Fired Without Cause in Ontario? What You May Be Owed
Summary
In Ontario, an employer can end your employment without cause, but it must give you notice or pay instead of notice. The Employment Standards Act, 2000 sets the floor. Most employees are also entitled to "reasonable notice" at common law, which is often much more. That extra amount is only off the table if your contract has a clear, legally valid termination clause, and many do not. Do not sign a release until someone has checked your contract and your offer.
Being let go is a shock. Many people are handed a letter and a release in the same meeting and told to sign within a few days. You do not have to decide on the spot, and you may be owed more than you are being offered.
This post explains how termination pay works in Ontario, in plain language, so you can make an informed decision.
Can my employer fire me without a reason in Ontario?
Yes. Most non-unionized employers in Ontario can end employment without cause. The trade-off is that they must give you proper notice, or pay you instead of notice. They also cannot end your employment for a discriminatory or retaliatory reason, such as a disability, pregnancy, or asking for your ESA rights.
"Without cause" simply means the employer is not claiming serious misconduct. Most terminations are without cause.
What does the Employment Standards Act give me?
The ESA sets the minimum. It has two parts.
Termination pay (or notice) is based on your length of service. It starts at one week once you have worked three months, and rises to a maximum of eight weeks after eight years.
Length of service
ESA notice or termination pay
3 months to under 1 year
1 week → 1 year to under 3 years
2 weeks → 3 years to under 4 years
3 weeks → Each further year
1 more week →8 years or more
8 weeks → (maximum)
Severance pay is a separate amount. It applies if you have five or more years of service and your employer has a payroll of $2.5 million or more (or you were part of a larger group terminated in certain circumstances). It equals one week per year of service, up to 26 weeks.
During the ESA notice period, your employer must also continue your benefits.
What is common law reasonable notice?
Common law reasonable notice is the amount of notice a court decides is fair in your situation. It is usually much higher than the ESA minimum.
Courts look at what are called the Bardal factors. These come from Bardal v Globe & Mail Ltd, 1960 CanLII 294 (ON SC). The main factors include:
your age
your length of service
the kind of job you held, including your level of responsibility
how easy it will be to find similar work
There is no fixed formula, so be wary of "one month per year" rules of thumb. A 55-year-old specialist with 12 years of service may be entitled to far more than the same formula would suggest. A short-service employee in a specialized role can also be owed more than you might expect.
Reasonable notice can include salary, bonus, commissions, benefits, pension contributions, and other parts of your compensation during the notice period.
Does my employment contract limit what I can get?
It might. A contract can limit you to the ESA minimums, but only if the termination clause is clear and fully complies with the ESA.
Ontario courts look at these clauses closely. In Waksdale v Swegon North America Inc, 2020 ONCA 391, the Court of Appeal held that if any part of the termination provisions breaches the ESA, the whole set of termination provisions can fail. That includes a "for cause" clause that is never actually used. When a clause fails, you are usually back to common law reasonable notice.
This is why a lawyer will ask for your contract before giving you a number. A clause that looks airtight to you may not be enforceable.
Do I have to look for a new job?
Yes. If you claim common law notice, you have a duty to mitigate. That means making reasonable efforts to find comparable work. Keep a simple log of jobs you apply for, interviews, and contacts. If you find a new job, your earnings may reduce what your former employer owes for the rest of the notice period.
The ESA minimums are not reduced by new earnings.
What if the way I was fired was harsh or unfair?
Employers must act in good faith when they end your employment. If the employer was untruthful, misleading, or unduly insensitive in how it dismissed you, a court may award extra damages. See Honda Canada Inc v Keays, 2008 SCC 39. If the termination was connected to a protected ground under the Human Rights Code, you may also have a human rights claim. See our post on how to file an HRTO application.
What should I do before I sign a severance package?
Take these five steps before signing anything.
Ask for time. A request for one to two weeks to get legal advice is normal and reasonable.
Gather your documents. Find your offer letter, every employment contract you signed, any bonus or commission plan, and your termination letter.
Write down the facts. Note your start date, your role, your total compensation, and what was said in the termination meeting.
Do not sign the release yet. A release usually ends your right to claim more. Once it is signed, it is very hard to undo.
Get advice from an employment lawyer. Many firms, including ours, offer consultations to review your package and provide advice.
How long do I have to make a claim?
For a wrongful dismissal lawsuit, the general limitation period in Ontario is two years from the date of termination under the Limitations Act, 2002, SO 2002, c 24, Sch B, s 4. ESA complaints to the Ministry of Labour have their own time limit. You also generally cannot pursue the same termination through both an ESA complaint and a civil lawsuit, so choose your path with advice.
Do not wait until the deadline. Evidence and memories fade, and an early demand letter often leads to a better negotiated result.
Frequently asked questions
Is severance pay the same as termination pay? No. Under the ESA, termination pay replaces notice. Severance pay is a separate amount that only some employees qualify for. In everyday language, people often call the whole package "severance."
Can I get more than the ESA minimum if I was a short-term employee? Often, yes. Unless your contract has a valid termination clause, common law notice usually exceeds the ESA minimum, even for employees with less than a year of service.
Do I have to sign the release to get my ESA pay? No. Your employer must pay your ESA minimums whether or not you sign a release. The release is usually tied to any amount above the minimum.
Will my EI be affected? Possibly. Severance and termination payments can affect when your Employment Insurance benefits start. Apply for EI right away regardless.
Do I need a lawyer? You are not required to have one. A short review of your contract and offer often shows whether you are owed more. Bird Bolt Law represents employees in Hamilton and across Ontario.
This post provides general information about Ontario employment law. It is not legal advice. Every situation is different. Contact Bird Bolt Law to discuss your circumstances.