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Statutory Severance and Common Law Severance

The entitlement to severance pay includes the following:

The amount of severance pay owed to eligible employees is 1 week of regular pay per year of service, pro-rated to the number of completed months for a maximum of 26 weeks of pay. Severance pay is paid to an employee separately from any termination pay owed to an Employee under the Employment Standards Act but it can be deducted from any amounts owed to an employee at common law.

Statutory notice is also part of an employee’s minimum entitlements under the Ontario Employment Standards Act. This entitlement requires employers to provide notice or pay instead of notice to employees when they’re dismissed. The amount of notice or pay in lieu of notice depends on the length of the employee’s service with their employer and the calculation of notice would be owed as follows:

To only be liable for an employee’s entitlements at dismissal at the above amounts, the Employee’s contract must specifically restrict other entitlements such as those at common law. Upon dismissal, employers also have the option of providing “working notice” where the employee would work for the above period of time.

Common Law notice is the entitlement to advance notice or pay in lieu for the dismissal of an employee. Generally, common law entitlements are higher than the minimum owed to employees under the Employment Standards Act. The amount of pay owed to the employee at common law is based on past legal cases for similar employees that have been decided through the courts. The amount of common law notice is based on many factors including the following:

To enforce these entitlements, Employees may need to sue their employers for the appropriate amount of termination pay. Employers will often try to keep termination pay at common law to a minimum and suing is one way that Employees can enforce the amounts they’re owed.

Overall, entitlements upon dismissal can be much greater than most think. Whenever an employee is dismissed and given an offer of compensation at the end of employment, it’s best for employees to get competent legal advice of their entitlements and best options. And for employers, consulting an employment lawyer to ensure you are offering the appropriate entitlements can help avoid liability.

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