What to know
- Non-unionized Ontario workers may be entitled to notice pay, severance pay and continued benefits when they’re permanently terminated.
- Notice entitlements generally increase with an employee’s length of service, ranging from one week to up to eight weeks under Ontario’s minimum employment standards.
- Some employees may also qualify for severance pay, depending on factors including their length of employment and their employer’s payroll.
- A company’s financial difficulties generally don’t automatically eliminate an employee’s termination rights, although bankruptcy or creditor protection can change the situation.
- Lublin recommends getting legal advice before signing a severance agreement, as an employer’s initial offer may not represent everything an employee could be entitled to.
As new U.S. tariffs are expected to impact Canadian businesses, an Ontario lawyer is warning laid off employees they should not accept the first severance deals on the table.
Last month, U.S. President Donald Trump imposed 50 per cent tariffs on various Canadian goods, from dairy to alcoholic beverages, to clothes, re-igniting a trade war between the two neighbouring countries.
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Canada has since announced its own counter tariffs, promising to match the U.S. measures “dollar for dollar,” with new fees expected to come into effect as soon as Sept. 8.
University of Calgary economics professor Trevor Tombe has predicted that the newly-imposed tariffs could have significant impacts in the Canadian economy, estimating that over 87,000 jobs could be lost across the country as a result of the measures, taking the current 6.4 per cent overall unemployment rate to 6.8 per cent.
According to him, considerable direct losses are expected in manufacturing, agriculture, furniture, textiles, electrical equipment, and plastic products industries, while indirect impact is expected mainly in transportation and warehousing.
As layoffs become an increasing risk, Whitten & Lublin Lawyers Founding Partner Daniel Lublin is reminding workers that company economic hardship is not an excuse to sign off their severance rights.
What are your termination rights?
Non-unionized workers in Ontario have a right to notice pay, severance pay, and benefits upon termination under the Employment Standards Act, if they have passed their probationary period.
The amount of notice pay employees are entitled to might depend on how long they’ve stayed at the company, including one week for those employees who have been hired for less than a year, three weeks for those between one and three years, and up to eight weeks for those with eight or more years in the company.
During this notice period, employees must also have access to their employment benefits.
In addition to the notice, employees are entitled to severance pay, which is compensation for their job loss. This compensation applies to those who have been with the company for more than five years, and the company must have a payroll of $2.5 million or more.
“Employees who are older and have been employed for a long period of time could be entitled to up to 24 months severance and possibly even more,” Lublin said.
“I once had an individual who was entitled to 27 months severance because he had worked at a company his entire life.”
Do termination rights change during layoffs?
Although layoffs might put employees in a vulnerable or pressuring position, Lublin warns that they are still entitled to the same termination rights when facing permanent layoffs.
It is still common to see employers offering termination deals or even buyouts for employees who voluntarily choose to leave, but employees should be careful not to dismiss their rights.
“Outside of a situation where an employer claims bankruptcy or enters into some type of creditor protection, the severance obligations an employer owes and an employee’s entitlements that he or she’s entitled to don’t really change,” he said.
This rule has been determined after the Ontario Court of Appeal has ruled in 2015 that an employer’s poor economic situation doesn’t justify reducing employee’s severance entitlements.
However, employees should note that their termination rights might be different when it comes to temporary layoffs.
How to handle layoffs
Although dealing with layoffs is never fun, Lublin shared some recommendations that can help employees make sure they are getting the compensation they are entitled to.
The lawyer strongly advises employees to never sign any termination deals or severance packages right away.
“Many employers use a pressure tactic with a timeline for a response outlined in a severance letter. They say you have one week to decide on our severance, and there is an implication that the employee won’t receive anything or won’t receive as much money if they don’t sign off on those terms,” he said.
“Employers usually do not offer everything an employee is entitled to. They generally offer employees what they think they will accept.”
Before taking any next steps, Lublin said it is recommended that employers contact an employment expert or attorney who could look at the terms of the offer and make sure they are receiving their total compensation.
“You could be signing away your rights. So, my first piece of advice is: don’t sign anything.”
