Severance Pay in Ontario
The duration of employment can affect the amount of severance pay an employee receives upon being terminated from a job. As such, it is important for employers to understand the rules surrounding severance pay ontario and best practices in this regard in order to ensure legal compliance.
The length of an individual’s employment can also impact their entitlements if they are laid off, or are offered another position with the same employer at a lower salary. In this case, an employee will be entitled to the higher of their regular wage in the new role or their severance pay.
Aside from severance pay Ontario, there are other types of compensation an employer may owe to an employee upon termination. One of the most common is termination pay, which is the amount an employer must give to an employee when they are terminated without cause. This is outlined in the Employment Standards Act (ESA) and can be quite substantial depending on how long an employee has been with an employer.
Severance Pay in Ontario and the Duration of Employment
An employee is entitled to up to six weeks of termination pay if they have completed five to six years of service, and the employer has a payroll of $2.5 million or more. There are also special rules that apply when an employer has a mass layoff, with 50 or more employees being terminated in the course of six months or less. In these cases, an employer must provide the same level of notice and severance pay as those outlined in the ESA.
Some employers are required to provide severance packages to their terminated employees as part of their human rights obligations. This is especially true in the event of discriminatory reasons for firing, which is illegal under the Human Rights Code. A severance package can compensate an employee for their loss of income, as well as any other expenses they incur during the transition period.
Typically, an employer will offer severance pay in the form of a lump sum payment. However, they may be able to agree to payments in installments as long as the employee approves of this. They will have to provide written or electronic consent for this, and the agreement must be made prior to terminating an employee. In addition, an employer can only pay severance in installments once the employee has provided written or electronic approval of this, and it has been approved by the director of Employment Standards, Ministry of Labour, Training and Skills Development.
An individual can hire a lawyer to review their severance pay or package before signing it. This will ensure they are getting the amount to which they are entitled and not being shortchanged. They will also want to make sure the severance agreement does not contain any provisions that would limit their ability to pursue any legal action in the future. A severance package can be a significant financial support during the transition period, so it is important to review all terms carefully.