Common Law Termination Pay – Is Your Employee Eligible?
Common Law Termination Pay
According to the laws of most countries, it is not always easy to determine or predict common law termination pay. Even where there are stipulations in local statutes, these rarely give an indication as to the amount of time one has within which to seek employment with a new company. In many cases, it is possible to terminate one’s employment without any notice or alternative, but this is not always the case. Statutory termination pay and other severance pay provisions are usually determined by case-by-case basis. Unlike in the common law, where there may often be some argument between the employer and the employee as to the validity of the contract or the extension of statutory payments, here there usually is no option to negotiate or contest the terms of severance.
When comparing employment termination pay in Canada with that in the common law jurisdictions, it is important to take into consideration the statutory requirements for each type of agreement. For example, the statutory period within which an employee must give notice of termination usually differs greatly from one province to another. Ontario, unlike some of its neighbours, requires an employee to give notice of termination after one year of employment. Many private sector employers have been successful in having Ontario’s labour laws applied to their employees’ contractual agreements without having to go to the courts.
The third area in which common law termination pay is more difficult to determine is whether an employee is really entitled to such a payment, given that there is no express provision to that effect in the common law. A short review of some employment standards acts provides some insight into this matter. For example, in Canada, an employee must ordinarily give notice of termination before being entitled to any wage supplement. This Act also requires that an employee who is about to receive a specified bonus (e.g., bonus accrual) be informed of his or her entitlement to that bonus, and then given an additional notice period of at least fourteen days.
Is Your Employee Eligible?
It is also important to keep in mind that even if an employee is entitled to common law termination pay, that employee may still be unable to receive the entire wage amount owed to him/her if the employer offers something like a severance package. An employment lawyer can help with aspects of this issue, but will not be able to provide a definitive ruling on whether or not an employee is entitled to severance pay. Therefore, an employment lawyer will not necessarily be able to decide for you if your employee should be entitled to severance pay. However, you may wish to retain the services of an employment lawyer if your employee makes a claim for breach of contract or discrimination.
In addition to these difficulties in determining if your employee is really entitled to common law termination pay, it is also important to remember that Ontario employers are well within their rights to limit severance pay to only those employees who have actually been terminated. For this reason, it may be necessary for your employee to take an appeal to the Employment Appeal Act. This is especially true if you have overlooked some elements of the employment agreement, or if you have failed to follow employment law clearly.
As previously mentioned, employment law in Ontario is complex and frequently very difficult to understand. Therefore, you may wish to consult with an employment lawyer before taking any steps towards defending your employee. The lawyer will be able to guide you through the various sections of the Human Rights Code and the various aspects of Ontario labour laws, including the meaning of “common law” and the way severance pay works in Ontario. They will also be able to answer questions related to the application of sections of the Human Rights Code.