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Can Severance Pay Ontario Be Included in Termination Agreements?

Severance Pay Ontario Be Included in Termination

Losing a job is a stressful experience for any employee. Whether they saw it coming or were abruptly terminated, being let go from work can be demoralizing and financially devastating. For non-unionized employees, the loss of a job also means the loss of a financial safety net. As such, it’s important for employees to understand their legal right to severance pay ontario, as well as what to look out for in a termination agreement.

Severance pay is compensation an employer must offer to a terminated employee as per the terms of the Employment Standards Act (ESA). The ESA requires employers to provide severance pay Ontario if they have been in business for five years or more, have a global payroll over $2.5 million, and are terminating 50 or more employees within a six-month period because they’re closing all or part of their company.

The minimum amount of severance pay an employer must provide is one week’s regular wages for every year of service, to a maximum of 26 weeks. It’s important for employees to be aware of the minimum severance pay their employer must provide in order to prevent them from being taken advantage of by their former employers. It’s common for employers to try to limit their severance pay obligations in the form of termination clauses in their employment contracts. But these clauses must be legally valid and up to date with current labour and employment laws in order to be enforceable.

Can Severance Pay Ontario Be Included in Termination Agreements?

In most cases, severance pay must be paid within seven days after an employer’s decision to terminate an employee, or on the employee’s next regular payday. However, in certain circumstances, the ESA allows an employer to pay severance pay in installments.

An employee’s severance pay is usually outlined in the termination agreement they’re required to sign after being fired. They’ll likely have time to review the severance package before signing, but it’s important that they read it thoroughly to ensure that the terms are fair.

Some industries, such as banks and air transportation, are regulated by the federal government rather than a provincial ministry of labour. In these instances, it’s crucial that employees review the federal labour laws to determine if they’re eligible for higher severance packages than those stipulated by the ESA.

It’s important for both non-unionized and unionized workers to understand their rights to severance pay. Failing to comply with ESA guidelines can have significant legal repercussions. Employees who are considering accepting a severance package should consult with an employment lawyer to ensure that the agreement meets the requirements of ESA and common law.

It’s also important for employees to remember that their rights don’t expire a few months after being fired. They’re entitled to the severance pay they’re owed for as long as their employer remains in business. This is regardless of whether the employee’s position is being eliminated or expanded, or if they’re being laid off due to COVID-19-related reasons. The federal labour laws also protect employees from retaliation and discrimination after being fired.


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