In good times and in economic slowdowns, the reality is that employers and employees sometimes become “former” employers and employees. Both employees and employers should know their rights in the event of a termination.
There are two basic types of employees: unionized and non-unionized employees. This article will only deal with non-union employees, as unionized employees have access to their union for assistance and have their rights set out under a collective agreement.
An employer can terminate a non-union employee with or without “just cause”. If there is “Just Cause” then the employer does not have to pay any severance. Given the current economic climate it is important to note that lack of work or sale of the business is not just cause for dismissal. Just cause requires wilful misconduct on the part of an employee, such as theft.
Incompetence is considered just cause, but it is very difficult to prove. Unsatisfactory job performance is not generally good enough unless there has been a careful written record of the problem, with meetings with the employee and warnings that continued poor performance will lead to dismissal.
If there is no just cause then an employer must give an employee notice of her or his termination or pay them a package. The term for the package often referred to as “severance”, “termination pay”, “transition pay”, “pay in lieu of notice” or a host other terms that fall under the concept of “wrongful dismissal”. Most terminations fall into this category, including where there is a lack of work or economic cutbacks.
The Employment Standards Code (the “Code”) sets out the minimum pay to an employee upon termination. This is an amount to be paid in addition to money that the employee has already earned up to termination and any unpaid vacation pay. These amounts must be paid very shortly after termination and the employer cannot force the employee to sign a release before getting these amounts.
It is important to note that the Code amounts are minimums. The law provides for additional legal rights for employees to claim damages for what is commonly called severance pay under the heading of “wrongful dismissal”. There is no set table of what an employee might be awarded, but if you are getting paid more than minimum wage then you are generally entitled to get more than the minimum set out under the Code. Many people think that there is a rule stating “one month per year of service”. This is not a legal standard or rule. Many factors are considered by the Courts such as: length of employment, type of position, age, job prospects and others. Each case will be decided by its own set of facts.
If an employer is planning on paying more than what is set out under the Code then it may ask the employee to sign a release. The release prevents the employee from taking an agreed amount and asking for more money later. It is always recommended to speak to a lawyer before signing a release to ensure you are getting a fair package.

Darryl Aarbo is a partner at Courtney Aarbo, Barristers and Solicitors, www.courtneyaarbo.ca