The Employment Standards Act in Ontario indicates how severance pay is to be determined

Published by Paragon Legal Services on 20th May, 2021 

The Employment Standards Act guarantees a minimum severance pay for all employees as part of a Severance Package. Once an employee has been continuously employed for 3 months of more, they are to be paid at least on week of their salary for every year they were employed.

This severance has a maximum of 8 week's worth of their salary once they have worked for more than 8 years. If they have worked for less than one year, they must still be paid for at least one extra week. Whether you are an employer or employee, contact Paragon Legal Services to find out about severance packages specific to your situation. 

The Ministry of Labour helps employees obtain their severance pay under the Employment Standards Act but they cannot help persons under a common law package. An employee filing a claim to them also waives their right to retain an attorney. Therefore, for information on termination packages, you should contact Paragon Legal Services. 

We can also help employers review and draft their severance packages for their employees. We can help them calculate the termination package that should be paid in Ontario according to the law.

Most employers are unaware that an employee must also be paid for one week for every additional year of service that they have worked if they have 5 or more years of service with a company who has a payroll over a certain amount. If a company also has a high turnover of employees, they may also need to pay them an increased termination package. 

Calculating termination packages in Ontario can be tricky as the Ministry of Labour oversees that certain companies with certain financials remain within the ambit of the law. For help drafting or reviewing your termination package, you should contact a qualified legal professional or firm for more information on what is legally required. 

Termination packages should rely on the termination clause in an employment contract. This clause allows an employer to dismiss an employee in the manner in which it was agreed upon when the employee first signed the contract. It should state the minimum terms and conditions under which they should be dismissed. 

For help drafting termination packages, severance pay and drafting termination letters or contracts of employment, contact Paragon Legal Services to speak with a qualified legal professional.