Severance Packages: What Is The Difference Between Employment Standards And The Common Law?

In employment law, you will frequently hear the terms employment standards and common law when dealing with termination pay in Ontario. But what are they? And why should you care?

What Are They?

If the employment of a non-unionized employee is terminated on a “without cause” basis, the amount of notice, pay in lieu of notice, or a combination of the two that should be provided can vary greatly.

The ESA sets out the minimum standards—or the floor—when it comes to the amount of notice or termination pay in lieu to which you are entitled. Your employer is allowed to offer you more than the minimum amounts set in the ESA but never less. Notice required under the ESA is generally one week per year of employment to a maximum of eight weeks.[1] If your employer’s annual payroll is more than $2.5 million or if you’re part of a mass layoff, you are also entitled to severance pay in the amount of one week per year of service and pro-rated for part years. However, you must have a minimum of five years of service to be eligible for any statutory severance pay.

On the other hand, common law entitlements are generally considered a ceiling to the amount of reasonable notice or pay in lieu. Apart from an enforceable termination clause in your employment contract, the amount of notice or pay in lieu will be governed by the common law. The common law severance entitlement will depend on a several factors, including:

  • Your age at the time of termination
  • Your length of service
  • Your salary or wages
  • The character of your employment
  • The availability of comparable or similar employment

Considering these factors, the courts in Ontario have awarded 24 months of pay in lieu of notice, and in some cases, more than 24 months. Keep in mind that you do not have to sue or go to court to assert your common law severance entitlement; we, at Pak Smith Employment Lawyers, can negotiate out of court on your behalf.

Remember: your common law severance entitlement includes your ESA notice amounts; it is not in addition to it.

Speak to an expert employment lawyer about your statutory and common law termination pay entitlements. If you recently lost your job or you’re an employer who is about to let someone go, give Pak Smith Employment Lawyers a call today at 416-583-1920. We can help you learn more about your rights, entitlements, and obligations.

[1] Note: If employed between three months to one year, your entitlement is one week; if employed between one and three years, it is two weeks.

By |2020-09-03T03:57:13-04:00October 7th, 2019|Article-All|0 Comments

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