ONTARIO LAW REGARDING SEVERANCE

To understand whether you may have relied on the Ministry of Labour’s advice to your detriment, you need to understand something about severance entitlements. There are two types of laws that govern severance entitlements in Ontario. One is called the Employment Standards Act, 2000 (the “ESA”), and the other is called the “common law”. The ESA is a piece of written legislation (see: http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_00e41_e.htm). The common law, however, is a system of law that is used in Canada (except for Quebec) which is developed by courts and tribunals (see a brief description of common law on Wikipedia: http://en.wikipedia.org/wiki/Common_law)

The Employment Standards Act (“ESA”)

The ESA is the law that establishes certain minimum standards that apply to employment relationships, including the termination of employment. The ESA provides that when a person is fired without cause, he or she is entitled to a certain amount of notice of termination (or termination pay in lieu thereof) and in many cases, an additional amount for severance pay. For example, an employee may be entitled to up to 8 weeks of notice or termination pay in lieu thereof, and a further 26 weeks of severance pay. However, these are just the minimum entitlements. These minimum termination and severance entitlements are similar to a minimum wage rate, which is there to provide minimum protection to employees. Almost all non-union employees have much more significant severance entitlements under the common law.

The Common Law

Ontario’s (and much of Canada’s) system of law is called the “common law”. The common law is not a written piece of legislation (like the ESA). It is a collection of thousands and thousands of court and tribunal decisions that have evolved over many years. The common law is very important when it comes to determining an employee’s termination/severance entitlements and an employer’s termination/severance obligations.

Under the common law, a person is owed significantly
more termination/severance than the minimums provided for in the ESA.

Under the common law, the calculation of severance entitlements depends on various factors, including the position held by the employee, length of employment and the employee’s age, and possibly other factors which may affect how long it will take that employee to find another job.

ROLE OF THE MINISTRY OF LABOUR

The Ministry of Labour provides various services. One of these services includes advising people by phone when they call to inquire about their termination/severance entitlements. The Ministry states on its website that questions about rights and responsibilities are often complex and recommend that people call them with questions (see caption below from their website):

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The Ministry of Labour website contains a toll-free number, as well as a local 416 number for Toronto, directing people where to call. See caption below from their website:

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When people call the Ministry of Labour and ask about their severance, they are advised about their ESA entitlements, but they are not advised that the ESA provides for minimum entitlements only. They are not advised that they may have common law severance entitlements which may be significantly higher than their minimum ESA entitlements. Often the difference between minimum ESA entitlements and common law entitlements are in the tens of thousands of dollars, and possibly much more!

The Ministry actually states this on its website, but they state it at the bottom of the web pages which discuss termination and severance entitlements (see direct links below to the Ministry’s website – scroll all the way down to the bottom):

http://www.labour.gov.on.ca/english/es/pubs/guide/severance.php
http://www.labour.gov.on.ca/english/es/pubs/guide/termination.php
http://www.labour.gov.on.ca/english/es/tools/esworkbook/termsev.php

Here is a caption of exactly what the Ministry has on its website, at the bottom of some of the pages which discuss termination and severance:

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So the Ministry is well aware of these greater common law entitlements, but they only state this at the bottom of some of their web pages, where people are least likely to read it. Unfortunately, when people call the Ministry for advice about termination, they are not informed about these greater entitlements at all. The Ministry does not tell callers that they are only being advised about their minimum entitlements under the ESA. They don’t tell callers about any greater rights under the common law. The Ministry does not even advise callers that they may wish to obtain legal advice in order to fully explore and understand their severance entitlements beyond the ESA. Essentially, the Ministry provides incomplete information to callers by not letting them know that the ESA is just one part of the severance/termination equation and that people could be (and often are) entitled to more than the minimums prescribed by the ESA.

As a result, people often accept inadequate severance packages because they are unaware that the ESA provides them with only the minimum severance entitlements and that the common law is there as well to protect them. They rely on incorrect advice provided by the Ministry of Labour when they call the Ministry’s inquiry services.

Similarly, many employers offer their employees inadequate severance packages for the same reason, after having called the Ministry of Labour and after having received the wrong advice. Some of these employers are then sued for wrongful dismissal and end up having to pay their employees’ common law entitlements, as well as lawyers’ fees – when they never meant to avoid their legal obligations in the first place!

WHAT WE CAN DO

Our position is simple. If the Ministry of Labour advises callers about their severance entitlements, they should always explain, on the phone, that there are minimum entitlements under the ESA, as well as potential additional entitlements under the common law. They may want to suggest that the callers seek legal advice. At the very least, they should emphasize that they are only able to provide advice with respect to the ESA, but that the ESA is not the only law that deals with termination/severance entitlements. After all, they do this on their website (although in places where many readers likely don’t see it – at the absolute bottom of some of their web pages). But why are they not saying the same thing to people who take the time to call to inquire about their entitlements, or employers that call regarding their obligations towards employees? We believe that many employees and employers have suffered significant losses over the years as a result of the Ministry’s failure to do these things. We want to help such employees and employers to assess whether they have a claim which may be pursued against the Ministry, and to assist them to recover compensation with respect of the losses they have suffered.

WHO MAY HAVE BEEN AFFECTED?

img-3Employees who called the Ministry of Labour for advice or to inquire about termination or severance entitlements and who subsequently accepted an inadequate severance package on the basis of that advice.

Employers who called the Ministry of Labour for advice about what termination/severance entitlements they should have provided to their employees, acted on the advice, but were subsequently sued because the termination/severance entitlements they provided were inadequate under the common law.

WHO DO WE REPRESENT?

We represent individuals and employers who have been adversely affected as a result of receiving and relying on incorrect advice from the Ministry of Labour with respect to severance entitlements.

If you fall into one of the above categories and would like us to review the circumstances of your case, please click on the appropriate button below to complete a short form which will be sent to us for our review. We will contact you shortly after reviewing your submission to let you know if we can help.