When terminating employees, employers in Ontario have certain obligations to fulfill under the Employment Standards Act (ESA). The ESA generally requires employers to provide employees with a notice of termination, termination pay or a combination of both. In situations where employers want to end employment immediately, they can provide pay in lieu of notice.
What is pay in lieu of notice?
Pay in lieu of notice is termination pay that is provided to employees instead of termination notice. This means that the employee does not continue to work through a notice period, but instead receives pay as compensation. Employers may prefer this option if they do not want to continue employing a worker up to their termination date.
Which employees qualify?
In order to qualify for pay in lieu of notice, employees must have worked for the same employer for at least 3 months. Earlier than this, employers are not required to provide employees with termination notice or pay. Also, employees are not entitled if they are being dismissed for just cause.
Giving Termination Pay in Lieu of Notice
Termination pay must be paid in a lump sum seven days after termination or on the employee’s next pay date, whichever is later. The pay should equal the regular wages that the employee would have made had they continued to work through their notice period.
Need help determining the amount of notice an employee is due?
We can answer your questions about employee layoffs, termination without cause or constructive dismissal. Speak to our HR advisors to get help with dismissing employees in a manner that is compliant with the ESA: 1 (833) 247-3652.