The following is and article by Daniel Walker of petindustrylaw.com. His firm, Bobila Walker is a member of PIJAC Canada and offers free 45 minute consultations and reduced rates on legal fees for members of the association. (more info)
In most business scenarios, the need for a contract to define the rights and obligations of the employer and employee in a legal relationship is the key. Bad Contracts create a false sense of certainty and increase the risk of litigation. This is the first part to employment law and employment contracts 101.
The following general information is to be kept in mind when dealing with employment matters.
The Employment Standards Act, 2000 (the “Act”) is the key legislation in the province of Ontario. Similar legislation exists in other jurisdictions.
The legislation includes minimum terms and conditions of employment for the majority of employees in Ontario. It includes the minimum standards of employment only. Under the Act, employers have numerous duties, including keeping accurate records of wages paid, hours worked and holidays accrued.
Termination Pay: Termination of employment under the Employment Standards Act
Termination pay is given in place of required notice of termination.
Under the Act employees must be given advance notice of termination (or payment instead). The minimum length of notice required for individual terminations is determined by an employee’s length of service as follows:
Length of Service Notice Requirement
3 months but less than 1 year 1 week
1 year but less than 3 years 2 weeks
3 years but less than 4 years 3 weeks
4 years but less than 5 years 4 weeks
5 years but less than 6 years 5 weeks
6 years but less than 7 years 6 weeks
These are the minimum numbers provided for. Often, employers will provide employees with agreements that are not properly drafted and make conflicting or unclear legal obligations. Under such circumstances, the courts will turn to the “common law” or “case precedents” to determine what amount should be paid. Under the common law, an employee is entitled 1 month of pay for each year worked, which evidently means a more expensive termination. This is why it is essential that employment contracts are properly drafted.
The Act also provides for “severance pay” for some employees. Severance pay is considered a benefit for long-serving employees
The employee must have been employed for five or more years, and the employer must have a payroll of more than $2.5 million dollars, or the employee must be part of a mass termination of 50 or more employees.
If you are not 100% sure of your responsibility for compliance with the law, before paying the funds, consult a lawyer, it may save you money in the long run.