- An Employment Contract can establish the obligations and rights of employers and employees, as well as an employee’s entitlement upon termination. To be enforceable, it must comply with Ontario’s Employment Standards Act or the Canada Labour Code, as the case may be.
- Employees can be terminated for any reason, upon receipt of reasonable notice of termination or pay in lieu thereof. The amount of reasonable notice depends on factors such as length of service, age of the employee, nature of the employment, and the availability of similar replacement employment.
- Employers who have “just cause” to terminate an employee will not have to provide notice or pay in lieu thereof. Single incidents of incompetence, insubordination or a single violation of company policy, however, may not amount to just cause. Employees must generally be given notice of problems or violations and the employer must work with the employee to prevent further violations.
- If an employer makes significant changes to the terms of an employee’s employment, this may amount to constructive dismissal. This means that while the employer has not formally terminated the employee, the change to the terms of employment can amount at law to termination and will entitle the employee to reasonable notice or pay in lieu thereof.
- A lump sum payment made in lieu of notice can be characterized as a “Retiring Allowance,” which will result in it being taxable as employment income, but not subject to Canada Pension Plan (CPP) or Employment Insurance (EI) deductions.
- The Code appearing on a Record of Employment (ROE) issued by the employer upon termination often makes the difference as to whether or not the employee is eligible for EI benefits. Whether you’re an employer or an employee, in this world of increasingly complex employment relationships, it is crucial to provide clients with constructive and practical legal services as efficiently and cost effectively as possible.
DISCLAIMER: The information provided herein is for general purposes only, and is not legal advice. This information relates only to the laws of the Province of Ontario and related laws of Canada applicable in Ontario, and is believed to be correct as at the date it was assembled, but may contain inadvertent errors or inaccuracies and may be out of date when accessed. Cohen Highley LLP disclaims any and all liability and accepts no legal responsibility relating to any use or reliance on this information. Use or reliance on this information does not establish any form of lawyer-client relationship with Cohen Highley LLP, and any such alleged relationship is hereby disclaimed. Legal advice depends on facts and circumstances, and should only be obtained through direct personal consultation with a licensed legal professional. This information is protected by Canadian and international copyright laws and may not be reproduced, transmitted or otherwise disseminated without the express written consent of Cohen Highley LLP.