Termination of Employment

What is the definition of termination? What does termination of employment mean?

Although a termination of employment can happen in a variety of ways, the common meaning is that an employee’s employment has ended.

At the point of termination of employment, both the employer and employee have rights and obligations, which will be discussed in detail below.

What are the ways that an employer can terminate an employee?

There are two types of terminations: “with cause” and “without cause.”

1. Termination “with cause” [also called “for cause” or “with just cause”].

If an employer terminates you with cause, it has taken the position that you engaged in some conduct that irreparably damaged the trust in the employment relationship.

The employer believes it would be inappropriate to resort to a lesser form of discipline, like a warning or suspension.

A termination with cause means that the employer is not required to give you any notice of termination or pay in lieu of notice / severance pay. In other words, your job is over immediately, and you get nothing.

Examples of conduct that employers have relied on to terminate with cause include:

• Theft and Fraud
• Dishonesty
• Violence
• Conflict of Interest
• Insubordination

An employer can terminate an employee for cause because of performance issues, but usually for significant performance issues and only after the employer provides several warnings.

Remember, a termination with cause is only a legal position or argument. You can fight it.

For a more in-depth discussion on “with cause” terminations, read our “Terminated With Cause”. page.

2. Termination without cause

If the employer has terminated you without cause, then you are entitled to notice of your termination or pay in lieu / severance pay.

Common reasons for termination without cause are: restructuring, elimination of position, business closing, not a good fit, etc.

To be clear, provided the employer provides notice or pay in lieu, it can fire you for any or no reason whatsoever.

Exception: An employer who terminates based on a protected human rights ground (such as race, sex, religion) may be liable for more than just severance pay; it might be liable for human rights damages.

What is a constructive termination?

A constructive termination, also called a constructive dismissal is a without cause termination. Accordingly, the employee would be entitled to notice or pay in lieu (i.e. severance pay).

Constructive dismissal occurs when the employer makes a significant change to the terms of your employment without your consent (for example, a reduction in pay) or it acts or behaves in a way that is inconsistent with an employment relationship (i.e. it engages in or permits harassment).

In most cases, the change or conduct happens with little or no warning. Normally, the employee can treat the employment as terminated, and claim for severance.

For a more in-depth discussion on constructive dismissal, read our “Constructive Dismissal” page.

Does the reason for my termination matter?

If you were terminated for cause (resulting in no notice or pay in lieu), then the reason matters. For example, if the employer accused you of theft, and the accusation is untrue, then it matters. If you can establish that you were not guilty of theft, you would be entitled to severance pay.

If you were terminated because of your age, sex or other prohibited ground of discrimination, then you might be entitled to human rights damages.

For terminations without cause, the reason doesn’t generally matter. The reason does not affect how much severance you are entitled to.

What if the employer lied about the reason for my termination?

If you were terminated for cause (and received no severance pay), and the employer lied about the reason for your termination, then a court could award extra compensation (on top of severance pay) to penalize the employer for bad behaviour.

But, in without cause terminations, whether the employer lied about the reason for your termination is usually irrelevant. It does not typically affect either the amount of notice or severance pay.

A common scenario: The employer says your job is being eliminated, but it either posts your job on-line, or else hires someone to perform your job. Unless you were terminated for an improper reason (i.e., the employer breached the Human Rights Code), then the employer’s untruthfulness is irrelevant to how much severance pay you are entitled to.

What is meant by unlawful termination, wrongful termination, and wrongful dismissal?

They all mean the same thing, but the most commonly used term is “wrongful dismissal”.

If the employer terminates you without cause and fails to provide proper notice or pay in lieu, then it is wrongful. It is the failure to provide proper notice or pay in lieu that is “wrongful” – not the reason for your dismissal.

Also, if the employer terminates you with cause (and provides you nothing at all) and if it is later determined that the employer’s case was a weak one, then we also call it “wrongful dismissal”. 

What is meant by voluntary or involuntary termination of employment?

These terms are rarely used in employment law.

However, a “voluntary” termination of employment means a resignation. An “involuntary” termination means that the employer terminated or dismissed you.

Does the employer have to give advance notice of my termination, severance pay, or both?

An employer is entitled to give you advance notice of your termination, severance pay, or a combination of both.
Examples:

• “Jane, your job is over in 6 months’ time”
• “Jane, your job is over now, and here is 6 months’ pay”
• “Jane, we need you here for 3 more months, then we will pay you 3 months severance pay”

What will I find in a termination letter?

Here are some common things you will find in a termination letter:

• Effective date of termination
• What your automatic statutory entitlements are
• How your health benefits will be treated
• How your pension or RRSP will be treated
• Provision of career-counseling services
• Reminder of non-compete or non-solicitation obligations
• What amount of money (in addition to the statutory entitlements) the company is willing to pay in exchange for a “release” (so you won’t sue them in the future)

For a complete discussion of these and other important parts of your severance package, please read “Understanding Your Severance Package”.

How much is termination pay in Ontario? How do I calculate termination pay?

The amount of compensation you might be entitled to upon termination, is decided by three things:

1. The Employment Standards Act, 2000: which provides minimum amounts of pay.

2. An employment contract: which might spell out exactly how much you are entitled to (but it can’t be less than what the Employment Standards Act, 2000 provides.)

3. The common law: applies when you don’t have a written contract, when your written contract doesn’t have a termination provision, or the termination provision in your contract is void or unenforceable for some reason.

In almost all cases, the common law provides the most amount of compensation.

The amount of compensation under the common law is based on a variety of factors. The most important factors are:

• Age
• Length of Service
• Type of Job
• Availability of Comparable Jobs in the Market

If you are interested in how much common law termination pay you might be entitled to, try our termination pay calculator.

 

Visit our videos page or download a free guide to learn more about severance pay.

My employment was terminated after 23 years. Ertl Lawyers were able to get me a severance package that bridged me to retirement.

 

– C.B., Insurance Claims Specialist, Halton Hills

Have you been terminated?

Get the severance pay you deserve.

If you were terminated without cause, you can call us for a free consultation.

We will tell you whether your severance package is fair or not, whether you are entitled to more, how much you might be entitled to, and answer any other questions you may have.

Our help can make all the difference!

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