Facts Employers Need to Know Before Terminating a Worker

By J.B. Maverick

2 min read

One of the most difficult things you’ll ever have to do as an employer is terminating a worker. The reasons will vary — performance reviews over a period of time may indicate that the employee isn’t a good fit for your company or perhaps the employee has consistently made the same or similar errors despite numerous chances to correct their mistakes. However, before you terminate a worker, there are some important facts you need to know.

What Constitutes Termination

Employee “termination,” under the Employment Standards Act, 2000 (ESA), occurs when an employer no longer employs the worker, even if this happens because of the employer’s insolvency or bankruptcy; when an employer ‘constructively dismisses’ an employee and they later resign; or when an employer lays off an employee for a period of time that exceeds a temporary layoff.

Notice of Termination

Under the ESA, you may terminate an employee that has been employed for three or more continuous months as long as you provide the required written notice of their termination, and the notice period has passed. The amount of time an employee is under your employment includes not only the time they are actively working, but the entire time that the employment relationship exists, including time spent in training, time off for sick leave, and for the time period that an employee may be laid off, provided it’s a temporary lay off. The notice period required depends on the individual’s length of employment. For all terminated employees that have worked less than a year, the notice period is one week. Employees who worked longer than one year, but less than three, must be given a two week notice period. From there, the lengths of the notice periods go up in one-week increments as the length of employment goes up in one-year increments until a terminated employee has worked at your company for eight years or more, in which case, the notice period is eight weeks. During the notice period, there are several rules you must follow. You may not reduce their rate of pay or change any conditions of their employment. You must also make agreed upon contributions to their benefit plans.

Termination Pay

In lieu of written notice, you may opt to provide termination pay to a terminated employee. This is a lump sum of money that must be equal to the amount the employee would have earned during a regular week of work under your employment. The employee also earns vacation pay on their termination pay. You are also required to continue paying benefits that the employee would have been entitled to throughout the notice period. You are not required to provide termination pay or a written notice to certain employees. This includes workers who have willfully participated in misconduct, disobeyed direct orders or company policy, or workers who have committed illegal acts. Some other examples of employees that meet this exemption include employees refusing reasonable offers for alternative employment, construction workers, employees that have been temporarily laid off, and all employees that have worked with you less than three months.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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