Question

Glorious Florists is a floral supply company with offices and boutiques in Ontario and Québec. The organization started operations in 1992 and currently has an approximate annual payroll of $12,000,000 in each jurisdiction.

The organization is considering terminating the employment of five employees in each jurisdiction. To assist with forecasting the budget for the balance of the year, Abigail Adu, the Director of Finance has asked you, as the Payroll Supervisor, to provide her with the details on all legislated payments on termination of employment required for each jurisdiction. In addition to the required payments on termination, include any employer costs related to the employees’ statutory deductions.

Answer 1

The cost of terminating the employment of an employee in Ontario depends upon a mixture of contract provisions, common law and statute. The rules under the Employment Standards Act, 2000 about the termination of employment are minimum requirements which cannot be contracted out of. Some employees may have rights under the common law or other legislation that provide them greater rights than those regarding termination under the Employment Standards Act, 2000.

Common law obligations for reasonable notice of termination will always add an element of uncertainty to an employee's entitlements upon termination, as calculating payment in lieu of notice at common law requires an understanding of the impact of the termination on the affected employee. In particular, an employee's age, length of service, character of employment, and availability of suitable alternative employment may all affect their entitlements at common law. The only way employers can attempt to mitigate the cost of common law obligations are to use well‐drafted termination provisions in their employment contracts.

Termination :

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; or
• 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 in lieu of notice 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 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, as specified in the ESA.

If we see Emplyment Standards Act(ESA), 2000 - Part XV (Termination and severance of emplyment) :

1. No termination without notice :

No employer shall terminate the employment of an employee who has been continuously employed for three months or more unless the employer,

(a) has given to the employee written notice of termination in accordance with section 57 or 58 and the notice has expired; or

(b) has complied with section 61.

2. Prescribed employees not entitled :

Prescribed employees are not entitled to notice of termination or termination pay under this Part.

3. Employer notice period :

The notice of termination under section 54 shall be given,

a) at least one week before the termination, if the employee’s period of employment is less than one year;

(b) at least two weeks before the termination, if the employee’s period of employment is one year or more and fewer than three years;

(c) at least three weeks before the termination, if the employee’s period of employment is three years or more and fewer than four years;

(d) at least four weeks before the termination, if the employee’s period of employment is four years or more and fewer than five years;

(e) at least five weeks before the termination, if the employee’s period of employment is five years or more and fewer than six years;

(f) at least six weeks before the termination, if the employee’s period of employment is six years or more and fewer than seven years;

(g) at least seven weeks before the termination, if the employee’s period of employment is seven years or more and fewer than eight years; or

(h) at least eight weeks before the termination, if the employee’s period of employment is eight years or more.

4. Period of employment: included, excluded time :

Time spent by an employee on leave or other inactive employment is included in determining his or her period of employment. 2000,

Exception -

Despite subsection (1), if an employee’s employment was terminated as a result of a lay-off, no part of the lay-off period after the deemed termination date shall be included in determining his or her period of employment.

5. Requirements during notice period :

(1) During a notice period under section 57 or 58, the employer,

(a) shall not reduce the employee’s wage rate or alter any other term or condition of employment;

(b) shall in each week pay the employee the wages the employee is entitled to receive, which in no case shall be less than his or her regular wages for a regular work week; and

(c) shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee’s benefits under the plan until the end of the notice period.

6. Pay instead of notice :

(1) An employer may terminate the employment of an employee without notice or with less notice than is required under section 57 or 58 if the employer,

(a) pays to the employee termination pay in a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given in accordance with that section; and

(b) continues to make whatever benefit plan contributions would be required to be made in order to maintain the benefits to which the employee would have been entitled had he or she continued to be employed during the period of notice that he or she would otherwise have been entitled to receive.

7. Deemed active employment :

(1) If an employer terminates the employment of employees without giving them part or all of the period of notice required under this Part, the employees shall be deemed to have been actively employed during the period for which there should have been notice for the purposes of any benefit plan under which entitlement to benefits might be lost or affected if the employees cease to be actively employed. 2000, c. 41, s. 62 (1).

Benefit plan contributions :

(2) If an employer fails to contribute to a benefit plan contrary to clause 61 (1) (b), an amount equal to the amount the employer should have contributed shall be deemed to be unpaid wages for the purpose of section 103.