How Does Seniority Affect Severance Pay in Ontario?
Seniority Affect Severance Pay in Ontario
When an employer decides to let go of an employee, it can be a stressful time for everyone involved. The shock of losing a job can create a rush of emotions from the sudden loss of income to the uncertainty of where to go next in life. For employees in Ontario, this can also mean wondering whether they will qualify for severance pay and how much that might be.
Severance pay is compensation given to a former employee when they are terminated or laid off, and it’s important for individuals who are considering finding new employment to understand how it works in the province. While it’s true that the minimum severance pay Ontario required by the Employment Standards Act (ESA) in Ontario is equivalent to 26 weeks of wages, many employers may offer more than this. The amount an individual receives depends on a variety of factors, including their seniority and the circumstances surrounding their termination.
For example, an individual’s seniority could impact their severance package if they are part of a union and their employment contract dictates that those who have been with the company for the longest will get the best offer in the event of a layoff. This can be a great way for companies to save money on recruitment and training expenses and ensure that their workforce has a safety net while looking for a new position, according to an article in The Toronto Star.
How Does Seniority Affect Severance Pay in Ontario?
However, for non-unionized employees, the law is different and only those who have been with a company for at least three months when they’re fired without cause are entitled to severance pay. This can be confusing for some people, especially since they may be confused with termination pay, which is something that an employer is legally obliged to give if they’re terminating an employee during their notice period.
The reason for this distinction is that an employer can’t fire a worker for any reason other than a serious misconduct, as it would be considered constructive dismissal. This is a violation of the law and an employee who has been reprimanded for poor performance or disciplined for violating workplace policies may be eligible to file an employment law complaint against the employer.
The legal framework governing severance pay in Ontario primarily derives from the province’s Employment Standards Act (ESA), which sets out the minimum employment standards that employers must adhere to. According to the ESA, employees are entitled to receive severance pay if they have worked for their employer for at least five years and if the employer meets certain criteria, such as having a payroll exceeding a specified threshold.
It’s important for those who are uncertain about their eligibility for severance pay to talk to an experienced employment lawyer, such as the professionals at Knit. Contact us today to discuss your concerns or to schedule a consultation. We can help you navigate the intricacies of employment entitlements, payroll management, and more! Check out our blog for more helpful tips on workplace issues.