You Received a Termination Letter: Now What?achkarlaw-admin
With a recession and economic difficulties looming around the world, many employers are terminating employees to cut costs. “Termination of employment” is a phrase many employees could expect to hear or see in these difficult times.
Many employers provide employees with written notice of termination through a “Termination Letter”. These letters typically confirm a “termination of employment” and include details of what will happen next. In some cases, the Termination Letter will include a severance offer in exchange for a Full and Final Release.
Does a Termination Letter cover all my legal entitlements? What does an employer have to tell me in a Termination Letter? What do I do if I receive a Termination Letter? These questions are answered in the article below. You will also learn how an employment lawyer can assist with the termination of employment.
What You Are Owed for Termination of Employment
In Ontario, most employers must comply with the minimum requirements of the Employment Standards Act, 2000 (the “ESA”). Part of the ESA regulates termination of employment, outlining what an employee must provide the employee in such an event.
An employer can terminate your employment without cause at any time if they provide you with advanced written notice of your termination date or pay in lieu of that notice. Employers who provide an employee written notice may be required to work until their termination date.
The minimum amount of written notice required for termination is usually governed by the ESA, but how much working notice or pay in lieu of notice an employee is entitled to will depend on their unique circumstances.
Under the ESA, most employees who have at least 3 months of continued service with an employer are entitled to advanced notice or termination pay of 1 week, with an additional 1 week per year of service up to a maximum of 8 weeks.
Some employees may also be entitled to additional statutory severance pay under the ESA of 1 week per year of service up to a maximum of 26 weeks. To qualify, an employee must have worked at least 5 years for an employer with either:
- An employee payroll of $2,500,000 per year; or
- 50 or more “severed” employees in a 6-month period.
If there is no enforceable termination provision in a written employment contract or no written contract at all, an employee may also be entitled to common law reasonable notice for their termination.
Common law reasonable notice usually includes the employee’s minimum entitlements under the ESA but provides for more working notice or pay in lieu of notice as a whole. Reasonable notice is calculated based on a variety of non-exhaustive factors upon the termination of employment, including:
- Age of the employee;
- Years of service for the employer;
- The character of the employee’s position;
- Compensation of the employee;
- Economic climate;
- The employee’s geographic location; and
- Other factors that will help determine how long it would reasonably take an employee to find comparable employment.
Common law reasonable notice is statistically awarded at a rate of 1 month per year of service up to a general cap of 24 months. This is not an explicit rule, and an employee’s unique circumstances could result in more or less owed reasonable notice.
While your employer may outline in the Termination Letter that the amount they are paying or offering you meets all their legal obligations to you upon the termination of employment, you should take their statements with a grain of salt.
The only way to determine what you are owed in severance and other damages upon the termination of employment is to consult with an employment lawyer as soon as possible. However, Termination Letters do need to meet some minimal standards.
What Does a Termination Letter Need to Include?
An employer must be as clear and concise as possible when communicating a termination of employment. For example, if an employer provides their employee with a Termination Letter that does not set a specified date for termination, it is arguably not really a proper notice of termination.
The test to determine whether a Termination Letter is a proper notice of termination triggering your entitlements to severance requires an analysis of what a reasonable person would understand from the words used in the Termination Letter. This analysis typically requires examining the context, the specific industry, the specific workplace, and the surrounding circumstances.
A Termination Letter’s substance must always comply with the ESA. Examples of ways employers could breach the ESA in a Termination Letter include but are not limited to:
- Improperly calculating your ESA entitlements, such as how much notice or pay in lieu of notice you are entitled to or how long your benefits should continue for;
- Deducting monies from your owed unpaid wages or vacation pay without express written consent to do so; and
- Outlining conditions for you to meet before you are paid your minimum ESA entitlements, such as returning the Company’s property or agreeing to sign a Full and Final Release.
If you are terminated without cause, your minimum ESA entitlements are not negotiable. It is important to always double-check how your employer calculated any amounts outlined in the Termination Letter. Some employers may try to use an inaccurate figure representing your “regular wages” when calculating your termination pay or other ESA entitlements.
Your employer is not obligated to offer you a severance package over and above your minimum entitlements under the ESA. Your employer may offer an amount exceeding your minimum ESA entitlements in exchange for a Full and Final Release that prevents you from suing your employer for anything relating to your employment afterward.
If you want to determine whether you are entitled to more than what your employer is providing or offering you in a Termination Letter, it is your responsibility to seek legal advice to determine your next steps. If you have a case for more severance than what you are being provided on termination of employment, you may be able to sue for wrongful dismissal.
What To Do When You Receive a Termination Letter
Most employers meet with their employees to discuss termination of employment with their employee before providing a Termination Letter. It is important for you to stay calm and refuse to sign anything without a chance to review and seek independent legal advice.
You should read the Termination Letter carefully and gather any documents relevant to your termination of employment. The natural next step is to book a consultation with an employment lawyer to review the Termination Letter and discuss what you may be legally entitled to.
An employment lawyer can then help you understand your legal entitlements, the best next steps to take for your matter and negotiate your severance package with your employer. If early-stage negotiations fail, an employment lawyer can then help you sue your employer for your owed legal entitlements, advocate on your behalf, and continue negotiating to achieve your desired result.
If your employer terminates your employment, you may be entitled to advanced notice of termination or pay in lieu of such notice. How much severance you are owed is not necessarily limited by the ESA. It will depend on the facts of your case.
Your Termination Letter must be clear enough that a reasonable person in your shoes can understand the important details relating to the termination, such as the specific termination date. The Termination Letter’s contents must also comply with the ESA, and not purport to withhold your ESA entitlements triggered by termination of employment.
If you receive a Termination Letter, you should refuse to sign anything and consult with an employment lawyer as soon as possible. They can help you determine your legal entitlements, and what course of action to take moving forward. If your employer refuses to negotiate your severance, you may be able to sue for wrongful dismissal.
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