Termination Trap

A February 2011 decision of the Ontario Superior Court of Justice highlights the risks facing employers who give the statutory minimum notice required under employment standards legislation upon the termination of employees rather than the larger sum typically warranted by “common law” standards, which a judge would award at trial.

Under Ontario’s legislation, upon the termination of employment, the employer must pay one week’s salary in lieu of notice to the employee for every year she or he worked for the employer, to a maximum of eight weeks’ pay. The oversimplified version of the common law, however, requires the employer to pay one month of salary in lieu of notice to the employee for every year she or he worked, to a maximum of about two years’ salary.

In the February case, the Court considered the company’s termination of a 55-year-old employee following 24 years of service. Upon the termination of employment, the company gave the employee the statutory minimum of eight weeks’ pay in lieu of notice, and agreed to maintain his long-term disability (LTD) benefits for that period. The employee secured new employment less than one month later for less salary and no disability benefits.

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