In Ontario, employment contracts often include Termination Clauses Ontario that outline the terms and conditions of termination. These clauses are essential for both employers and employees, as they provide clarity on notice periods, severance pay, and continuation of benefits. In this article, we will delve into the world of termination clauses in Ontario, exploring their importance, key considerations, and best practices.
Why Are Termination Clauses Important?
Termination clauses serve as a safety net for both parties involved in an employment contract. For employers, these clauses provide a clear framework for terminating employees, reducing the risk of costly lawsuits. For employees, termination clauses offer protection by ensuring they receive fair notice and compensation in the event of termination.
Key Considerations
When crafting or reviewing termination clauses in Ontario, it’s crucial to consider the following:
Compliance with the Employment Standards Act (ESA): Termination clauses must adhere to the ESA, which sets minimum standards for notice, severance, and termination.
Termination Pay Under ESA: Employers must provide termination pay, which compensates employees for loss of employment.
Severance Pay Under ESA: Employers must provide severance pay, which compensates employees for loss of seniority and rewards them for firm-specific skills if some criteria are met.
Reasonable Notice: Employers must provide termination pay and severance pay, as required by the ESA. When a termination clause contravenes the ESA or other guidelines set by legal precedents, it will be invalidated and be replaced by the default common law reasonable notice.
Enforceability: Courts in Ontario have consistently found that termination clauses must be clearly worded and compliant with the ESA to be enforceable.
Best Practices
To ensure that termination clauses are effective and compliant, follow these best practices:
Clearly Draft Clauses: Ensure that termination clauses are specific, unambiguous, and compliant with the ESA.
Provide termination pay and severance pay, if applicable: Employers must provide termination pay and severance pay as well, if applicable, as required by the ESA. However, if the employer is offering a severance package that is more than the ESA statutory minimum, courts tend to be more lenient in evaluating termination clause eligibility.
Seek Legal Advice: Consult with an employment lawyer to ensure compliance with Ontario employment laws.
Regularly Review and Update Clauses: Regularly review and update termination clauses to ensure they remain compliant and effective.
Understanding Wrongful Dismissal
Dealing with a job loss can be overwhelming, as one needs to figure out what needs to be done next. If you feel you are dealing with wrongful termination or wrongful dismissal, things become even more difficult. This is when you should consider reaching out to a wrongful dismissal lawyer near me, such as HTW Law. The lawyer will help to determine whether you have a strong case and guide you through the process. Here is all that you need to know about wrongful dismissal.
What Is The Definition of Wrongful Dismissal?
There is wrongful dismissal when the employee is dismissed or terminated by the employer without fair compensation. Wrongful dismissal is usually of two types:
Termination Without Cause: The employee is terminated without a cause, and the employer refuses to adequately compensate the employee.
Termination for Cause: The employee is inappropriately dismissed without cause and fails to pay compensation to the employee.
What Is the Difference Between Constructive Dismissal and Wrongful Dismissal?
Constructive dismissal takes place when the employer makes a fundamental change to a material term or condition of the employment contract either through words or conduct. Whereas, in wrongful dismissal, there is no fundamental change made to the employment contract.
How Is Wrongful Dismissal Proved?
When you’ve filed your claim for wrongful dismissal, the employee needs to show one of two things. First: the employee was not provided with enough working notice or a payment instead of a notice; or second: the cause of termination was illegal (such as reprisal or discrimination) or lacking wilful disobedience, disinheriting an employee of ESA entitlements.
Reasonable Notice vs. ESA Entitlements
The common law reasonable notice is the default position. Common law reasonable notice is typically significantly larger than ESA entitlements, as ESA standards are minimum protection law.
However, the common law reasonable notice can be displaced by the ESA entitlements of termination law and severance pay, if applicable, if there’s an enforceable termination clause, which is challenging after the Waksdale decision and the line of cases afterwards, such as Dr. David Walt Dentistry, Baker v. Van Dolder’s Home Team Inc.
So, if an employee can show that the termination clause violates the ESA or the guideline set by legal precedents and have the termination clause invalidated, the common law reasonable notice will be restored.
So, the first thing a wrongful dismissal lawyer will do when contacted by someone who has been terminated is to examine whether the termination clause can be invalidated and be replaced by the common law reasonable notice.
Can the Employer Be Sued for Wrongful Dismissal if They’ve Lied About the Reason Why the Employee Was Fired?
There is a common belief that companies provide employees with a reason for termination. Whereas, the employer is not obliged to give a reason for termination if the employee has been provided with sufficient notice or payment in lieu of notice. In case the employer does provide a wrong reason for termination and provides you with sufficient notice or payment in lieu of notice, then it can’t be considered as a wrongful dismissal.
However, if the reason given for termination was a lie to disguise an illegal motive for termination, such as reprisal, discrimination, or fraud, it will obviously be prohibited.
Can Wrongful Dismissal Be Claimed During Probation?
An employer may terminate an employee only if there is a good faith determination that the person is unfit for permanent employment and the employee has been given a fair and reasonable chance to demonstrate that they are qualified for the position. That they are not terminated for cost savings.
If the employer is deemed to have acted in bad faith in the termination decision, the probational term will be struck and be replaced by the default position of common law reasonable notice.
