This article was first published on January 17, 2015 and recent updated on February 28, 2015 due to amendments in ESA regarding to the recovery of unpaid wages due on or after February 20, 2015.
It is very sad to hear about the latest news regarding three major companies, including Target, Sony and Bombardier, closing or reducing their business operations in Canada and laying off their employees. One commonly used option is to offer an employee a lump-sum Termination Package. The important question here: Is my Termination Package reasonable under the law?
According to Employment Standards Act, 2000 in Ontario, the minimum statutory entitlement is required to pay at least 1 week's pay for each year's service in the company. For example, you will receive the minimum statutory entitlements of 3 weeks, if you have worked for the company for three years before you get laid off.
This is the maximum entitlement under the common law that an employee can receive, when he or she gets laid off, which is one month's pay for each year's service in the company.
ESA Standards or Common-law Requirement applicable to your Termination Package?
Factors that determine whether an employee will likely be eligible for common-law requirement are as follows:
1) The employee's age;
2) The employee's position
3) The employee's level of compensation; and
4) The availability of similar employment (given that the employee's experience, training, and qualification).
The common-law entitlement will likely be applicable, if the above-mentioned factors contribute to any significant difficulty in future employment.
Ministry of Labour or Small Claims Court? (not applicable to unionized employees)
If an employee is not satisfied, or believe that the entitlement he or she receives is less that what he or she is legally entitled under the law, an employee can file a claim to the Ministry of Labour (ESA Standard claim). The compensation amount is capped at $10,000 prior to February 20, 2015, if you file a claim to the Ministry of Labour.
If an employee is seeking for the compensation amount worth more than $10,000 due on or after February 20, 2015 , he or she can submit the ESA Standard claim to the Ministry of Labour directly due to the recent changes (rather than Small Claims when the claim is worth more than $10,000 but equal or less than $25,000 prior to February 20, 2015).
An employee may also be entitled to Severance Pay as part of the Termination Package under the following conditions:
i) An employee must have worked for the employer for 5 or more years; and
ii) The employer must have an Ontario Payroll of at least $2.5 million, OR must have severed the employment 50 or more employees in a six-month period because all or part of the business closed.
Qualifying employees are entitled to receive Severance Pay in the amount of one week's pay for each year's service, to a maximum of 26 weeks.
- 2 years for unpaid wages, termination or severance pay.
Recent changes can be referred to:
i) http://www.labour.gov.on.ca/english/es/pubs/guide/esclaim.php &
Disclaimer: This information is not intended to be construed as a legal advice, but strictly for information only in this entire website. Please contact Trustworthy Legal Service for your independent legal advice in your particular situation. The first consultation is also required prior to my retainer of your case.
Recent updated on February 28, 2015
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