Working Notice vs Pay in Lieu of Notice in Ontario
When an employer ends employment without cause, the ESA requires either advance notice of termination or pay in lieu of it. Which one an employer chooses changes what you get during the notice period. Employment contracts and the common law can add to the ESA minimums, but never reduce them.
- The ESA minimum is one to eight weeks of notice, rising with years of service and reaching the maximum of eight weeks at eight years.
- With working notice, you stay employed, keep working and are paid as usual, including benefits.
- With pay in lieu, employment ends right away and you are paid the amount you would have earned.
- Severance pay of up to 26 weeks applies when you have five years or more of service and the employer has a payroll of $2.5 million or more, or in some mass terminations.
Notice or pay
An employer can give written working notice, pay in lieu of notice, or a mix of both. During working notice the employer cannot cut your pay, reduce your hours or change your job in a way that is a constructive dismissal. If it does, the notice may not count.
The ESA notice periods
- Under three months of service: no statutory notice (the employer can still owe damages at common law in some cases).
- Three months to less than one year: one week.
- One year to less than three years: two weeks.
- After that, one more week for each additional year of service, up to eight weeks at eight years.
- Mass terminations (50 or more employees in four weeks) have longer, separate notice periods.
Severance pay
Severance pay is separate from termination pay. It applies when you have worked for the employer for five or more years and either the employer's payroll is $2.5 million or more, or the termination is part of a larger permanent closure. The amount is one week per year of service, up to 26 weeks. The common law can give more than the ESA minimums, so many dismissed employees are owed more than these amounts.
Benefits and other pay
- Benefit plan contributions must continue through the ESA notice period.
- Vacation pay continues to accrue and is owed on termination.
- All wages must be paid by the deadline in the ESA, generally the later of seven days after termination or the next regular payday.
If you receive a termination letter
- Do not sign a release straight away. Take time to read it and get advice.
- Compare the notice offered against the ESA minimum and what a court might award.
- Note the date on the letter and the last day of work, and keep all documents.
- If you believe it is a termination for cause, ask for the reasons in writing.
Common questions
Is the ESA minimum all I can get?
Often not. Unless your contract validly limits you to the ESA minimum, a court can award reasonable notice at common law, which may be much more.
Can my employer make me work out my notice?
Yes if it gives working notice in writing. You must be given your normal pay and hours. If your job is changed or your pay is cut, that may be a constructive dismissal.
This guide is general information for people in Ontario, not legal advice. Rules, forms and deadlines change, and every situation is different. Check the current rule or speak to a licensed legal professional before you act.
Not sure where you stand? A licensed paralegal can look at your documents and tell you your options.
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