The Employment Standards Act, 2000 (ESA) governs provincially regulated, non-unionized workplaces in Ontario. It outlines fundamental rights and obligations related to work hours, wages, leaves, termination, and severance. Understanding these legal standards is crucial for both employers and employees to maintain compliance and protect their rights.

This article will discuss key aspects of the Ontario Employment Standards Act and recent changes that impact workplaces across the province.

What is the Employment Standards Act (Ontario)?

The ESA establishes the rights and obligations of employees and employers in Ontario, covering:

• Minimum wage
• Standard hours of work
• Overtime pay
• Public holidays
• Vacation leave and pay
• Leaves of absence
• Termination pay
• Severance pay

Compliance with the ESA is a legal obligation. Employers must ensure employment contracts and workplace policies align with the ESA, while employees should be aware of their rights under Ontario law.

Recent Changes to the ESA Ontario

Several significant changes to the ESA have come into effect between 2023 and 2025. Employers and employees should be aware of the following updates:

• Minimum Wage Increases:

  • October 1, 2023: Increased to $16.55 per hour.

  • October 1, 2024: Increased to $17.20 per hour.

• Inclusion of Remote Workers in Mass Terminations (Effective October 26, 2023):

  • The ESA now considers employees working exclusively from home as part of an employer’s establishment.

  • Remote employees are included when calculating mass terminations (50+ employees dismissed within four weeks).

• Expanded Reservist Leave (Effective October 26, 2023):

  • Reservists can now take leave for treatment, recovery, or rehabilitation related to their service.

  • The eligibility period was reduced from three months to two months of continuous employment.

• Prohibition of Unpaid Trial Periods (Effective March 21, 2024):

  • Unpaid trial shifts are now banned, ensuring all workers are entitled to ESA protections.

• Licensing Requirements for Temporary Help Agencies and Recruiters (Effective July 1, 2024):

  • All temporary help agencies and recruiters must be licensed to operate in Ontario.

  • Employers are prohibited from working with unlicensed agencies or recruiters.

• Tip and Gratuity Payment Rules (Effective June 21, 2024):

  • Employers must pay tips and gratuities by cash, cheque, direct deposit, or another prescribed method.

  • If tips are pooled and include employer participation, the policy must be written, posted, and retained for three years.

• Vacation Pay Agreements (Effective June 21, 2024):

  • Any alternate vacation pay arrangements must be in writing.

• Prohibition on Requiring Medical Notes for Sick Leave (Effective October 28, 2024):

  • Employers cannot require a doctor’s note for an employee’s sick leave under the ESA.

• Increased ESA Violation Penalties (Effective October 28, 2024):

  • The maximum fine for ESA violations has increased from $50,000 to $100,000.

Minimum Wage, Hours of Work, and Overtime

The ESA establishes clear rules regarding wages and work hours:

• Minimum Wage: Employers must pay at least the Ontario minimum wage to all employees, including full-time, part-time, and casual workers.

• Hours of Work: The standard workweek is 8 hours per day or 48 hours per week, with additional hours allowed only if there is a written or electronic agreement.

• Overtime Pay: Overtime is paid at 1.5 times the regular hourly rate for hours worked beyond 44 hours per week. Certain positions are exempt from overtime rules.

Vacation & Leaves of Absence

The ESA provides the following protections:

• Paid Vacation:

  • Employees with less than five years of service: Two weeks’ vacation and 4% vacation pay.

  • Employees with five or more years of service: Three weeks’ vacation and 6% vacation pay.

• Leaves of Absence: Employees are entitled to various unpaid leaves, including pregnancy leave, parental leave, family medical leave, and reservist leave.

Termination and Severance

Termination Pay

Employers can terminate employees without cause as long as they provide written notice or pay in lieu of notice:

• Employees with at least 3 months of continuous employment are entitled to a minimum of 1 week’s notice per year of service, up to a maximum of 8 weeks.

• Some employees may also be entitled to common law reasonable notice, which may be higher than ESA requirements.

Severance Pay

Severance pay applies when an employee meets both of the following conditions:

1. They have at least five years of continuous employment with the employer.

2. Their employer either:

   • Has a global payroll of at least $2.5 million; or

   • Has terminated 50 or more employees within six months due to a business closure.

The maximum severance pay under the ESA is 26 weeks’ pay.

Conclusion

Employers in Ontario have a legal obligation to comply with the ESA, ensuring fair treatment of workers. The ESA establishes minimum rights related to wages, hours of work, leaves, and termination protections. Recent updates have strengthened worker protections, introduced licensing for recruiters, and increased penalties for non-compliance.

Whether you are an employer managing compliance requirements or an employee seeking to understand your rights, staying informed about the ESA is essential.

Need Legal Advice on the ESA? Contact Achkar Law Today

At Achkar Law, we provide legal guidance for both employers and employees regarding ESA compliance, workplace disputes, and legal obligations. If you need assistance with an employment law matter, contact us today to discuss your options.