Things just aren’t working out with that one employee. A slow economy forces you to downsize. There’s a new piece of technology that will do the work of one of your employees twice as fast and for half the price.
Whatever the reason, at one point or another, most employers have found themselves in a position where they need to terminate the employment relationship with one of their employees. Then what?
5 Common Questions About Notice of Termination
You know you have obligations to your employee if you are going to terminate them without cause but what are they? How much notice do you owe? How much termination pay must you give?
You can find answers to these, and other questions about termination notice below.
1. Who is Entitled to Notice of Termination?
The first question employers will have to consider is if the employee you plan to terminate is entitled to notice.
Any employee who you have employed for at least three months on an indefinite term contract is entitled to reasonable notice of their termination. The Employment Standards Act (ESA) sets out statutory minimum amounts of notice to which terminated employees are entitled (discussed below).
Employees with fixed-term contracts are not entitled to notice of terminations. However, there are unique complications that come with ending a fixed-term contract before its completion. (You can read more on this topic here)
Employees who are terminated for cause are not entitled to any notice. Their termination is effective immediately.
2. What is Reasonable Notice?
Reasonable notice is intended to give a terminated employee adequate time to find a new, comparable job. Reasonable notice can be given in time or pay in lieu thereof. This means that, if an employee is entitled to one week’s notice, they will either continue working for one week after they have been terminated or be compensated with pay and benefits equivalent to the value of these things had the employee continued to work to the end of the notice period.
3. What are the Minimum Notice Periods?
The ESA sets out the minimum standards for termination notice and pay for all non-federally employed workers. Employees working in federally-regulated industries (such as banking and telecommunications) have their notice periods and severance entitlements set out in the Canada Labour Code.
The table below outlines the statutory minimum notice periods under the ESA.
|Length of Employment||Minimum Notice Required|
|Less than 3 months||None|
|3 months to less than one year||1 week|
|1 year to less than 3 years||2 weeks|
|3 years to less than 4 years||3 weeks|
|4 years to less than 5 years||4 weeks|
|5 years to less than 6 years||5 weeks|
|6 years to less than 7 years||6 weeks|
|7 years to less than 8 years||7 weeks|
|8 years or more||8 weeks|
During the statutory notice period, employers may not in any way change the nature of the employee’s work or compensation. This means wages and any other term or condition of employment must remain the same including benefit contributions, bonuses and vacation pay.
Employers should be aware that employees are often entitled to more than these statutory minimums. Common law notice, which is based on factors such as an employee’s position and age, often supplement statutory minimums.
For example, if an employee has been with your company for 10 years and has a relatively senior position, eight weeks’ notice may not be considered reasonable notice.
If you fail to provide an employee with the statutory minimum notice of their termination, the termination becomes a wrongful dismissal and you could be held liable for damages.
4. When does the Notice Period Begin?
Notice periods begin on the day that you give your employee written notice of their termination.
5. How is Termination Pay Paid?
Termination pay is to be delivered in a lump sum payment. It is equal to an employee’s regular wages for a regular work week. Vacation pay and benefit contributions must also be included in this payment.
Termination pay must be paid within seven days of the employee’s termination or on the employee’s next regular pay date, whichever comes later.
Termination Of Employment Experts
Consulting with an experienced employment lawyer is the best way for employers to ensure that they give their employees appropriate termination notice. Contact KCY at LAW today on 905-639-0999 or online for more info.