Navigating employment law can be complex, but understanding the basics is crucial. At DMC, we believe that knowledge is the foundation of effective decision-making, especially when it comes to the legal obligations of being an employer. This post will break down the critical concept of providing notice when terminating an employee to help you stay legally compliant while ensuring a fair and supportive workplace. Whether you’re managing a small team or a larger group, this back-to-basics guide will equip you with the information you need. Let’s dive in and demystify notice requirements.
What is Notice?
When an employee is terminated without cause in Ontario, they are entitled to notice of termination or pay in lieu of notice. That is a fundamental tenet of Ontario employment law and of Canadian law in general. Pay in lieu means that the employee receives the amount of regular income that they would have earned if they worked during their notice period.
Understanding reasonable notice is key to knowing an employee’s rights and an employer’s responsibilities. However, two distinct frameworks within Ontario employment law dictate the amount of notice an employee should receive:
- the statutory minimums outlined in the Employment Standards Act, 2000 (the “ESA”)
- the common law, which flows from case law based on decisions in court
Employment Standards Act: Statutory Minimum Notice
The ESA sets out the minimum notice period employers must provide employees upon termination without cause. Alternatively, the amount of pay in lieu of notice if the termination is immediate. These statutory minimums are designed to ensure that all employees receive a basic amount of ‘warning’ so they can seek alternate employment. The amount of notice under the ESA is based primarily on the length of service.
The following are the statutory minimum notice periods set out for employees of various tenures:
- 1 week’s notice if the employee’s period of employment is less than 1 year
- 2 weeks’ notice if the employee’s period of employment is between 1 year and 3 years
- 3 weeks’ notice if the employee’s period of employment is between 3 and 4 years
- 4 weeks’ notice if the employee’s period of employment is between 4 and 5 years
- 5 weeks’ notice if the employee’s period of employment is between 5 and 6 years
- 6 weeks’ notice if the employee’s period of employment is between 6 and 7 years
- 7 weeks’ notice if the employee’s period of employment is between 7 and 8 years
- 8 weeks’ notice if the employee’s period of employment is 8 years or more
These ESA minimums are non-negotiable unless the employee is terminated for cause. Employee dismissal for cause also known as just cause is another topic that goes beyond the scope of this post. For more on the concept of termination for cause, please check out this post.
Common Law: Beyond the Statutory Minimums
While the ESA sets out the minimum requirements, common law notice is determined by the courts and is based on what is considered “reasonable” in the circumstances. Several factors influence what constitutes reasonable notice, including:
- Length of service: Generally, the longer an employee has been with the company, the more notice they are entitled to.
- Age: Older employees may be entitled to longer notice periods due to the potential difficulty of finding new employment.
- Character of employment: Employees in more senior or specialized roles may receive longer notice periods.
- Availability of similar employment: If similar employment opportunities are scarce, this may increase the notice period.
Common law notice periods are significantly longer than those prescribed by the ESA, often ranging from a few months to over 24 months, depending on the circumstances. The concept is to give the employee enough time to secure comparable employment. Although many commentators argue that it never takes two years to find comparable employment or even alternate employment if comparable employment does not exist.
Over the years, the initial factors used by the courts to determine notice periods have been expanded. For example, in 2023, the Court of Appeal confirmed a trial judge’s award of a 30-month notice period to the dismissed employee. The Court followed a precedent by identifying certain ‘exceptional’ or special circumstances which, in the Court’s view, justified a notice period above the 24-month soft ceiling, those circumstances being:
- The employee was highly specialized (in the field of software design).
- The employee’s job and skillset were highly tailored to, and limited by, their workplace.
- The employee was a frequent and prolific filer of patents during his long tenure (nearly 39 years) with the employer and was extremely valuable in that respect.
- The employer had identified the employee as a key performer in one of their recent performance reviews.
- The availability of similar work in the employee’s vicinity– Belleville, Ontairo – was scarce.
Employers should take note of such cases and remember that 24 months’ worth of common law notice is not a hard ceiling and sympathetic or exceptional factors in favour of terminated employees may lead to greater liability.
Key Differences Between ESA and Common Law Notice
Amount of Notice
Eligibility
All employees are entitled to the ESA minimums, but not all will qualify for extended common law notice. Employers can limit an employee’s notice entitlement to the ESA minimum by including an enforceable termination clause in the employment contract. However, if the clause is unclear, ambiguous, or deemed unenforceable, the employee may be entitled to common law notice instead. Common law notice could only apply to employees with no enforceable employment contract that limits their notice to the ESA minimums. This emphasizes the importance of having proper, enforceable written agreements in place.
Bottom Line
Understanding the difference between ESA and common law notice isn’t just important—it’s essential for protecting your practice from costly legal pitfalls. Failing to provide adequate notice (or pay in lieu of) can result in costly wrongful dismissal claims. That is why you should always consult with legal professionals when dealing with termination to ensure that notice entitlements are correctly calculated and provided.
Our Employment Law team is dedicated to helping dentists understand and minimize the risks associated with being an employer. Send DMC an email or call our Employment Law team directly at 416-443-9280 extension 206.
