enough work to do). The mere fact that the employer does not specify a recall date when laying the employee off does not necessarily mean that the lay-off is not temporary. Note, however, that a lay-off, even if intended to be temporary, may result in constructive dismissal if it is not allowed by the employment contract.
For the purposes of the termination provisions of the ESA, a "week of layoff" is a week in which the employee earned less than half of what he or she would ordinarily earn (or earns on average) in a week.
A week of layoff does not include any week in which the employee did not work for one or more days because the employee was not able or available to work, was subject to disciplinary suspension, or was not provided with work because of a strike or lockout at his or her place of employment or elsewhere.
Employers are not required under the ESA to provide employees with a written notice of a temporary layoff, nor do they have to provide a reason for the lay-off. (They may, however, be required to do these things under a collective agreement or an employment contract.)
Under the ESA, a “temporary layoff” can last:
- not more than 13 weeks of layoff in any period of 20 consecutive weeks;
- 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, where:
- the employee continues to receive substantial payments from the employer;
- the employer continues to make payments for the benefit of the employee under a legitimate group or employee insurance plan (such as a medical or drug insurance plan) or a legitimate retirement or pension plan;
- the employee receives supplementary unemployment benefits;
- the employee would be entitled to receive supplementary unemployment benefits but isn't receiving them because he or she is employed elsewhere;
- the employer recalls the employee to work within the time frame approved by the Director of Employment Standards;
- the employer recalls the employee within the time frame set out in an agreement with an employee who is not represented by a trade union;
- the employee continues to receive substantial payments from the employer;
- a layoff longer than a layoff described in 'B' where the employer recalls an employee who is represented by a trade union within the time set out in an agreement between the union and the employer.
If an employee is laid off for a period longer than a temporary layoff as set out above, the employer is considered to have terminated the employee’s employment. Generally, the employee will then be entitled to termination pay.
Written notice of termination and termination pay
Under the ESA:
- an employer can terminate the employment of an employee who has been employed continuously for three months or more if the employer has given the employee proper written notice of termination and the notice period has expired;
- an employer can terminate the employment of an employee without written notice or with less notice than is required if the employer pays termination pay to the employee.
Written notice of termination
An employee is entitled to notice of termination (or termination pay instead of notice) if he or she has been continuously employed for at least three months. A person is considered “employed” not only while he or she is actively working, but also during any time in which he or she is not working but the employment relationship still exists (for example, time in which the employee is off sick or on leave or on lay-off).
The amount of notice to which an employee is entitled depends on his or her “period of employment”. An employee’s period of employment includes not only all time while the employee is actively working but also any time that he or she is not working but the employment relationship still exists, with the following exceptions:
- if a lay-off goes on longer than a temporary lay-off, the employee’s employment is deemed to have been terminated on the first day of the lay-off—any time after that does not count as part of the employee’s period of employment, even though the employee might still be employed for purposes of the “continuously employed for three months” qualification;
- if two separate periods of employment are separated by more than 13 weeks, only the most recent period counts for purposes of notice of termination.
It is possible, in some circumstances, for a person to have been “continuously employed” for three months or more and yet have a period of employment of less than three months. In such circumstances, the employee would be entitled to notice because an employee who has been continuously employed for at least three months is entitled to notice, and the minimum notice entitlement of one week applies to an employee with a period of employment of any length less than one year.
The following chart specifies the amount of notice required:
|Period of employment||Notice required|
|Less than 1 year||1 week|
|1 year but less than 3 years||2 weeks|
|3 years but less than 4 years||3 weeks|
|4 years but less than 5 years||4 weeks|
|5 years but less than 6 years||5 weeks|
|6 years but less than 7 years||6 weeks|
|7 years but less than 8 years||7 weeks|
|8 years or more||8 weeks|
Note: Special rules determine the amount of notice required in the case of mass terminations – where the employment of 50 or more employees is terminated at an employer’s establishment within a four-week period.
Requirements during the statutory notice period
During the statutory notice period, an employer must:
- not reduce the employee’s wage rate or alter any other term or condition of employment;
- continue to make whatever contributions would be required to maintain the employee’s benefits plans; and
- pay the employee the wages he or she is entitled to, which cannot be less than the employee’s regular wages for a regular work week each week.
This is an employee’s rate of pay for each non-overtime hour of work in the employee’s work week.
These are wages other than overtime pay, vacation pay, public holiday pay, premium pay, termination pay and severance pay and certain contractual entitlements.
Regular work week
For an employee who usually works the same number of hours every week, a regular work week is a week of that many hours, not including overtime hours.
Some employees do not have a regular work week. That is, they do not work the same number of hours every week or they are paid on a basis other than time. For these employees, the “regular wages” for a “regular work week” is the average amount of the regular wages earned by the employee in the weeks in which the employee worked during the period of 12 weeks immediately preceding the date the notice was given.
An employer is not allowed to schedule an employee’s vacation time during the statutory notice period unless the employee—after receiving written notice of termination of employment—agrees to take his or her vacation time during the notice period.
If an employer provides longer notice than is required, the statutory part of the notice period is the last part of the period that ends on the date of termination.
How to provide written notice
In most cases, written notice of termination of employment must be addressed to the employee. It can be provided in person or by mail, fax or e-mail, as long as delivery can be verified.
There are special rules for providing notice of termination if an employee has a contract of employment or a collective agreement that provides seniority rights that allow an employee who is to be laid off or whose employment is to be terminated to displace (“bump”) other employees.
In that case, the employer must post a notice in the workplace (where it will be seen by the employees) setting out the names, seniority and job classification of those employees the employer intends to terminate and the date of the proposed termination. The posting of the notice is considered to be notice of termination, as of the date of the posting, to an employee who is “bumped” by an employee named in the notice. However, this notice of termination must still meet the length requirements set out in the ESA.
There are also special rules regarding how notice is provided when there is a mass termination.
An employee who does not receive the written notice required under the ESA must be given termination pay in lieu of notice. Termination pay is a lump sum payment equal to the regular wages for a regular work week that an employee would otherwise have been entitled to during the written notice period. An employee earns vacation pay on his or her termination pay. Employers must also continue to make whatever contributions would be required to maintain the benefits the employee would have been entitled to had he or she continued to be employed through the notice period.
Example: Regular work week
Sarah has worked for three and a half years. Now her job has been eliminated and her employment has been terminated. Sarah was not given any written notice of termination.
Sarah worked 40 hours a week every week and was paid $14.00 an hour. She also received 4% vacation pay. Because she worked for more than three years but less than four years, she is entitled to three weeks’ pay in lieu of notice.
Sarah’s regular wages for a regular work week are calculated:
$14.00 an hour X 40 hours a week = $560.00 a week
Her termination pay is calculated:
$560.00 X 3 weeks = $1,680.00
Then her vacation pay on her termination pay is calculated:
4% of $1,680.00 = $67.20
Finally, her vacation pay is added to her termination pay:
$1,680.00 + $67.20 = $1,747.20
Result: Sarah is entitled to $1,747,20. The employer must also ensure continued coverage for any benefit or pension plans that applied to her for three weeks.
Example: No regular work week
Gerry has worked at a nursing home for four years. He works every week, but his hours vary from week to week. His rate of pay is $14.00 an hour, and he is paid 6% vacation pay.
Gerry’s employer eliminated his position and did not give Gerry any written notice of termination. Gerry was ill and off work for two of the 12 weeks immediately preceding the day his employment was terminated. Gerry earned $1,800.00 in the 12 weeks before the day on which his employment ended.
Gerry is entitled to four weeks of termination pay.
Gerry’s average earnings per week are calculated:
$1,800.00 for 12 weeks / 10 weeks (Gerry was off sick for two weeks therefore these weeks are not included in the calculation of average earnings) = $180.00 a week
His termination pay is calculated:
$180.00 × 4 weeks = $720.00
Then his vacation pay on his termination pay is calculated:
6% of $720.00 = $43.20
Finally, his vacation pay is added to his termination pay:
$720.00 + $43.20 = $763.20
Result: Gerry is entitled to $763.20. The employer must also ensure continued coverage for any benefit or pension plans that applied to him for four weeks.
When to pay termination pay
Termination pay must be paid to an employee either seven days after the employee’s employment is terminated or on the employee’s next regular pay date, whichever is later.
Special rules for notice of termination may apply when the employment of 50 or more employees is terminated at an employer’s establishment within a four-week period. This is often referred to as mass termination. (Note: an "establishment" can, in some circumstances, include more than one location.)
When a mass termination occurs, the employer must submit Form 1 (Notice of termination of employment) to the Director of Employment Standards. Any notice to the affected employees would not be considered to have been given until the Form 1 was received by the Director, i.e. notice of mass termination is not considered to be effective until the Director of Employment Standards receives the Form 1.
In addition to providing employees with individual notices of termination, the employer must post a copy of the Form 1 provided to the Director of Employment Standards in the workplace where it will come to the attention of the employees it affects on the first day of the notice period.
The amount of notice employees must receive in a mass termination is not based on the employees' length of employment, but on the number of employees who have been terminated. An employer must give:
- Eight weeks' notice if the employment of 50 to 199 employees is to be terminated
- 12 weeks' notice if the employment of 200 to 499 employees is to be terminated
- 16 weeks' notice if the employment of 500 or more employees is to be terminated
Exception to the mass-termination rules
The mass-termination rules do not apply if:
- The number of employees whose employment is being terminated represents not more than 10% of the employees who have been employed for at least three months at the establishment,
- None of the terminations are caused by the permanent discontinuance of all or part of the employer’s business at the establishment.
Mass termination: Resignation by an employee
An employee who has received termination notice under the mass termination rules who wants to resign before the termination date provided in the employer’s notice must give the employer at least one week’s written notice of resignation if the employee has been employed for less than two years. If the employment period has been two years or more, the employee must give at least two weeks’ written notice of resignation. However, the employee does not have to give notice of resignation if the employer constructively dismisses the employee or breaches a term of the contract.
Temporary work after termination date in notice
An employer can provide work to an employee who has been given notice of termination on a temporary basis in the 13-week period after the termination date set out in the notice without affecting the original date of the termination and without being required to provide any further notice of termination to the employee when the temporary work ends.
If an employee works beyond the 13-week period after the termination date and then has his or her employment terminated, the employee will be entitled to a new written notice of termination as if the previous notice had never been given. The employee’s period of employment will then also include the period of temporary work.
A "recall right" is the right of an employee on a layoff to be called back to work by his or her employer under a term or condition of employment. This right is commonly found in collective agreements.
An employee who has recall rights and who is entitled to termination pay because of a layoff of 35 weeks or more may choose to:
- keep his or her recall rights and not be paid termination pay (or severance pay, if he or she was entitled to severance pay) at that time;
- give up his or her recall rights and receive termination pay (and severance pay, if he or she was entitled to severance pay).
If an employee is entitled to both termination pay and severance pay, he or she must make the same choice for both.
If an employee who is not represented by a trade union elects to keep his or her recall rights or fails to make a choice, the employer must send the amount of the termination pay (and severance pay, if any) to the Director of Employment Standards, who holds the money in trust.
If an employee who is represented by a trade union elects to keep his or her recall rights or fails to make a choice, the employer and the trade union must try to come to an arrangement to hold the termination pay (and severance pay, if any) in trust for the employee. If they cannot come to an arrangement, and the trade union advises the employer and the Director of Employment Standards in writing that efforts have failed, the employer must send the termination pay (and severance pay, if any) to the Director of Employment Standards, who holds the money in trust.
If an employee chooses to give up his or her recall rights or if the recall rights expire, the money that is held in trust must be sent to the employee.
If the employee accepts a recall back to work, the money that is held in trust will be returned to the employer.
Exemptions to notice of termination or termination pay
The notice of termination and termination pay requirements of the ESA do not apply to an employee who:
- is guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer. Note: “wilful” includes when an employee intended the resulting consequence or acted recklessly if he or she knew or should have known the effects his or her conduct would have. Poor work conduct that is accidental or unintentional is generally not considered wilful;
- was hired for a specific length of time or until the completion of a specific task. However, such an employee will be entitled to notice of termination or termination pay if:
- the employment ends before the term expires or the task is completed; or
- the term expires or the task is not completed more than 12 months after the employment started; or
- the employment continues for three months or more after the term expires or the task is completed;
- is employed in construction. This includes employees who are doing off-site work in whole or in part who are commonly associated in work or collective bargaining with employees who work at the construction site;
- builds, alters or repairs certain types of ships
- has his or her employment terminated when he or she reaches the age of retirement in accordance with the employer’s established practice, but only if the termination would not contravene the Human Rights Code.
- has refused an offer of reasonable alternative employment with the employer;
- has refused to exercise his or her right to another position that is available under a seniority system.
- is on a temporary lay-off
- does not return to work within a reasonable time after being recalled to work from a temporary layoff;
- is terminated during or as a result of a strike or lockout at the workplace;
- has lost his or her employment because the contract of employment is impossible to perform or has been frustrated by an unexpected or unforeseen event or circumstance, such as a fire or flood, that makes it impossible for the employer to keep the employee working. (This does not include bankruptcy or insolvency or when the contract is frustrated or impossible to perform as the result of an injury or illness suffered by an employee.)
See also: Termination tool
Rights greater than ESA notice of termination, termination pay, severance pay
The rules under the ESA about termination and severance of employment are minimum requirements. Some employees may have rights under the common law or other legislation that give them greater rights than notice of termination (or termination pay) and severance pay under the ESA; because such rights generally cannot be enforced under the ESA, some employees may want to sue their former employer in court for “wrongful dismissal” or pursue other options. Employees should be aware that they cannot sue an employer for wrongful dismissal and file a claim for termination pay or severance pay with the ministry for the same termination or severance of employment, an employee must choose one or the other. Employees may wish to obtain legal advice concerning their rights.