EMPLOYMENT STANDARDS ACT EXPLAINED
QUESTION: Until recently, I was the general manager of a company. After 5 years of service, the chief executive officer told me that he was tired of me undermining and questioning his authority (I thought we had a good relationship) and that he was letting me go. He told me that he would be forwarding me a letter offering me 11 weeks’ wages. Is this right? Can he do this?
ANSWER: An employer can terminate anyone they want for any stupid reason they want as long as the employee is not in a union, and there is no violation of the Ontario Human Rights Act or the Employment Standards Act involved.
The employer has to pay you, however, minimum payments under the Employment Standards Act as well as reasonable notice at common law.
Under the Employment Standards Act, all employees are entitled to termination pay which is a week per year of completed service; in your case 5 weeks. If your employer had a yearly payroll of over $2.5 million dollars, then given that you were there more than 5 years, you are also entitled to severance pay. Severance pay under the Employment Standards Act is a week per year to a limit of 26 weeks. So, as a minimum, you’re owed 10 weeks altogether. But that is just a minimum.
You are also entitled to reasonable notice at common law. If you were the general manager of a business, you are going to be entitled to at least a month of reasonable notice for each year of service. Depending on how large the company was and your level of responsibility and age, your reasonable notice could be anywhere from 5 to 8 months. Reasonable notice is what is awarded by the courts. It is not in addition to 10 weeks you are entitled to under the Employment Standards Act, but includes that amount.
The 5 to 8 months of reasonable notice, is not, however, a guaranteed amount. It is the maximum period of time for which your employer would be responsible for compensating you if you could prove that you looked for work during that time and couldn’t find it.
The situation is similar to a landlord whose tenant runs out on her. She can sue for the lost rent, but she has to prove to the judge that she tried to rent the apartment out immediately. If she ended up getting a new tenant the next day, she has nothing to sue for. She “mitigated” her damages.
In your case, if you find new employment paying the same amount after 4 months, a court would only award you 4 months’ lost income, even though, you might have been entitled to 5 to 8 months notice if you had not found work.
This concept does not apply to the 10 weeks minimum pay owed to you under the Employment Standards Act. That is a minimum and guaranteed amount and even if you got a better paying job the day after you were terminated, you are still entitled.
Your overly generous employer has offered you all of one week in excess of the 10 weeks you are entitled to under the Employment Standards Act. You’ve been offered just under 3 months’ wages.
If you found a job before that 11 weeks was up that pays close to the same as you used to make, take the offer. If not, see an employment lawyer.
As published in the Hamilton Spectator, May 13, 2002